Law: Income Tax Act, 1922

Section: 10(2)(xv)

Income-tax-Business expenditure-Whether reasonableness of expenditure can be gone into-Business of distribution and exhibition of films - Film exhibited for twenty-five weeks-Celebrations connected therewith-Expenditure incurred for presentations whether laid out for business and allowable-Indian Income-tax Act, 1922, S. 10(2)(xv). The jurisdiction of the revenue under section 10(2)(xv) of the Indian Income-tax Act, 1922, is confined to deciding the reality of the expenditure, namely, whether the amount claimed as deduction was factually expended or laid out and whether it was wholly and exclusively for the purpose of the business. The reasonableness of the expenditure could be gone into only for the purpose of determining whether, in fact, the amount was spent. The assessee, a firm engaged in the distribution and exhibition of films, claimed as business expenditure the deduction of a sum of Rs. 13,376 which it had expended in connection with celebra tion of twenty-five weeks of exhibition of a particular film and presentation of shields to theatres, artists and others: Held, that the sum in question was an expenditure laid out for the purpose of the business of exhibiting films and, hence, allowable under section 10(2)(xv). Sanjeevi & Co. v. Commissioner of Income-tax (1966) 62 I T R 156 fol. JUDGMENT VEERASWAMI, J.-The assessee claimed as deduction under section 10(2)(xv) of the Income-tax Act, 1922, a sum of Rs. 13,376 as expenditure laid out wholly and exclusively for purposes of the business. The claim was disallowed by the Income-tax Officer, who was of the view that the sum was not expended for commercial expediency. The Appellate Assistant Commissioner, however, agreed with the assessee, being of opinion that the expenditure was a normal feature and tended to bring a better market for the picture. The Tribunal reversed that order and that is how the reference arises under section 66(2). The question referred is : "Whether, on the facts and in the circumstances of the case, the disallowance of a sum of Rs. 13,376 out of the expenses incurred by the petitioner in connection with the Silver Jubilee run of picture `Kalyana Parisu' is…