2006 (2) TMI 119

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....n. The brief facts of the case are stated as under. The assessee derives income from photo studio by exposing the negatives and printing of positives/photos. The Assessing Officer rejected the assessee's claim for deduction under section 80-I of the Act. However, on appeal, the Commissioner of Income-tax (Appeals) set aside the order of the Assessing Officer. Hence, the Revenue preferred an appeal before the Tribunal, which confirmed the order of the Commissioner holding that exposing of film rolls amounts to manufacturing and, therefore, the assessee was eligible for deduction under section 80-I of the Act. Aggrieved by the said order, the Revenue has preferred the above appeal, raising the following substantial question of law. "....

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....usiness consisted of producing feature films. It had a processing and drying plant, where exposed films in various stages were processed into positive films used for projection in cinema theatres. The assessee was entitled to investment allowance in respect of its plant and machinery." The Andhra Pradesh High Court in CIT v. Prasad Film Laboratories P. Ltd. [1997] 225 ITR 348 has held as follows: "that by the process carried out by the assessee, the raw film without images and sound were converted into films with images and sounds, which was a new and distinct commodity well known in the trade as positive prints quite different from raw film. Therefore, the process of obtaining positive prints would be manufacture .... that the pro....