Single venture production costs must be assessed on completion when the commercial result is known, not split artificially by year or head.

Where a business consists of a solitary, indivisible venture, the profit or loss must be determined on completion of that venture, and the entire production expenditure is relevant to the year in which the commercial result is ascertainable. The court held that expenditure for producing one film could not be split into separate heads or artificially allocated to an earlier year, because the result of the venture became known only when the picture was completed and released. The distinction between establishment and production expenses was held to be artificial on these facts, and the deduction was allowed in favour of the assessee.

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Issues: Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 42,338 was properly allowed as a deduction in the assessment year 1953-54 in respect of a single venture undertaken to produce one picture.

Analysis: The business was confined to the production of one film, and the result of the venture could not be ascertained piecemeal by splitting expenditure into separate heads or by treating part of the production outlay as relating to an earlier year. In a single venture of this kind, the commercial result is known only when the picture is completed and released, and the entire expenditure incurred for its production is relevant to the computation of profit or loss for the year in question. The distinction sought to be drawn between establishment expenses and production expenses was held to be artificial on the facts.

Conclusion: The deduction of Rs. 42,338 was rightly allowed and the question was answered in the affirmative, in favour of the assessee.

Ratio Decidendi: Where a business consists of a solitary, indivisible venture, its profit or loss must be determined on completion of that venture, and expenditure incurred for its production cannot be disintegrated on an artificial year-wise or head-wise basis if the commercial result is ascertainable only at completion.

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