24 : Circular No. 24, dated 23-07-1969

728. Whether production of motion pictures amounts to manufacture or processing of goods within the meaning of section 101(4)(a)

1. The question whether production of cinematographic films, i.e., motion pictures, would amount to "manufacture or processing of goods" within the meaning of section 104(4)(a) has been con­sidered by the Board. The Board are advised that a cinema film suitable for exhibition is entirely different from the raw unex­posed film which is loaded into the camera in a studio.

2. It has, therefore, been decided by the Board that the produc­tion of cinematograph films would amount to the manufacture or processing of goods within the meaning of section 104(4)(a ).

Circular: No. 24 [F. No. 6/22/68-IT(A-I)], dated 23-7-1969.

JUDICIAL ANALYSIS

EXPLAINED IN - In CIT  v. D.K. Kondke [1991] 192 ITR 128 (Bom.), the above circu­lar was explained with the following observations :

". . . 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 section 104(4)(a) of the Income-tax 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.....

If the production of a cinematograph film amounts to ‘manufacture of an article or goods’ within the meaning of section 104(4)(a) as it then stood, it follows that the said activity must be treated as an ‘industrial undertaking’ within the purview of sec­tion 80J of the Income-tax Act, 1961....."(pp. 130-131)