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TMI Blog2015 (5) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the disallowance. - Decided in favour of assessee. Deduction section 80J - whether business of production of films constitutes an industrial undertaking ? - Held that:- As relying on Commissioner Of Income-Tax Versus DK. Kondke [1991 (3) TMI 82 - BOMBAY High Court] if the production of a cinematograph film amounts to manufacture of an article or goods within the meaning of section 104 (40(a) as it then stood, it follows that the said activities must be treated as that of an industrial undertaking within the purview of Section 80J of the Act.Accordingly, the activities of production of a film amounted to manufacturing of an article or goods. The activities be treated as those of an industrial undertaking within the purview of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppy were paid ₹ 3,00,000/- and ₹ 1,50,000/- respectively for directing and producing a film. The Income Tax Officer ('the ITO') applied the provisions of Section 40(3) of the Act which was in force at the relevant time and disallowed the payment in excess of ₹ 72,000/- in respect of the payments made to each of these persons. The Commissioner of Income Tax (Appeals) upheld the order of the ITO. In second appeal the Appellate Tribunal relying on its earleir decision on the issue deleted the addition made by the ITO. 4. The assessee had claimed to be industrial undertaking undertaking and sought deduction under Section 80J of the Act. The ITO rejecting the application claimed that the assessee being in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a rider that whether the assessee satisfies the conditions of the said Section as it then stood, will have to be ascertained by the authorities below. 7. As far as the first question is concerned, we find that the disallowance made by the ITO under section 40(c) of the Act was not justified. The amounts paid to the two individuals were not paid in their capacity as members of the Board of Directors but these amounts were paid as professional charges for directing and producing a film. The revenue is, therefore, not justified in disallowing the claim, the character of the remuneration mode being different. As we have observed above, we are of the view that the Tribunal was right in deleting the disallowance. Accordingly, we answer t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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