Law: Income Tax Act, 1922

Section:

Income-tax----Additions to income ---Assessee, a film artiste, entering into agreement with a company---Object of company to provide artistes, technicians, etc., to film producers---Company entering into agreement with film producers directly and receiving all payments ---Assessees services made available to company under agreement---Company agreeing to pay certain amounts per annum as remuneration to assessee---ITO making additions to income of assessee on ground that company controlled by assessees brother and mother and agreement with company was to evade tax ---Assessee entitled only to certain amount as remuneration per annum and not to entire sum paid by producers to company---No material brought on record by Revenue to show that there was attempt to evade tax---Additions to income not justified. The assessee, a film artiste, had a permanent assignment with a company, whose object was to make available artistes, technicians, etc. to various film producers. Under the terms of the agreement entered into between the assessee and the company, the assessees services were made available to the company for which the said company had agreed to pay a remuneration of Rs.80,000 per annum to the assessee. The company had entered into agreements with film producers directly and received all payments. In the previous year relevant to the assessment years 1972-73 and 1973-74, the assessee had acted in two movies and five movies for which the company got Rs.45,001 and Rs.3,35,001, respectively. For the years 1972-73 and .1973-74, the assessee declared Rs.1,65,712 and Rs.2,30,976, respectively, in her returns of income for the above years which included Rs.80,000 received by the assessee from the company. The Income Tax Officer took the view that the assessee had entered into the agreement with the company with a view to avoid tax, that the company was controlled by the assessees brother and her mother, who was also a leading film star, and hence added Rs.45,001 to the total income of the assessee for the assessment year 1972-73 and Rs.3,35,000 for the assessment year 1973-74. The Appellate Assistant Commissioner deleted the additions made by the Income Tax Officer. The…

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