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Issues involved: Determination of whether the production of cinematograph films qualifies as an 'industrial undertaking' for the purpose of deduction under section 80J of the Income-tax Act, 1961 for the assessment years 1972-73, 1973-74, and 1974-75.
Summary: The High Court of Bombay was tasked with deciding whether the production of cinematograph films by the assessee constituted an 'industrial undertaking' eligible for deduction under section 80J of the Income-tax Act, 1961. The assessee had started producing motion pictures in Marathi during the relevant assessment year and sought the benefit of the deduction. The Income-tax Officer initially denied the claim, questioning whether the film industry fell within the scope of section 80J. Upon appeal, the Appellate Assistant Commissioner supported the claim based on a circular by the Central Board of Direct Taxes and a judgment by the Gujarat High Court. The Income-tax Appellate Tribunal further examined the matter, considering the definition of 'industrial undertaking' and relevant judgments, including those under the Central Excises and Salt Act, 1944. The Tribunal concluded that film production constituted an 'industrial undertaking' based on commercial understanding and definitions from dictionaries. The High Court concurred with the Tribunal's interpretation, emphasizing the circular's continued relevance and the common-sense view that film production qualifies as a manufacturing activity. The Court ruled in favor of the assessee, affirming that film production is an 'industrial undertaking' under section 80J, with further assessment of other conditions left to the lower authorities as directed by the Tribunal. Therefore, the High Court of Bombay affirmed that the production of cinematograph films qualifies as an 'industrial undertaking' for the purpose of deduction under section 80J of the Income-tax Act, 1961, for the specified assessment years.
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