Rule 9B : Cost of prints cannot be clubbed with cost of acquisition of distribution rights of films for carried forward of unabsorbed cost

Brief of the Case

Delhi High Court held In the case of Honey Enterprises. vs. CIT that the Assessee has sought to club the two expenses, that is, the cost of acquisition of distribution rights of films and the cost of prints for the purposes of charging the same against realizations from those films and for carrying forward the excess to the next year for the purposes of Rule 9B of the Rules. However, this is not permissible in terms of the explanation to Rule 9B (1) of the Income Tax Rules. In our view, the plain language of Rule 9B(3) of the Rules is unambiguous and the expression “amount realized” must be given its plain meaning; that is, the amount realized by the Assessee without accounting for any expenditure that is incurred by the Assessee in its business.

Facts of the Case

ITA 163/2002

The Assessee is a partnership firm engaged in the business of distribution of Hindi motion-pictures/films in the Territory of Delhi and Uttar Pradesh. The Assessee filed its return of income on 31st October, 1992 for the AY 1992-93 declaring an income of Rs.1,13,380/-. The return was initially processed under Section 143(1)(a) and, subsequently, picked up for scrutiny.

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