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[2007] 292 ITR 126 (MAD.) HIGH COURT OF MADRAS A.M. Rathnam v. Deputy Commissioner of Income-tax P.D. DINAKARAN AND MRS. CHITRA VENKATARAMAN, JJ. T.C. (A) NO. 73 OF 2002 JANUARY 3, 2007 Section 29 of the Income-tax Act, 1961 - Computation of business income â–  Where assessee was not a film producer but only a film distributor, in respect of films claim of cost of acquisition would come only under rule 9B(4) as against claim of assessee that it would come under rule 9A(6) [Assessment year 1997-98] Rule 9A deals with deduction in respect of expenditure on production of feature film. On the other hand, rule 9B alone deals with the deduction in respect of distributors. Where the assessee was not a film producer but only a film distributor, in respect of the films, the claim of cost of acquisition would come only under rule 9B(4) as against the claim of the assessee that it would come under rule 9A(6). Where assessee purchased distribution rights of film, and exhibited film, in some theatres and then sold distribution rights of film to another distributor in respect of two areas, deduction claim made by assessee in respect of expenditure and acquisition and distribution rights of feature film came under rule 9B(3)(c ) as against claim made by assessee under rule 9B(2)(a) [Assessment year 1997-98] â–  Where the assessee purchased the distribution rights of film, the assessee exhibited the film in some of the theatres, and then sold the distribution rights of the film to another distributor in respect of two areas and the question for consideration was whether the Tribunal was justified in holding that deduction claim made by the assessee in respect of expenditure and acquisition and distribution rights of feature films came under rule 9B(3)(c) as against the claim made by the assessee under rule 9B(2)(a). Held that there was no merit in the assessee's contention that the term, 'certain areas' found in rule 9B(3)(c) would not mean theatres and that it should be understood to mean the entire area. A plain reading of rule 9B(3)(c) would make it clear that even if the assessee retains one theatre for the release of the movie by himself, and sells the remaining…

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