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TMI Blog2019 (2) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... uted by Sections 80IA and Section 80IB by Finance Act, 1999 w.e.f. 01.04.2000. The block assessment period for which this appeal relates is 01.04.1986 to 30.01.1997, and the applicable law is Section 80IA of the Act as it stood before 01.04.2000. Therefore we cannot say that ld. CIT(A) fell in error in applying the judgment of Hon’ble Bombay High Court in the case of Jyoti Prakash Dutta (supra), which was in relation to section 80IB. Production of a cinema film would amount to manufacturing or processing of goods- The project of the assessee on which it had claimed deduction u/s.80IA of the Act was not formed by splitting up or reconstruction of a business already in existence. Assessee was running a production house and each new project for a new film, in our opinion cannot be considered as split up or reconstruction of the business already in existence. It may be true that assessee had used machinery already available with it, alongwith hired machinery for the new film project. However, nothing has been brought on record by the Revenue to show that there was any transfer of used machinery or plant to a new business. That production of a cinema film would amount to manufacturing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achinery for various separate projects, and as such is distinguishable to the facts of the present case. 2.2. The ld. CIT(A) ought to have appreciated the findings of the AO in the assessment order under consideration that the assessee has not fulfilled any of the conditions laid down in clause (i) to (iii) subsection (2) to section 80lA of the IT Act and since the assessee has not brought out any new evidence even during the appeal proceedings to counter the holdings of the AO and as such the ld.CIT(A) ought to have upheld the denial of deduction u/s 80lA of the IT Act in the said assessment order passed u/s. 143(3) r.w.s.158BC r.w.s. 264 of the IT Act on 31.03.2016, in the assessee's case for the Block Period 01.04.1986 to 31.03.1996 & 01.04.1996 to 30.01.1997''. 2. Genesis of this Department appeal is an assessment done on 31.03.2016 by Deputy Commissioner of Income Tax, Central Circle 1(4), Chennai, pursuant to Tribunal directions in IT(SS) No.23/Mds/2012, dated 31.01.2013. What was held by this Tribunal in the above order in so far as it relates to the issue on hand is reproduced hereunder:- ''2.In this appeal filed by the Revenue, the brief facts are that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdictional High Court has held as under : "10. As far as the first question of law as to whether the assessee is eligible for the benefit under Section 80IA of the Income Tax Act is concerned, except for the question as to whether the assessee's activity is manufacture or production, we do not find any discussion as to whether the assessee had satisfied other criteria in the section, particularly Sub-clause (ii) to sub-section (2) to section 80-IA of the Income Tax Act, which reads as under : "80IA (1) …….. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:- (i) it is not formed by splitting up, or the reconstruction………….. (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose; ………….." 11. In the absence of any such discussion on the above and as pointed out in the decision of the Bombay High Court reported in (1991) 192 ITR 128 (Commissioner of Income-Tax v. D.K. Kondke), it is but necessary that the Assessing Officer has to re-work whether the assessee had satisfied all the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sine Nineteen Eighties and production of a new movie, though it could be construed as a new project was nothing but splitting up or reconstruction of a business already in existence. Further, as per the ld. AO, assessee also could not show that it was not formed by the transfer to a new business of a machinery or plant previously used for any purpose. Ld. AO noted that assessee through its letter dated 27.02.2015 had admitted using machinery owned by it, other than items like camera and lenses which were hired from outside parties for the new film projects undertaken during the relevant previous year. Ld. AO also came to a conclusion that assessee could not satisfy clauses (v) since all its personnel like artists, music director, cinematographer, cameraman, associate camera men, lyrics writer, art director etc were employed on contract basis. Thus, according to the ld. AO assessee had not employed more than ten workers for manufacturing purpose. Effectively, he held that assessee had not satisfied clauses (i) (ii) and (v) of Sub Section (2) of Section 80IA of the Act and denied the claim of deduction of ₹ 2,20,23,331/-, made under the said Section. 3. Assessee's appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking or a hotel or operation of a ship or developing, maintaining and operating any infrastructure facility or scientific and industrial research and development or providing telecommunication services whether basic or cellular including radio paging, domestic satellite service or network of trunking and electronic data interchange services or construction and development of housing projects or operating an industrial park or commercial production or refining of mineral oil in the North- Eastern Region or in any part of India on or after the 1st day of April, 1997 (such business being hereinafter referred to as the eligible business), to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6). (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely (i) it is not formed by splitting up, or the reconstruction, of a business already in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istrict as the Central Government may, having regard to the prescribed guidelines, by notification in the Official Gazette, specify in this behalf, as an industrially backward district of Category A or an industrially backward district of Category B, and, it begins to manufacture or produce articles or things or to operate its cold storage plant or plants at any time during the period beginning on the 1st day of October, 1994, and ending on the 31st day of March, 2000; (d) in the case of an industrial undertaking being a small scale industrial undertaking, not specified in sub-clause (b) or in sub-clause (c), it begins to manufacture or produce articles or things or to operate its cold storage plant at any time during the period beginning on the 1st day of April, 1995 and ending on the 31st day of March, 2000; (v) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power. Section 80IA of the Act was substituted by Sections 80IA and Section 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. Explanation 2.- Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent. of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with ; (iv) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power''. Conditions stipulated in Sub Section (2) of both the Sections are more or less pari materia .The block assessment period for which this appeal relates is 01.04.1986 to 30.01.1997, and the applicab ..... 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