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TMI Blog1989 (11) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-83 for which the previous year ended on 30-9-1981. The assessee had claimed a sum of Rs. 76,520 as investment allowance on account of new machinery installed in its business for the purpose of processing and printing of cinematograph films, amounting to Rs. 3,06,080. The Income-tax Officer disallowed the assessee's claim for said investment allowance in the following words in the assessment order : " The assessee had claimed investment allowance of Rs. 76,520 on account of purchase of certain machineries. The assessee has submitted the details of purchase of machineries. On the scrutiny of the same it is found that the assessee has purchased machinery in processing and printing of cinematograph films amounting to Rs. 3,08,080 and has cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment allowance. It was further argued that the assessee received raw films from the producers and produced release prints therefrom for supply to producers. It was submitted that for this purpose the raw prints were taken through printing machine, processing machine and the use is made of developer, fixer, bleacher and stabiliser. The release print is utilised for exhibition of the picture in the theatre. The assessee contended that this business carried on by the assessee amounted to manufacture or production of an article or thing. In support of this submission the assessee relied on definition of 'manufacture' given in Corpus Juris Secundum and also on the decision of the Punjab and Haryana High Court in the case of Raghbir Chand Som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsformed into a negative film with the help of the solutions. The CIT(A) therefore held that during this stage the assessee's activities were only of processing and that the assessee could not be said to have produced or manufactured any article or thing when it prepares the negative films. 5. During the second stage, the Commissioner found that the negative film is used to prepare the release prints on the basis of work print, as it is only with reference to the work print that the necessary formalities of Censor Board, etc., are completed and the editing, dubbing or any other activities, are carried on. He pointed out that after this, the assessee prepares as many number of final release prints as are required by the producers and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,080. 6. In support of his conclusion the CIT(A) relied on the following decisions : 1. Amiya Kumar Tarafdar v. ITO [1985] 14 ITD 172 (Cal.) 2. Anwar Khan Mehboob Co. v. State of Bombay [1960] 11 STC 698 (SC) 3. A. Hajee Abdul Shukoor Co. v. State of Madras [1964] 15 STC 719 (SC) 4. State of Madras v. Swasthik Tobacco Factory [1966] 17 STC 316 (SC) 5. CIT v. Ajay Printery (P.) Ltd. [1965] 58 ITR 811 (Guj.). The Commissioner therefore finally held that the exposed raw films in the first stage only undergoes a change or it alternates its form before the conversion of raw films into negative film, and that it amounts only to processing but that in the second stage with the help of the negative, the assessee prepares further pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the first stage of its activity the assessee was only processing the raw films when it converted it into a negative, ought to have further held that the release prints obtained by the assessee was also the result of processing only and that it would not amount to either manufacturing or production of an article or thing. He further submitted that even though the ITO seemed to have accepted the assessee's claim that it was a small scale industrial undertaking, yet the assessee would not be entitled to any relief as its case would be hit by the exclusion clause contained in section 32A(2)(b)(iii) since the assessee was producing cinematograph films specified in item No. 9 of the 11th Schedule which was excluded from the benefit of inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of 32A(2)(b)(ii) of the Act which applies to a Small Scale Industrial Undertaking. The learned counsel pointed out that the exclusion clause in sub-clause (iii) would not apply to sub-clause (ii) which would apply to the assessee's case and that the ITO had accepted as a fact that the assessee is a small scale industrial undertaking. He therefore submitted that the order of the CIT(A) was correct both on facts and in law and that the same should be upheld. 9. On a careful consideration of the submission urged by both sides and in the light of the materials placed before me, I am of the considered view that the decision of the CIT(A) is correct and that the same has to be upheld. The revenue does not dispute any of the facts found by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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