DCIT Central Circle 1(4), CHENNAI V. KT Kunjamon, CHENNAI

ITSSA 6/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4063 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS M SUBASHREE
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Depreciation; Question of law; Block assessment
• Section: 263; 132; 143(3); 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.(SS)A. NO. 06/CHNY/2018 / ASSESSMENT YEAR : BLOCK ASSESSMENT PERIOD 01.04.1986 TO 31.03.1996 01.04.1996 TO 30.01.1997 THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4) CHENNAI. VS. SHRI. K T KUNJU MON, BUDDHA STREET, ASHOK NAGAR, DIRECTORS COLONY, KODAMBAKKAM, CHENNAI 600 024. [PAN AC ZPK 1724A ] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS. M. SUBASHREE, IRS, JCIT. /RESPONDENT BY : SHRI.B. RAM AKRISHNAN, C.A. /DATE OF HEARING : 07 - 0 2 - 201 9 /DATE OF PRONOUNCEMENT : 12 - 0 2 - 201 9 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE, WHICH I S DIRECTED AGAINST AN ORDER DATED 31.01.2018 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-18, CHENNAI. OF THE THREE GROUNDS RAISED BY THE REVENUE, GROUNDS 1 AND 3 ARE GENERAL NEEDING NO SPECIFIC ADJ UDICATION. GROUND NO.2, BEING THE ONLY EFFECTIVE GROUND IS REPRODUC ED HEREUNDER:- IT(SS)A NO.6/2018. :- 2 -: 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S. 8 0LA OF THE IT ACT THEREBY DELETING THE DISALLOWANCE OF RS. RS.2,20,23,331/- MADE BY TH E ASSESSING OFFICER(AO) IN THE ASSESSMENT ORDER PASSE D 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 PE RIOD 01.04.1986 TO 31.03.1996 & 01.04.1996 TO 30.01.1997. 2.1 HAVING RELIED ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS JYOTHI PRAKASH DUTTA (I TA NO. 540/2012) TO HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80LA OF THE IT ACT, THE LD. CIT(A) O UGHT TO HAVE APPRECIATED THAT THE SAID DECISION WAS IN THE CONTEXT OF DEDUCTION U/S. 80LB OF THE IT ACT AND THE FILM PRODUCTION UNIT OF THE CASE DISCUSSED THEREIN WAS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE, WHEREAS IN THE PRESENT CASE IT IS DENI AL OF DEDUCTION U/S. 80LA ON THE GROUND THAT THE CAMERA, LENSES ETC. ARE HIRE D FROM THE OUTDOOR UNIT AND THAT THE ASSESSEE HAS ACCEPTED THAT THEY ARE RE-USING THE OLD MACHINERY FOR VARIOUS SEP ARATE PROJECTS, AND AS SUCH IS DISTINGUISHABLE TO THE FAC TS OF THE PRESENT CASE. 2.2. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE F INDINGS OF THE AO IN THE ASSESSMENT ORDER UNDER CONSIDERATI ON THAT THE ASSESSEE HAS NOT FULFILLED ANY OF THE COND ITIONS LAID DOWN IN CLAUSE (I) TO (III) SUBSECTION (2) TO SECTION 80LA OF THE IT ACT AND SINCE THE ASSESSEE HAS NOT B ROUGHT OUT ANY NEW EVIDENCE EVEN DURING THE APPEAL PROCEEDINGS TO COUNTER THE HOLDINGS OF THE AO AND A S SUCH THE LD.CIT(A) OUGHT TO HAVE UPHELD THE DENIAL OF DEDUCTION U/S 80LA OF THE IT ACT IN THE SAID ASSESS MENT 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 FO R 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 DIRECTIO NS IN IT(SS) NO.23/MDS/2012, DATED 31.01.2013. WHAT WAS HELD BY THIS TRIBUNAL IN IT(SS)A NO.6/2018. :- 3 -: THE ABOVE ORDER IN SO FAR AS IT RELATES TO THE IS SUE ON HAND IS REPRODUCED HEREUNDER:- 2.IN THIS APPEAL FILED BY THE REVENUE, THE BRIEF FACTS ARE THAT THE ASSESSEE WAS MAINLY CARRYING ON THE BUSINESS OF PRO DUCTION, DISTRIBUTION AND EXPLOITATION OF MOVIE FILMS. THERE WAS A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT) ON 20- 01-1997. THE BLOCK ASSESSMENT PROCEED INGS WERE INITIATED AND NOTICE U/S 158BC WAS ISSUED. IN RESPO NSE TO THAT THE ASSESSEE FILED THE RETURN OF INCOME AND THE BLOCK A SSESSMENT WAS COMPLETED ON 29-01-1999. THE ASSESSING OFFICER IN T HE ORIGINAL ASSESSMENT ORDER ALLOWED DEDUCTION UNDER SECTION 80 - IA OF THE ACT. THEREAFTER, THE COMMISSIONER OF INCOME BY EXER CISING POWER U/S 263 OF THE ACT SET ASIDE THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER BY ORDER DATED 10-3-2010 AND DIRE CTED HIM TO RE-DO THE ASSESSMENT. ACCORDINGLY, THE ASSESSMENT W AS COMPLETED WHEREIN SEC. 80-IA CLAIM WAS DISALLOWED. AGAINST THE ASSESSMENT ORDER PASSED IN PURSUANCE OF SEC. 263 OR DER PASSED BY THE CIT, THE PRESENT APPEAL HAS BEEN FILED WHERE IN THE ASSESSEE HAS RAISED THE SPECIFIC GROUND THAT HE IS ELIGIBLE FOR 80IA DEDUCTION. THE CIT(APPEALS) BY CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE ALLOWED THE CLAIM OF SEC. 80-IA OF THE ACT. IT WAS SUBMITTED BEFORE THE CIT(APPEALS) THAT ONE MR. FRAN CIS JOSEPH IS ALSO ENGAGED IN THE FILM PRODUCTION AND THE FACTS A RE IDENTICAL IN HIS CASE AND THE CHENAI BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 17-08- 2004 IN I.T.A NO. 183/MDS/1997 HAS ALLOWED T HE CLAIM OF DEDUCTION U/S 80-IA AND THEREFORE THE CLAIM OF THE ASSESSEE ALSO HAS TO BE ALLOWED. AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE THE CIT(APPEALS) ALLOWED THE DEDUCTION U/S 80-IA BY TAKING INTO CONSIDERATION THE DECISION OF THE TRIBU NAL IN THE CASE OF FRANCIS JOSEPH, SUPRA. WHEN THIS APPEAL WAS CALL ED FOR HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE CARRIED THE MATTER IN APPEAL AGAINST THE ORDER OF T HE TRIBUNAL IN THE CASE OF FRANCIS JOSEPH IN ITA NO. 183/MDS/1997 DATED 17-08- 2004. THE HONBLE JURISDICTIONAL HIGH COURT IN TAX CASE (APPEAL) NO. 1318 OF 2005 DATED 22- 06-2012 HELD THAT ON THE SECOND QUESTION FRAMED, VIZ. WHERE, IN THE FACTS AND CIRC UMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT TH E PRODUCER OF A FEATURE FILM IS AN INDUSTRIAL UNDERTAKING ENGAGED IN THE MANUFACTURE OF PRODUCTION OF GOODS FOR THE PURPOSE OF SECTION 80- IA, IT HAS BEEN HELD IN FAVOUR OF THE ASSESSEE. IT(SS)A NO.6/2018. :- 4 -: 3. INSOFAR AS FIRST QUESTION FRAMED IS CONCERNED, T HE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER : 10. AS FAR AS THE FIRST QUESTION OF LAW AS TO WHET HER 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 ASSESSEES 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-CLA USE (II) TO SUB-SECTION (2) TO SECTION 80-IA OF THE INCOME T AX ACT, WHICH READS AS UNDER : 80IA (1) .. (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAK ING 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 BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; .. 11. IN THE ABSENCE OF ANY SUCH DISCUSSION ON THE AB OVE AND AS POINTED OUT IN THE DECISION OF THE BOMBAY HI GH COURT REPORTED IN (1991) 192 ITR 128 (COMMISSIONER OF INCOME-TAX V. D.K. KONDKE), IT IS BUT NECESSARY THA T THE ASSESSING OFFICER HAS TO RE-WORK WHETHER THE ASSESS EE HAD SATISFIED ALL THE CONDITIONS MENTIONED IN SECTI ON 80IA OF THE INCOME TAX ACT. 12. IN THE CIRCUMSTANCES, IF THE ASSESSEE IS ABLE T O PROVE THAT IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE, THEN THE ASSESSEE WOULD QUALIFY FOR DEDUCTION, SINC E HE HAD ALREADY QUALIFIED ON THE OTHER CONDITION, NAMEL Y, MANUFACTURE OF AN ARTICLE OR THING. 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT (SUPRA), THE ISSUE HAS TO GO BACK TO THE ASSESSING OFFICER TO DECIDE T HE ISSUE IN THE LIGHT OF THE OBSERVATIONS MADE BY THE HONBLE JURISDICTIO NAL HIGH COURT. 5. ON THE OTHER HAND, THE LEARNED DR FAIRLY CONCEDE D THE SUBMISSIONS MADE BY THE ASSESSEE. IT(SS)A NO.6/2018. :- 5 -: 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ON LY ISSUE IN THIS APPEAL IS WHETHER THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION UNDER SECTION 80-IA OR NOT. THE CIT(APPEALS) WHILE GRANTI NG THE DEDUCTION U/S 80-IA RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF FRANCIS JOSEPH IN ITA NO. 183/MDS/1ASSESSEE997 DATED 17-08- 2004. THE VERY SAME DECISION WAS CARRIED IN APPEAL BY THE REVENUE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND IN THAT CASE THE HONBLE HIGH COURT HAS HELD THAT THE BENEFIT OF SECTION 80-IA IS AVAILABLE SUBJECT TO SATISFACTION OF THE CONDITIONS LAID DOWN BY SUB-CLA USE (2) TO SEC. 80-IA OF THE ACT AND REMITTED THE MATTER BACK TO THE ASSE SSING OFFICER TO EXAMINE THE ISSUE AFRESH. WE THEREFORE SET ASIDE TH E ORDER PASSED BY THE CIT(APPEALS) AND REMIT THE MATTER BACK TO THE F ILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE DECISION OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF FRANCIS JO SEPH IN TAX CASE (APPEAL) NO. 1318 OF 2005 DATED 22-06-2012. IN THE CIRCUMSTANCES, THE APPEAL FILED BY THE REVENUE IN ITA NO. 23/MDS/2 012 STANDS ALLOWED FOR STATISTICAL PURPOSES . PURSUANT TO THE ABOVE ORDER, LD. ASSESSING OFFICER MADE A RE- EXAMINATION OF THE CLAIM OF ASSESSEEE FOR DEDUCTION U/S.80IA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), AND VE RIFIED WHETHER IT SATISFIED THE CONDITIONS LAID DOWN SUBSECTION (2) O F SECTION 80IA OF THE ACT. LD. AO CAME TO A CONCLUSION THAT ASSESSEE HAD NOT SATISFIED THREE OF THE SUB CLAUSES NAMELY CLAUSES (I), (II) AND (V) OF THE SAID SUB SECTION. ACCORDING TO THE LD. AO, ASSESSEE WAS PRO DUCING MOVIES SINE NINETEEN EIGHTIES AND PRODUCTION OF A NEW MOVIE, TH OUGH IT COULD BE CONSTRUED AS A NEW PROJECT WAS NOTHING BUT SPLIT TING UP OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. FURTHER, AS PER THE LD. AO, ASSESSEE ALSO COULD NOT SHOW THAT IT WAS NO T FORMED BY THE TRANSFER TO A NEW BUSINESS OF A MACHINERY OR PLANT PREVIOUSLY USED FOR IT(SS)A NO.6/2018. :- 6 -: ANY PURPOSE. LD. AO NOTED THAT ASSESSEE THROUGH IT S LETTER DATED 27.02.2015 HAD ADMITTED USING MACHINERY OWNED BY I T, OTHER THAN ITEMS LIKE CAMERA AND LENSES WHICH WERE HIRED FROM OUTSIDE PARTIES FOR THE NEW FILM PROJECTS UNDERTAKEN DURING THE RELEVAN T PREVIOUS YEAR. LD. AO ALSO CAME TO A CONCLUSION THAT ASSESSEE COUL D 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. THU S, ACCORDING TO THE LD. AO ASSESSEE HAD NOT EMPLOYED MORE THAN TEN WOR KERS FOR MANUFACTURING PURPOSE. EFFECTIVELY, HE HELD THAT A SSESSEE 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 RS.2,2 0,23,331/-, MADE UNDER THE SAID SECTION. 3. ASSESSEES APPEAL BEFORE LD. CIT(A) WAS SUCCESSFUL. LD. CIT(A) RELYING ON THE JUDGMENT OF HONBLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. JYOTI PRAKASH DUTTA (2014) 367 ITR 568 HELD THAT ASSESSEE HAD SATISFIED THE CONDITIONS STIPULATED IN SUB SECTION (2) OF SECTION 80IA OF THE ACT AND WAS THUS ELIGIBLE FOR THE DEDUCTION CLAIMED BY IT. 4. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDER OF THE LD. CIT(A) SUBMITTED THA T ASSESSEE WAS USING IT(SS)A NO.6/2018. :- 7 -: ALREADY EXISTING MACHINERY AND THEREFORE IT COULD N OT BE STATED THAT THERE WAS ANY NEW INDUSTRIAL UNDERTAKING WHICH CAM E INTO EXISTENCE DURING THE RELEVANT PREVIOUS YEAR. ACCORDING TO HE R, ASSESSEE WAS ONLY DOING A NEW PROJECT IN THE SAME LINE OF BUSIN ESS OF PRODUCING CINEMAS AND EVERY NEW PROJECT IN THE NATURE OF A NE W CINEMA COULD NOT BE TERMED AS A NEW INDUSTRIAL UNDERTAKING, WH ICH WAS ELIGIBLE FOR DEDUCTION U/S.80IA OF THE ACT. AS PER THE LD. DR, ASSESSEE ADMITTEDLY HAD USED MACHINERY WHICH WERE ALREADY USED FOR ITS OTHER MOVIE PROJECTS. FURTHER, AS PER THE LD. DR, ASSESSEE COU LD NOT SHOW IT HAD EMPLOYED MORE THAN TEN PERSONS IN THE PROCESS OF P RODUCING A MOVIE. AS PER THE LD. DR, THE JUDGMENT OF HONBLE BOMBAY H IGH COURT IN THE CASE OF JYOTI PRAKASH DUTTA (SUPRA ) WAS IN RELATION TO SECTION 80IB OF THE ACT AND NOT SECTION 80IA OF THE ACT, AND HAD NO APPLICABILITY HERE. THUS, ACCORDING TO HER LD. CIT(A) FELL IN ERROR IN GIVING THE BENEFIT OF SECTION 80IA (2) TO THE ASSESSEE. 5. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. HONBLE BOMBAY H IGH COURT HAD CLEARLY HELD IN THE CASE OF JYOTI PRAKASH DUTTA (SUPRA ) THAT AN ASSESSEE WHICH WAS A FILM PRODUCTION UNIT, AND WHICH WAS NO T FOUNDED BY IT(SS)A NO.6/2018. :- 8 -: TRANSFER TO A NEW BUSINESS ANY MACHINERY OR PLANT P REVIOUSLY USED FOR ANY PURPOSE, WAS ENTITLED FOR DEDUCTION U/S.80IB O F THE ACT. NO DOUBT, THE JUDGMENT WAS RENDERED BY THE HONBLE B OMBAY HIGH COURT IN THE CONTEXT OF SECTION 80IA OF THE ACT. S ECTION 80IA OF THE ACT AS IT STOOD BEFORE ITS SUBSTITUTION BY FINANCE ACT, 1999 IS REPRODUCED HEREUNDER:- 80-IADEDUCTION IN RESPECT OF PROFITS AND GAINS FR OM INDUSTRIAL UNDERTAKINGS, ETC., IN CERTAIN CASES.(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FRO M ANY BUSINESS OF AN INDUSTRIAL UNDERTAKING OR A HOTEL OR OPERATION OF A SHIP OR DEVELOPING, MAINTAINING AND OPERATING ANY INFRASTRUCTURE FACILI TY OR SCIENTIFIC AND INDUSTRIAL RESEARCH AND DEVELOPMENT OR PROVIDING TE LECOMMUNICATION 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 O R OPERATING AN INDUSTRIAL PARK OR COMMERCIAL PRODUCTION OR REFINING OF MINERA L 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 ACCORDA NCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTIN G THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS O F AN AMOUNT EQUAL TO THE PERCENTAGE SPECIFIED IN SUB-SECTION (5) AND FOR SUC H NUMBER OF ASSESSMENT YEARS AS IS SPECIFIED IN SUB-SECTION (6). (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAK ING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONSTRUC TION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF AN INDUSTRIAL UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE- ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BU SINESS OF ANY SUCH INDUSTRIAL UNDERTAKING AS IS REFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; IT(SS)A NO.6/2018. :- 9 -: (III)IT MANUFACTURES OR PRODUCES ANY ARTICLE OR THI NG, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDU LE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PART OF INDIA: PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL, IN RELATI ON TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDERTAKING REFERRED TO IN SUB-CLAUSE (B) OF CLAUSE(IV) WHICH BEGINS TO MANUFACTURE OR PR ODUCE AN ARTICLE OR THING DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL , 1993 AND ENDING ON THE 31ST DAY OF MARCH, 2000, APPLY AS IF THE WORDS NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDUL E HAD BEEN OMITTED; (IV) (A) IN THE CASE OF AN INDUSTRIAL UNDERTAKING NOT SPECIFIED IN SUB-CLAUSE (B) OR SUB- CLAUSE (C), IT BEGINS TO MANUFACTURE OR PRO DUCE ARTICLES OR THINGS OR TO OPERATE SUCH PLANT OR PLANTS, AT ANY T IME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1991 AND ENDING ON THE 31ST DAY OF MARCH, 1995, OR SUCH FURTHER PERIOD AS THE C ENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, SPECIFY WITH REFERENCE TO ANY PARTICULAR INDUSTRIAL UNDERTAKING; (B) IN THE CASE OF AN INDUSTRIAL UNDERTAKING LOCATED IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE OR SET UP IN ANY PART OF INDIA FOR THE GENERATION, OR GENERATION AND DIST RIBUTION, OF POWER, IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THI NGS OR TO OPERATE ITS COLD STORAGE PLANT OR PLANTS OR TO GENERATE POWER A T ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1993 AND ENDING ON THE 31ST DAY OF MARCH, 2000: PROVIDED THAT IN THE CASE OF AN INDUSTRIAL UNDERTAKING SET UP IN ANY PART OF INDIA FOR THE GENERATION, OR GENERATION AND DISTRIBUTION, OF POWER, THE PERIOD ENDING SHALL HAVE EFFECT AS IF FO R THE FIGURES 1998, THE FIGURES 2003 HAD BEEN SUBSTITUTED; (C) IN THE CASE OF AN INDUSTRIAL UNDERTAKING LOCATED IN SUCH INDUSTRIALLY BACKWARD DISTRICT AS THE CENTRAL GOVERNMENT MAY, HA VING REGARD TO THE PRESCRIBED GUIDELINES, BY NOTIFICATION IN THE O FFICIAL 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 OPE RATE ITS COLD STORAGE PLANT OR PLANTS AT ANY TIME DURING THE PERI OD BEGINNING ON THE 1ST DAY OF OCTOBER, 1994, AND ENDING ON THE 31ST DA Y OF MARCH, 2000; (D) IN THE CASE OF AN INDUSTRIAL UNDERTAKING BEING A S MALL SCALE INDUSTRIAL UNDERTAKING, NOT SPECIFIED IN SUB-CLAUSE (B) OR IN SUB-CLAUSE IT(SS)A NO.6/2018. :- 10 - : (C), IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES O R THINGS OR TO OPERATE ITS COLD STORAGE PLANT AT ANY TIME DURING T HE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1995 AND ENDING ON THE 31S T DAY OF MARCH, 2000; (V) IN A CASE WHERE THE INDUSTRIAL UNDERTAKING MANU FACTURES OR PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOYS TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF PO WER, 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 80IB BY FINANCE ACT, 1999 W.E.F. 01.04.2000. SECTI ON 80IB OF THE ACT WHICH CAME INTO THE STATUTE ON 01.04.2000 IS REPROD UCED HEREUNDER:- (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE I NCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB-SECTIONS (3) TO (11), (11A) AND 3(11B) (SUCH BUSINESS BEING HEREINA FTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTIN G THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAI NS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASS ESSMENT YEARS AS SPECIFIED IN THIS SECTION. (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAK ING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY :- (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONSTRUC TION, OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF AN INDUSTRIAL UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE- ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASS ESSEE OF THE BUSINESS OF ANY SUCH INDUSTRIAL UNDERTAKING AS IS R EFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AND WITHIN THE PE RIOD SPECIFIED IN THAT SECTION ; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE ; (III) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR THING, N OT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE E LEVENTH SCHEDULE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PART OF INDIA : IT(SS)A NO.6/2018. :- 11 - : PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL, IN RELATI ON TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDERTAKING REFERRED TO IN SUB-SECTION (4) SHALL APPLY AS IF TH E WORDS 'NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE E LEVENTH SCHEDULE' HAD BEEN OMITTED. EXPLANATION 1. FOR THE PURPOSES OF CLAUSE (II), AN Y MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OT HER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLAN T PREVIOUSLY USED FOR ANY PURPOSE, IF THE FOLLOWING CONDITIONS A RE FULFILLED, NAMELY :- (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME PREVIO US TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN INDIA ; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA ; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL I NCOME OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DATE OF THE INSTALLATION OF THE MACHINERY OR PLANT BY THE ASSES SEE. EXPLANATION 2. WHERE IN THE CASE OF AN INDUSTRIAL UNDERTAKING, ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUS LY USED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TO TAL VALUE OF THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT. OF THE TOTAL VALUE OF THE MACHINERY OR PL ANT 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 MANUFACT URES OR PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOY S TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER, OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUF ACTURING 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 PER IOD FOR WHICH THIS APPEAL RELATES IS 01.04.1986 TO 30.01.1997, AND TH E APPLICABLE LAW IS SECTION 80IA OF THE ACT AS IT STOOD BEFORE 01.04.2 000. THEREFORE WE IT(SS)A NO.6/2018. :- 12 - : CANNOT SAY THAT LD. CIT(A) FELL IN ERROR IN APPLY ING THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JYOTI PRAKASH DUTTA (SUPRA ), WHICH WAS IN RELATION TO SECTION 80IB OF THE ACT . WE ALSO FIND THAT 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 M ACHINERY ALREADY AVAILABLE WITH IT, ALONGWITH HIRED MACHINERY FOR T HE 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 WOUL D AMOUNT TO MANUFACTURING OR PROCESSING OF GOODS HAS BEEN CLEA RLY SPELT OUT BY CBDT IN CIRCULAR NO.24 (F. NO.6/22/68-IT (A-I), DA TED 23.07.1969. NOW COMING TO THE QUESTION WHETHER ASSESSEE HAD EM PLOYED MORE THAN TEN PERSONS, ADMITTEDLY, LIST MENTIONED BY THE LD.AO AT PARA 3 (I) OF THIS ORDER CLEARLY INDICATE THAT THERE WERE MOR E THAN TEN PERSONS WORKING FOR THE FILM PROJECT. JUST BECAUSE SUCH PE RSONS, WERE NOT REGULAR EMPLOYEES OF THE ASSESSEE, WOULD NOT MEAN THAT THEY WERE NOT EMPLOYED BY THE ASSESSEE FOR THE PURPOSE OF NEW PRODUCTION PROJECT. IN THE CIRCUMSTANCES, WE ARE OF THE OPINI ON THAT LD. CIT(A) IT(SS)A NO.6/2018. :- 13 - : WAS JUSTIFIED IN ALLOWING THE CLAIM OF DEDUCTION UN DER SECTION 80IA OF THE ACT TO THE ASSESSEE. WE DO NOT FIND ANY REASO N TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT STANDS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 12 TH DAY OF FEBRUARY, 2019, AT CHENNAI. SD/ - (N.R.S. GANESAN) / JUDICIAL MEMBER SD/ - (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER / CHENNAI / DATED: 12 TH FEBRUARY, 2019. KV / COPY TO: 1 . / APPELLANT 3. ( ) / CIT(A) 5. / DR 2. / RESPONDENT 4. / CIT 6. / GF