JUDGMENT judgment of court was delivered by A. K. Menon J.-The Income-tax Appellate Tribunal has referred following two questions under section 256(1) of Income-tax Act, 1961 ("the Act") for opinion of this court: "(i) Whether, on facts and in circumstances of case, Tribunal was right in law in deleting disallowance made under section 40(c) of Income-tax Act by Income-tax Officer. Out of remuneration of Rs. 3,00,000 and Rs. 1,50,000 paid to two directors of company, viz., Shri Hrishikesh Mukherjee and Shri N. C. Sippy? (ii) Whether, on facts and in circumstances of case, Tribunal was right in law in holding that business of production of films constitutes industrial undertaking for purpose of section 80J of Income-tax Act, 1961?" facts pertain to assessment year 1981-82. assessee was in business of production of films. During relevant year, two directors of company, Mr. Hrishikesh Mukherjee and Mr. N. C. Sippy, were paid Rs. 3,00,000 and Rs. 1,50,000, respectively, for directing and producing film. Income- tax Officer ("the ITO") applied provisions of section 40(c) of Act which was in force at relevant time and disallowed payment in excess of Rs. 72,000 in respect of payments made to each of these persons. Commissioner of Income-tax (Appeals) upheld order of Income-tax Officer. In second appeal Appellate Tribunal relying on its earlier decision on issue deleted addition made by Income-tax Officer. assessee had claimed to be industrial undertaking and sought deduction under section 80J of Act. Income-tax Officer rejecting application claimed that assessee being in business of film production was not entitled for deduction under section 80J of Act. Tribunal relied upon its earlier decision in case of one D. K. Kondke and allowed deductions under section 80J of Act. This is how reference came to be made. As far as second question is concerned, issue being already decided by this court in case of CIT v. D. K. Kondke [1991] 192 ITR 128 (Bom); [1991 Mh. L. J. 572. We proposed to deal with second question first. By this judgment, this court has decided Income-tax Reference No. 195 of 1977 on March 12, 1991. This court observed that if production of cinematograph film amounts to manufacture of article or goods within meaning of section 104(4)(a), as it then stood, it follows that said activities must be treated as that of industrial undertaking within purview of section 80J of Act. This position was conceded by counsel for Revenue in that case. Accordingly, activities of production of film amounted to manufacturing of article or goods. activities be treated as those of industrial undertaking within purview of section 80J of Act. Even otherwise, this court was of view that film production will have to be considered as manufacturing activity and undertaking will have to be considered as industrial undertaking as same is considered under excise law and other allied laws also. We, accordingly, answer this question in affirmative with rider that whether assessee satisfies conditions of said section, as it then stood, will have to be ascertained by authorities below. As far as first question is concerned, we find that disallowance made by Income-tax Officer under section 40(c) of Act was not justified. amounts paid to two individuals were not paid in their capacity as members of board of directors but these amounts were paid as professional charges for directing and producing film. Revenue is, therefore, not justified in disallowing claim, character of remuneration mode being different. As we have observed above, we are of view that Tribunal was right in deleting disallowance. Accordingly, we answer first question in affirmative. In result, both questions of law referred to us in present reference are answered in affirmative, i.e., in favour of assessee and against Revenue. There shall be no order as to costs. *** Commissioner of Income-tax v. Rupam Pictures P. Ltd