A.C.I.T. 11(1), MUMBAI vs. A.K. FILMS PVT. LTD., MUMBAI

आदेश / O R D E R PER AMARJIT SINGH, JM:

3. We have heard the submissions made by the representative of the parties and perused the records. The contention of the revenue is that the learned CIT(A) has wrongly allowed the deduction of Rs.87,33,388/- made u/s. 80IB of the Act. Before proceeding further it is necessary to advert the finding of CIT(A) on record:-

“I have considered the facts and material on record. It is seen that the issue in the present case is covered by its ITAT decision in A.Y.2004-05 & 205-06 (ITA No.1857/Mum/2009) dated 22.10.2010 wherein the Hon’ble ITAT following the decision in the case of Dada Kondke of Bombay High Court held that he assessee is an industrial undertaking eligible for deduction u/s 80IB of the Act. As regards the other condition that the assessee should not use the old machinery, the Tribunal observed that the assessee is claiming before them that it has entirely purchased new machinery in the earlier years and the same is used for TV Serials during the relevant period and there is no transfer of old machinery. However, the assessee has purchased new machinery during the year or not was directed to be verified by the AO and if the contention of the assessee is found to be true, then the AO may be allowed deduction u/s 80IB of the Act. In the light of these findings of the Hon’ble ITAT, I hold that the appellant is eligible for deduction u/s. 80IB of the Act. However, the deduction is subject to verification by the AO in A.Y.2004-05 and 05-06 where the appellant has purchased new plant and & CO 276/M/13 A.Y. 2009-10 machinery in the earlier years. When the business was set up and commenced the same has been utilized for producing the TV Serials as directed by the Hon’ble Tribunal for A.Y. in dated 28.08.2009. This ground of appeal is therefore accordingly disposed. In the result, appeal is treated as allowed.”

On appraisal of above mentioned findings recorded by the CIT(A) it is apparent on record that the CIT(A) has decided the matter of controversy on the basis of the decision of Income Tax Appellate Tribunal in the assessee’s own case in dated 22.10.2010 relevant to the A.Y.2005-06 which has also been decided on the basis of findings in the assessee’s own case in ITA No.220/M/2008 vide its order dated 28.08.2009. The said order perused and the relevant para of the said judgement is hereby reproduced as under:-

“7. Having heard both the parties, we find that the objection of the A.O. that the assessee is not an industrial undertaking, is not tenable in view of the decision of the Mumbai Tribunal in the case of Film Shoppe cited supra wherein it has been held that production of TV serials amounts to manufacturing activity. Similar view has also been expressed by the Hon’ble Bombay High Court in the case of D.K.Kondke cited supra. In view of the same, we hold that the assessee is an industrial undertaking eligible for deduction u/s. 80IB of the Act.

has purchased entirely new machinery in the earlier years and the same is used for the production of TV serials during the relevant period and there is no transfer of any old machinery. However, this fact has not been considered either by the A.O. or the CIT(A). We agree with the contentions of the ld. Counsel for the assessee that new machinery is not necessary to be purchased every year to claim deduction u/s. 80IB and the only condition stipulated is that an industrial undertaking should not be set up by the transfer of old machinery which is already used by others. In view of the same, we remand this issue to the file of the A.O. with a direction to verify as to whether the assessee has purchased new plant and machinery in the earlier years when the business was set up and commenced and the same has been utilized for producing the TV serials and if the contention of the assessee is found to be true, then the A.O. may allow deduction u/s. 80IB of the Act. This ground is accordingly allowed for statistical purposes.”

The Tribunal also followed the order passed by the Bombay High Court in case of Dada Kondke. Apparently, the case of the assessee is squarely covered by the judgement mentioned above. Whereas the representative of the department nowhere produce any material to differ the finding of CIT(A). In view of the said facts and circumstances of the case we are of the view that the CIT(A) has passed the order dated 27.12.2011 correctly and judiciously which does not required to be interfered with at the appellate stage. Therefore, in view of the reasons recorded above the appeal of the revenue is hereby dismissed. So far as the objection raised by the & CO 276/M/13 A.Y. 2009-10 assessee is concerned the representative of the assessee did not press the objection raised by him. Therefore, the Cross objection of the assessee is also hereby dismissed being not pressed.