TaxTMI 
TaxTMI 
1993 (3) TMI 201
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the books of accounts of the assessee. In other words, the cost of production of film as reflected in the books of accounts was adopted as against the market value of the film shown by the assessee at a lower figure. The assessment orders and the appellate order revealed the respective cost of production of films shown as per the books of accounts and the market value returned by the assessee for those films. 3. The relevant facts are that the assessee is an individual. The assessee, a film producer, has valued the incomplete film produced as on the valuation date at a throw away price in terms of section 7(1) of the Wealth-tax Act, vis-a-vis the actual cost of production shown in the balance sheet wherein such incomplete films are sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; sheet Officer ------------------------------------------------------------------------- 1 2 3 4 5 ------------------------------------------------------------------------- 1979-80 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sis of valuation is the price it would fetch in the open market if sold on the valuation date. 6. The Dy. CWT (A) held that incomplete film is just like works-in-progress in an industrial concern and it would not fetch full price if sold in the open market. But, however, on the principles of accounting it is always valued at cost and therefore, that principle would apply to the valuation of incomplete film also. Therefore, he concluded that it would be reasonable to estimate the value of incomplete pictures at the cost of production thereof. As regards the assessment year 1984-85, the film "Kulaswamini Ambabai" was under production and the expenses amounted to Rs. 7,46,058 which is said to have fetched actual collection of Rs. 2,50,000 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is required to be applied in this case. Section 7(1) contemplates that subject to any rules made in this behalf, the value of any asset, other than cash, for the purpose of this Act, shall be estimated to be the price which, in the opinion of the Assessing Officer, it would fetch if sold in the open market on the valuation date. Thus, the general rule of method of valuation is contained in section 7(1) of the Wealth-tax Act. However, subsection (2) of section 7 contains an obstante clause, namely, notwithstanding anything contained in section 7(1). In this sub-section, clause (a) is relevant and it provides that where the assessee is carrying on a business for which accounts are maintained by him regularly, the Assessing Officer may, instea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... expenditure incurred on the film production in the relevant previous year in the Income-tax assessment is the criterion for adopting the value of such incomplete film on the valuation date. Rules pertaining to the amortisation would apply only when production of film is completed and certified for release by the Board of Film Censors and not at earlier stage of incomplete production. Adjustment by way of market value would arise only if it is more than 20 per cent of the written down value or book value or value adopted for the purpose of Income-tax. Even such adjustment does not arise in the case of incomplete production of film which is treated as investment. After 1-4-1989, the rules for determination of value of assets have been incorp....