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Issue related to cinema hall owner

Priyanka.S (Articled Student) (168 Points)

09 May 2017

Whether Income from Business of exhibition of cinema in cinema hall can be shown as a rental income.Kindly provide case laws if any

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5 Replies

Studentsca (CA Practice ) (3577 Points)
Replied 09 May 2017

You have clearly stated that it is income from business of cinema then can it be rental income??

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Priyanka.S (Articled Student) (168 Points)
Replied 09 May 2017

Whether the Income derived from exhibition of cinema can be shown as rental income or not is the doubt?

(Guest)

That depends on the type of agreements between the hall owner and the distributor

For eg, Leasing agreements (the distributor leases out the hall for screening of the movie), Revenue sharing agreements, Agreement in the nature of sale of goods (the theatre owner buys the print of the film by payment of fixed price), Agreement to screen the movie for fixed period etc

Studentsca (CA Practice ) (3577 Points)
Replied 09 May 2017

If there is a rent agreement between the owner and the person who has taken the place and the person receives fixed rent then the rental income can be shown as Business Income or Income From Other Sources depending upon the facts of the case. Other wise it is business income only.

(Guest)

Ajit & Company , Jaipur 2017 (HC)The cinema was exclusively owned and managed by the cinema owner and the assessee was having no interference with selecting the films, exhibiting the films, issuing tickets, paying tax, maintaining statutory Compliances Whatsoever. Thus the agreement was not of letting out but was for conduct of business. Therefore, the view taken by the Tribunal is just and proper, no interference is called for. In the opinion of this court, is not rent it was the collection which was assured by the parties to the agreement.