TaxTMI 
TaxTMI 
2006 (12) TMI 269
X X X X Extracts X X X X
X X X X Extracts X X X X
....they are repetitive and argumentative in nature. In brief the grievance of assessee in both the assessment years relates to denial of deduction under section 80-IA on the production of films titled as "Duplicate" and "Kuch Kuch Hota Hai" (KKHH). 3-4. The facts on this issue are common in both the assessment years. The ld. first appellate authority has discussed the issue in details in assessment year 1999-2000 and thereafter followed his order in assessment year 2000-01. Thus for the facility of reference we are primarily taking up the facts from assessment year 1999-2000. 5. The brief facts of the case are that assessee late Shri Yash Johar was running a proprietary concern M/s. Dharma Productions engaged in producing films. The asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in a manufacturing process which is done with the aid of power in order to claim deduction under section 80-IA under proviso (iv) to sub-section (2) of section 80-IA. It is undisputed as well as admitted fact that appellant employed less than 10 persons (certificate given by the appellant dated 15-1-2001). (e)On the perusal of the Balance Sheet of the appellant it was noticed that except the office equipment, computer and Xerox machine, there is nothing which could have been used to produce the film. It is admitted that the film was produced with the help of equipment taken on hire or which were previously used in the production of films. Thus, it does not satisfy the conditions stipulated in proviso (iii) of sub-section (2) of section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be a new undertaking and is not formed by splitting up or the reconstruction of a business already in existence. The concept of reconstruction of business would not be attracted when a company which is already running one industrial unit sets up another industrial unit, as held in the case of CIT v. Ganga Sugar Corpn. Ltd. 92 ITR 173 (Delhi). (ii)It should not be formed by transfer of machinery or plant previously used for any purpose. (iii)It should not manufacture or produce articles specified in the XXI Schedule. (iv)It must start manufacturing between April 1, 1991 and March 31, 1995 or within the extended period." 8. The ld. counsel for the assessee further contended that it has been now settled down that production of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aim of assessee is that assessee has not employed more than 10 persons. Ld. counsel for the assessee in this connection drew our attention towards the list of the persons who worked on these projects available at pages 50 to 52 of the paper book and contended that ld. first appellate authority totally ignored the labourers and other technicians taken on hire for the project. He only took into consideration the regular employees of the muster roll. Even if those employees are more than ten, on the strength of the decision of the Hon'ble Allahabad High Court rendered in the case of CIT v. Sultan & Sons Rice Mill [2005] 272 ITR 181^1, he contended that it is not necessary that workers directly involved in manufacturing activity is to be counte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustrial undertaking he stopped his manufacturing activity in the company and incorporated a proprietorship concern. The instrument taken into the proprietary concern are only few computers and a small place for working. In a way it is just a tax planning for availing the benefit. The assessee has not generated any employment. Earlier also he used to hire artist etc. and after the benefit made available on such industrial undertaking he just hiring the artist not giving job on regular basis to the workers. 13. We have duly considered the rival contentions and gone through the record carefully. The assessee had produced the film "Duplicate" as well as "KKHH" in his proprietary concern M/s. Dharma Productions. The Hon'ble Bombay High Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urers etc. Therefore, taking into consideration all the facts and circumstances we are of the view that assessee is entitled for deduction under section 80-IA on the eligible receipts derived from the film "Duplicate". As far as film "KKHH" is concerned it is not established on the record when this film was started. As per the record it was started on 11-2-1997, whether the finalization of story and casting of the characters has taken place prior to that, no evidence is on the record, therefore, in principle we hold that assessee is entitled for deduction under section 80-IA. The ld. Assessing Officer shall take into consideration the receipts of "Duplicate" in computation of such deduction. With regard to receipt of "KKHH", the issue is re....