2006 (4) TMI 218

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....T(A), Chennai, dt. 8th Dec., 2004. The relevant assessment year involved in this appeal is 2001-02. 2. The only issue in the Revenue's appeal is whether payment made to distributor falls within the purview of expenditure incurred so as to attract the provisions of s. 40A(3) or not? 3. We have heard both the sides and gone through the facts of the case. The assessee has taken the Gaiety Theatre o....

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....iced that payment of Rs. 5,64,385 has been made to various distributors on various dates by cheques which were not crossed. The cheques have been en cashed by the distributors themselves. The dates on which such payments were made, names of the distributors, details of payment have been submitted before the AO by the assessee. The AO after going through these details found that a sum of Rs. 5,64,3....

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....unts and distributors' shares were paid as per the screening of the film and as per the agreement, the assessee is entitled to a fixed percentage to be calculated on that basis. This shows that the payment made to the distributors in no way can be treated as expenditure and it cannot be taken into account either for computing the GP or the net profit of the assessee. Once we cannot compute, either....