2004 (9) TMI 578 - AT - Income Tax

Tribunal grants deduction under section 80-IA for TV serial production, emphasizing artistic nature over machinery.

The Tribunal allowed the appeal in favor of the assessee, directing the Assessing Officer to grant the deduction claimed under section 80-IA for TV serial ... Deductions Issues:Claim of deduction under section 80-IA for a TV serial production.Analysis:The appeal was filed against the order passed by the CIT(A)-XXV at Mumbai, concerning the assessment year 1996-97 under section 143(3) of the Income-tax Act, 1961. The assessee, engaged in TV serial production, sold a serial to M/s. Zee Telefilms Ltd. using hired equipment. The Assessing Officer disallowed the deduction claim under section 80-IA as the assessee did not own any plant or machinery. The CIT(A) agreed that TV serial production is manufacturing but upheld the disallowance due to non-compliance with section 80-IA conditions. The CIT(A) referred to specific clauses and disallowed the deduction based on non-compliance with conditions regarding machinery ownership and prior use. The assessee argued that hiring equipment did not constitute a transfer and cited relevant case law. The advocate emphasized the dominant role of artists in TV serial production, not machinery. The revenue contended that the deduction was not meant for film industries and cited Supreme Court rulings on new industrial undertakings' parameters.The Tribunal noted that TV serial production is akin to manufacturing, as per previous court rulings. It considered whether hiring equipment constituted a transfer, citing relevant case law. The Tribunal emphasized that the dominant aspect of the business was casting artists, not machinery. It concluded that the conditions cited by the CIT(A) were not applicable to the assessee's case. The Tribunal directed the Assessing Officer to grant the deduction claimed by the assessee. The appeal was allowed in favor of the assessee.