1996 (11) TMI 30 - HC - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of eligibility for deduction under sections 80HH and 80-I of the Income-tax Act for an industrial unit rearing chicks into broilers.

Summary:

Issue 1: Eligibility for deduction under section 80-I of the Income-tax Act
The assessee, an industrial unit rearing chicks into broilers, claimed deduction under section 80-I of the Income-tax Act. The Tribunal held that the assessee, not being an industrial undertaking, was not entitled to the deduction. The Tribunal's decision was based on the premise that the process of rearing chicks into broilers did not result in a substantial change to acquire a new commercial identity. The court referred to American Supreme Court decisions to support the concept that not every change amounts to manufacturing. The court upheld the Tribunal's decision, ruling against the assessee and in favor of the Revenue.

Issue 2: Eligibility for deduction under sections 80HH and 80-I of the Income-tax Act
The assessee also claimed deduction under sections 80HH and 80-I of the Income-tax Act as an industrial undertaking. The Tribunal, however, held that the assessee was not entitled to these deductions. The court emphasized that even though the chicks developed into broilers and were sold in the market, they retained their original identity as chicks. As there was no substantial change in the process, the court agreed with the Tribunal's decision. The court ruled against the assessee and in favor of the Revenue.

Issue 3: Consideration of precedent from Andhra Pradesh High Court
The Tribunal's decision not to follow a favorable precedent from the Andhra Pradesh High Court was challenged. The court noted that since there was no decision from the jurisdictional High Court on the issue, the Tribunal was not bound to follow the Andhra Pradesh High Court's decision. The court supported the Tribunal's decision and answered the reference against the assessee and in favor of the Revenue.