COMMISSIONER OF INCOME TAX Vs. KONDKE D K

JUDGEMENT

(1.) THE Tribunal has referred the following question to this Court for its decision under S. 256(1) of the IT Act, 1961, at the instance of the CIT, Bombay. This question reads as under:

(2.) DURING the previous year pertaining to the asst. year 1972 73, the assessee started production of motion pictures in the Marathi language. The assessee claimed the benefit of deduction under s. 80J of the IT Act, 1961, on the ground that the said business was an "industrial undertaking" within the meaning of the said expression used in S. 80J. The ITO refused to grant the said benefit to the assessee, as the ITO was not satisfied that the film industry was within the purview of the said section. Being aggrieved by the said order, the assessee filed an appeal before the AAC. During the course of the hearing of the said appeal, the assessee relied, inter alia, on Circular No. 24, dt. 23rd July, 1969, issued by the CBDT. By the said Board's circular, it was notified by the Board that the production of cinematograph films amounted to manufacture or processing of goods within the meaning of S. 104(4)(a) of the IT Act, 1961. It was also stated in the said circular that, in the opinion of the Board, a cinematograph film suitable for exhibition was entirely different from the raw unexposed film which was loaded into the camera in a studio. Relying upon the said circular and the judgment of the Gujarat High Court in CIT vs. Ajay Printery Pvt. Ltd. (1965) 58 ITR 811 (Guj), the AAC accepted the claim made by the assessee. The AAC held that the activity of the assessee by way of production of motion pictures was liable to be treated as an "industrial undertaking" within the meaning of S. 80J of the IT Act, 1961, and the assessee was entitled to the necessary relief under the said section for the accounting period relevant to the asst. year 1972 73 and all subsequent years, subject to the assessee satisfying the other conditions also. Being aggrieved by the said order, the Department filed a second appeal before the Tribunal. The Tribunal examined the matter in further depth. The expression "industrial undertaking" has not been defined in the IT Act, 1961. The Tribunal applied the normal commercial meaning of the words "industrial undertaking" in support of its view that the aforesaid activity amounted to "industrial undertaking" and also referred to the definition of the word "industrial" from the Concise Oxford Dictionary and the Chambers Twentieth Century Dictionary. The Tribunal relied upon various judgments of the Hon'ble Supreme Court delivered under the Central Excises & Salt Act, 1944, and particularly the judgments in Union of India vs. Delhi Cloth and General Mills Co. Ltd. AIR 1963 SC 791, and in South Bihar Sugar Mills Ltd. vs. Union of India AIR 1968 SC 922, and held that "manufacture", in its ordinary connotation, meant production of articles which was commercially different from the basic component by which the item was manufactured. We are in complete agreement with the view taken by the Tribunal. We do not think it necessary to refer to various judgments or discuss the matter in any greater detail.

(3.) ACCORDINGLY , we answer the question referred to us in the affirmative and in favour of the assessee. There shall be no order as to costs.