Law: Income Tax Act, 1961

Section: 145

Section 145 of the Income-tax Act, 1961 [Corresponding to section 13 of the Indian Income-tax Act, 1922] - Method of accounting - Valuation of stock - Assessment year 1957-58 - Claim of assessee-company carrying on business as producers and distributors of films to deduct total cost of preparing positive prints of certain films which were distributed for screening and exploitation during first half of relevant accounting year was disallowed by ITO on ground that expenditure was of capital nature of which amortisation could be claimed in accordance with Board's circulars - Whether where a positive of a film got exhausted in six months and that period of six months fell within accounting year of assessee, it would not be fair to assessee to compel him to attribute a value to it at end of year including it inclosing stock and, thus, closing stock value must be nil on hypothesis that positive print was a mere junk after a six-month user - Held, yes - Whether scheme of amortisation allowance distributed over a range of three years 6 per cent for first year, 25 per cent for next year and 15 per cent for third year was based upon prevalent view which was in accord with practical knowledge and experience that normal span of life of a film negative was three years and was seldom more - Held, yes - Whether where till 30-9-1955 assessee claimed as expenses entire cost of positives, for more than six months in accounting year, and rest having not been screened for full six months, were treated as stock-in-trade at their full value, independent of cost of production amortised under prescription of Central Board of Revenue, assessee's claim to allow total cost of positive as a revenue expenditure had to be upheld treating them as stock-in-trade having ceased to have any value at end of year - Held, yes - Whether in absence of a finding that true profit of assessee could not be deduced from method of accounting regularly employed by it, proviso to section 13 could not be invoked - Held, yes - Whether on finding that positives were screened for exhibitions during accounting year and had been screened for six months prior to end of accounting year and finding that after 150…

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