2001 (7) TMI 298

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....he assessee is a famous film director and he is receiving advances from the producers and whenever he works for the said producer who paid the advance he used to offer a part of advance as income for the relevant period and showing the balance advance as due to the producer showing it in the list of sundry creditors. The assessee has filed this return for the present three years admitting an income of Rs. 20,72,730 and this was processed by the AO under s. 143(1)(a) adding an additional sum of Rs. 25 lakh to the returned income. This Rs. 25 lakh consists of an advance of Rs. 10 lakh received from M/s Base Industries as advance for directing their prospective film. In the same manner another sum of Rs. 15 lakh received by the assessee as adv....

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....s income. On the other hand, if it is claimed to be refunded by the giver, has to return the same. Therefore, the advance becomes his income only when he rendered any service to the giver of the advance but not till then. The learned counsel for the assessee relied on the decision of the Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC) wherein it was held by the Hon'ble apex Court that where Question as to whether taxability of certain receipt arises, the same has to be decided according to principles of law and not in accordance with accountancy practice. It was further held that where a particular receipt is of the nature of income and falls within the c....