Judgment

SHAH, J. : The respondents are a firm constituted under a deed dated December 12, 1947. The firm originally consisted of three partners: K. N. Damodra Mudaliar, A. Krishnaswami Mudaliar and V. Thangaraja Mudaliar. K. N. Damodra Mudaliar acquired for the firm for Rs. 1,00,000/- the exploitation rights which were to ensure for four years in a cinematograph film "Apoorva Chinthameni" for the North Arcot, the South Arcot and the Chingleput Districts and for Pondicherry. For the period, December 25, 1947 to August 2, 1948 which was "the previous year" corresponding to the assessment year 1949-50 the firm filed a voluntary return declaring that Rs. 28,643/- were earned by the exploitation of the film. In the statement submitted by the firm the total receipts credited in the firm s books were Rs. 1,46,849/-, and against that amount were debited Rs. 18,206/- as expenses and Rs. 1,00,000/- as the amount disbursed for acquiring the exploitation rights. Thereby in the computation of the profits of the business, the firm debited the amount paid for acquiring the rights of exploitation of the film, but did not take credit for the value of the unexpired exploitation rights at the end of