FILMYUG PVT LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Since the issues effectively required to be answered in these two references are common, both these references are heard together and disposed of by this common judgment. The questions referred by the Income -tax Appellate Tribunal ('the I. T. A. T.'), in these two references at the instance of the respective parties, under Section 256(1) of the Income -tax Act, 1961, read as follows : I. T. R. No. 624 of 1987, Filmyug Pvt. Ltd. v. CIT :

(2.) COUNSEL on both sides fairly state that question No. 2 raised above is covered by the decision of this court in the case of Nav Ketan International Films Pvt. ltd. v. C/T : [1994]209ITR976(Bom) in favour of the assessee. In this view of the matter, we answer question No. 2 in the affirmative and in favour of the assessee.

(3.) TO answer questions Nos. 1 and 4 it is necessary to set out a few facts. At the threshold it is necessary to note that in these two references two different Benches of the Income -tax Appellate Tribunal have taken diametrically opposite views in the matter of interpretation of Section 37(3D) of the Income -tax Act. In the case of Filmyug Private Limited, one Bench of the Income -tax Appellate Tribunal held that the exemption under Section 37(3D) will not be available as the assessee had been in existence for several years and had been producing several pictures in the past. In other words, the Tribunal held that even though the assessee (Filmyug) began manufacturing a new picture in the relevant previous year, exemption under Section 37(3D) will not be available to the assessee as the assessee undertaking was not set up in the relevant previous year. In the case of Uttam Chitra, another Bench of the Income -tax Appellate Tribunal held that each picture is a new product and exemption under Section 37(3D) is available to each picture, even though the assessee undertaking (Uttam Chitra) had been in existence for several years in the past and had produced several pictures in the past.