| Case ID |
150a8128-d19d-401b-9fed-252fe2063c16 |
| Body |
View case body. Login to View |
| Case Number |
106 of 1976 |
| Decision Date |
Feb 23, 1978 |
| Hearing Date |
|
| Decision |
The court held that the loss sustained by the assessee, a film distributor, was a trading loss allowable under section 28 of the Income-tax Act, 1961. The assessee had advanced moneys to film producers for distribution rights, and upon realizing that the distribution did not cover the advances, he wrote off the irrecoverable amount. The court emphasized that such losses are incidental to the business of film distribution and accepted commercial practices. The decision favored the assessee, confirming that the loss was indeed a trading loss arising in the course of business. |
| Summary |
In the landmark case of P. Satyanarayana v. Commissioner of Income Tax, the Supreme Court addressed the complexities surrounding business losses and deductions under the Income-tax Act, 1961, specifically section 28. The case revolved around the financial intricacies faced by film distributors when advancing funds to producers for acquiring distribution rights. The court's ruling underscored the accepted commercial practices in the film industry, where distributors often face losses due to the unpredictable nature of film success. This case serves as a significant reference for understanding how trading losses are treated under tax law, especially in the entertainment sector. Keywords such as 'Income-tax Act', 'trading loss', 'business deductions', and 'film distribution' are vital for SEO optimization, as they reflect trending topics in financial law and tax regulations. The ruling not only clarified legal interpretations but also reinforced the importance of recognizing legitimate business losses as deductible expenses. This decision has implications for future cases involving similar circumstances, making it a cornerstone for legal practitioners in tax law. |
| Court |
Supreme Court
|
| Entities Involved |
Not available
|
| Judges |
S. Obul Reddi, CJ,
Mrs. Amareswari, J
|
| Lawyers |
Not available
|
| Petitioners |
P. Satyanarayana
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1979 SLD 732,
(1979) 116 ITR 803
|
| Other Citations |
Badridas Daga v. CIT [1958] 34 ITR 10 (SC),
B.D. Bharucha v. CIT [1967] 65 ITR 403 (SC),
CIT v. R.B. Jairam Valji [1959] 35 ITR 148 (SC),
CIT v. Ramchandar Shivnarayan [1972] 84 ITR 296 (AP),
CIT v. Y.V. Sreenivasa Murthy [1967] 63 ITR 306 (Mys.),
Devi Films (P.) Ltd. v. CIT [1970] 75 ITR 301 (Mad.),
Indore Malwa United Mills Ltd. v. State of MP [1965] 55 ITR 736 (SC),
CIT v. South India Pictures Ltd. [1956] 29 ITR 910 (SC),
Ramchandar Shivnarayan v. CIT [1978] 111 ITR 263 (SC),
CIT v. Coimbatore Pictures (P.) Ltd. [1973] 90 ITR 452 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28,
36(2)
|