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Commissioner of Income Tax, Mumbai Versus M/s. Rupam Pictures Pvt. Ltd. C/o. NV. Vale & Co.

2015 (5) TMI 236 - BOMBAY HIGH COURT

Disallowance made u/s.40(c) - remuneration paid to two directors of the company - ITAT allowed claim - Held that:- disallowance made by the ITO under section 40(c) of the Act was not justified. The amounts paid to the two individuals were not paid in their capacity as members of the Board of Directors but these amounts were paid as professional charges for directing and producing a film. The revenue is, therefore, not justified in disallowing the claim, the character of the remuneration mode bei .....

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40(a) as it then stood, it follows that the said activities must be treated as that of an industrial undertaking within the purview of Section 80J of the Act.Accordingly, the activities of production of a film amounted to manufacturing of an article or goods. The activities be treated as those of an industrial undertaking within the purview of Section 80J of the Act. Even otherwise, this Court was of the view that film production will have to be considered as a manufacturing activity and the und .....

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) for the opinion of this Court :- (i) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the disallowance made u/s.40(c) of the I.T. Act, by the I.T.O. Out of the remuneration of ₹ 3,00,000/- and ₹ 1,50,000/- paid to two directors of the company viz. Shri Hrishikesh Mukherjee and Shri N.C. Sippy ? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the business of production o .....

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t which was in force at the relevant time and disallowed the payment in excess of ₹ 72,000/- in respect of the payments made to each of these persons. The Commissioner of Income Tax (Appeals) upheld the order of the ITO. In second appeal the Appellate Tribunal relying on its earleir decision on the issue deleted the addition made by the ITO. 4. The assessee had claimed to be industrial undertaking undertaking and sought deduction under Section 80J of the Act. The ITO rejecting the applicat .....

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with the second question first. By this judgment, this Court hs decided Income Tax Reference No.195 of 1977 on 12th March, 1991. This Court observed that if the production of a cinematograph film amounts to manufacture of an article or goods within the meaning of section 104 (40(a) as it then stood, it follows that the said activities must be treated as that of an industrial undertaking within the purview of Section 80J of the Act. This position was conceded by the counsel for the revenue in tha .....

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