1984 (11) TMI 6

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.... Telugu feature film by name "Srikrishna Satya". This film was released on December 24, 1972. The assessee claimed the entire cost of production for his Telugu film "Kodalu Diddina Kapuram " as deduction for assessment year 1971-72 and the cost of lease rights amounting to rupees 10 lakhs as a deduction for the assessment year 1972-73. The claims were based on a circular of the Central Board of Direct Taxes, dated October 4, 1969. This circular mentions that an assessee can claim write-off of the entire cost of a picture be it a producer or a distributor in the year in which the picture is released. It is on the basis of this circular that the assessee wrote off the cost of the picture in one year and the cost of purchase of lease rights in....

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....of the partnership. The department contended that this amounts to "transfer of asset" within the meaning of section 34(3)(b) and as such the claim for development rebate is not allowable. It may be mentioned in this context that all the three Tribunals, i.e., the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal found on facts that there was a partition in the family on January 1, 1972. However, the Tribunal held that there was no "transfer" within the meaning of section 34(3)(b) inasmuch as there was no transfer by the assessee as contemplated under the said section and in any event no transfer was involved at all. It is on these facts that the Revenue sought the reference on these two questions : "1.Whether, on ....

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....ld be applicable and the subsequent withdrawal of the circular during the assessment year would have no effect. A special leave application filed against this judgment of the Kerala High Court was dismissed by the Supreme Court on November 17, 1982, vide CIT v. Geeva Film. We have, therefore, no hesitation in holding that the circulars which are in force during the relevant assessment years are the circulars that have to be applied and the subsequent circulars either withdrawing or modifying the earlier circulars have no application. Accordingly we answer the first question in the affirmative and in favour of the assessee. Question No. 2.-The Hindu undivided family is the assessee herein. Admittedly, there was a partition and the partiti....