present two appeals are directed at instance of assessee against orders of learned CIT(A), XXV, Mumbai D dt. 30th March, 2001 and 30th April, 2001 passed for asst. yrs. 1999-2000 and 2000-01 respectively. ground of appeal taken by assessee are not in consonance with r. 8 of ITAT Rules, they are repetitive and argumentative in nature. In brief grievance of assessee in both assessment years relates to denial of deduction under s. 80-IA on production of films titled as "Duplicate" and "Kuch Kuch Hota Hai" (KKHH). -4. facts on this issue are common in both assessment years. learned first appellate authority has discussed issue in details in asst. yr. 1999-2000 and thereafter followed his order in asst. yr. 2000-01. Thus for facility of reference we are primarily taking up facts from asst. yr. 1999-2000. brief facts of case are that assessee late Shri Yash Johar was running proprietary concern M/s Dharma Productions engaged in producing films. assessee filed his return of income on 31st Dec., 1999 declaring total income of Rs. 8,97,96,370. assessee had claimed deduction of Rs. 3,09,32,633 under s. 80-IA being 25 per cent of Rs. 12,57,65,726 derived from new industrial undertaking in form of Hindi feature film titled "Duplicate" and "KKHH". learned AO examined this issue in detail and rejected claim of assessee. reasoning assigned by learned AO for denying claim of assessee have been briefly noticed by learned CIT(A), which read as under: (a) appellant does not satisfy some of important requirements to be fulfilled as per ss. 80-I and 80-IA. (b) appellant is in business of production of films since more than 25 years. Initially it was through Dharma Production (P) Ltd. and subsequently through his proprietary concern, Dharma Productions. Therefore, appellant cannot claim that he has commenced production of his films between 1st April, 1991 to 31st March, 1995, period between which industrial undertaking ought to have started production in order to be eligible to deduction under s. 80-IA. (c) If each film was to be treated as industrial undertaking then KKHH is not entitled to get deduction under s. 80-IA. Since production of film started only on 11th June, 1997 and not between 1st April, 1991 and 31st March, 1995. (d) If Dharma Productions is to be treated as industrial undertaking then it has to employ more than 10 workers in manufacturing process which is done with aid of power in order to claim deduction under s. 80-IA under proviso (iv) to sub-s. (2) of s. 80-IA. It is undisputed as well as admitted fact that appellant employed less than 10 persons (certificate given by appellant dt. 15th Jan., 2001). (e) On perusal of balance sheet of appellant it was noticed that except office equipment, computer and xerox machine, there is nothing which could have been used to produce film. It is admitted that film was produced with help of equipment taken on hire or which were previously used in production of films. Thus, it does not satisfy conditions stipulated in proviso (iii) of sub-s. (2) of s. 80-I, which prohibits use of plants, machinery, previously used for any purpose. Thus clause was incorporated by t h e Parliament with specific intended purpose of infusing fresh capital investment in production and manufacturing activities. (f) issue to be decided is all together than what was decided in case of D.K. Kondke and Bombay High Court and other related circulars. (g) AO has dealt with various principles of interpretation for granting deductions and meaning of words enterprise and undertakings on pp. 7 to 11 and held that each film cannot be described as undertaking by itself. They are only products of enterprises known as "Dharma Production" (whose worthy processor was) "Dharma Production (P) Ltd." Appeal to learned CIT(A) did not bring any relief to assessee. Dissatisfied with orders of Revenue authorities below assessee filed present appeals and learned counsel for assessee while impugning filed present appeals and learned counsel for assessee while impugning findings recorded by learned Revenue authorities below apprised us with t h e conditions required to be fulfilled by assessee for claiming deduction under s. 80-IA. In this connection he took us through s. 80-IA of IT Act and submitted that to claim deduction under s. 80-IA, industrial undertaking i.e., undertaking mainly engaged among other things in manufacture or processing of goods must fulfil following conditions: "(i) It should be new undertaking and is not formed by splitting up or reconstruction of business already in existence. concept of reconstruction of business would not be attracted when company which is already running one industrial unit sets up another industrial unit, as held in case of CIT vs. Ganga Sugar Corporation Ltd. (1973) 92 ITR 173 (Del). (ii) It should not be formed by transfer of machinery or plant previously used for any purpose. (iii) It should not manufacture or produce articles specified in XXI Schedule. (iv) It must start manufacturing between 1st April, 1991 and 31st March, 1995 or within extended period." learned counsel for assessee further contended that it has been now settled down that production of films amounts to manufacturing activity. For buttressing his contention he relied upon judgment of Tribunal rendered in case of Film Shoppe vs. Asstt. CIT (2005) 95 TTJ (Mumbai) 1056, wherein one of us (AM) is party to decision. learned counsel for assessee further relied upon decision of Hon ble Bombay High Court rendered in case of CIT vs. D.K. Kondke (1991) 96 CTR (Bom) 161: (1991) 192 ITR 128 (Bom). learned counsel for assessee contended that next objection pointed out by learned CIT(A) is that M/s Dharma Productions has been created by splitting up of existing business of M/s Dharma Productions (P) Ltd., which is company. He contended that learned first appellate authority merely swayed away with background that it is goodwill of Mr. Yash Johar who is material for production house and not name of entity whether Dharma Production or Dharma Production (P) Ltd. To this objection of learned CIT(A) he pointed out that M/s Dharma Productions (P) Ltd. is still continuing. During this period it had not produced any film. It is separate entity. Every good businessman would explore best possibility if come to him on change of law or otherwise. Except general objections learned first appellate authority could not point out any concurrent material for arriving at conclusion that M/s Dharma Productions has been incorporated by splitting existing business set up of M/s Dharma Productions (P) Ltd. next reason pointed out for rejecting claim of assessee is that assessee has not employed more than 10 persons. Learned counsel for assessee in this connection drew our attention towards list of persons who worked on these projects available at pp. 50 to 52 of paper book and contended that learned first appellate authority totally ignored labourers and other technicians taken on hire for project. He only took into consideration regular employees of muster roll. Even if those employees are more than t e n , on strength of decision of Hon ble Allahabad High Court rendered in case of CIT vs. Sultan & Sons Rice Mill (2005) 193 CTR (All) 444: (2005) 272 ITR 181 (All), he contended that it is not necessary that workers directly involved in manufacturing activity is to be counted. other staff essential for running undertaking are also to be taken into consideration. In that case assessee is running rice mill. labourers engaged in unloading and loading were not taken into consideration by ITO, on ground that they are not engaged in manufacturing. Hon ble High Court held that they have to be counted. learned counsel for assessee further submitted that next objection of Revenue is that production of film did not commence in between 1st April, 1991 to 31st March, 1995. He pointed out that film "Duplicate" was started on 8th Feb., 1995, however, "KKHH" was started on 11th June, 1997. starting point of film production is not inaugural of acting session, prior to that assessee has to carry out lot of activities, i.e., finalization of story, casting of assessee has to carry out lot of activities, i.e., finalization of story, casting of characters etc. All these activities have been initiated prior to 31st March, 1995 and thus assessee is entitled for deduction on this film also. Controverting contentions of learned counsel for assessee learned Departmental Representative submitted that basic object of granting such type of deduction is to develop such atmosphere which can help in improvement of infrastructure and which can generate more jobs for common man. Here Mr. Yash Johar was engaged in production of film earlier under banner of M/s Dharma Productions (P) Ltd., company wholly controlled and managed by him and his wife. When Government extended certain benefit for newly established industrial undertaking he stopped his manufacturing activity in company and incorporated proprietorship concern. instrument taken into proprietary concern are only few computers and small place for working. In way it is just tax planning for availing benefit. assessee has not generated any employment. Earlier also he used to hire artist, etc. and after benefit made available on such industrial undertaking he just hiring artist not giving job on regular basis to workers. We have duly considered rival contentions and gone through record carefully. assessee had produced film "Duplicate" as well as "KKHH" in his proprietary concern M/s Dharma Productions. Hon ble Bombay High Court in its decision rendered in case of D.K. Kondke (supra) has held that production of cinematographic film amounts to manufacture of article or goods. assessee engaged in such activity is industrial undertaking entitled to relief under s. 80J. Similar are conditions in s. 80-IA, thus production of film is to be treated as manufacturing of article and film "Duplicate" as well as "KKHH" are to be treated as industrial undertaking. other reasons assigned by learned Revenue authorities below are concerned that assessee s proprietary concern has came into existence after splitting of earlier company M/s Dharma Productions (P) Ltd., we find that assessee has placed on record balance sheet, etc. of M/s Dharma Productions (P) Ltd. company is still in existence having its all assets etc., and nothing has been taken out from there in proprietary concern. Therefore, learned CIT(A) is not justified in holding that proprietary concern has taken over business of company. learned first appellate authority simply swayed away with reason that it is goodwill of Mr. Yash Johar as person is material irrespective of commercial entity in which he is working. In our opinion Mr. Yash Johar was still director in Company and separately he has formed his proprietary concern. Therefore, this legal entity cannot be ignored. assessee has also fulfilled other conditions. We have gone through list of labourers etc. Therefore, taking into consideration all facts and circumstances we are of view that assessee is entitled for deduction under s. 80-IA on eligible receipts derived from film "Duplicate". As far as film "KKHH" is concerned it is not established on record when this film was started. As per record it was started on 11th Feb., 1997, whether finalization of story and casting of characters has taken place prior to that, no evidence is on record, therefore, in principle we hold that assessee is entitled for deduction under s. 80-IA. learned AO shall take into consideration receipts of "Duplicate" in computation of such deduction. With regard to receipt of "KKHH", issue is restored to file of AO for re-adjudication. He shall decide when production of this film was started. If it was started within eligible period then take into consideration receipt of this film also for computation of deduction. assessee will be at liberty to raise any plea in this connection such as starting of film is to be considered from finalization of casting, story etc. learned AO shall consider all such pleas and decide issue in accordance with law. It is needless to say that due opportunity of hearing be granted to assessee. In result, appeals of assessee are partly allowed. *** YASH JOHAR v. JOINT COMMISSIONER OF INCOME TAX