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Interpretation of Section 80-I of the Income Tax Act, 1961 for a private limited company engaged in running cold storages and claiming relief under the Act. Determination of whether the company qualifies as a priority industry for the purpose of claiming deductions under Section 80-I based on the production of processed seeds. Analysis: The case involved a private limited company operating cold storages that claimed relief under Section 80-I of the Income Tax Act, 1961 for the assessment years 1969-70 and 1970-71. The company argued that it was engaged in the production of processed seeds, qualifying as a "priority industry" under Section 80B(7) of the Act. The Income Tax Officer (ITO) and the Appellate Assistant Commissioner (AAC) denied the claim, stating that storing potatoes in cold storage did not constitute production of processed seeds. The Income-tax Appellate Tribunal also upheld this decision. To determine whether the company qualified as a priority industry, the court analyzed the definition of "priority industry" under Section 80B(7) of the Act, which includes the construction, manufacture, or production of specified articles. The court emphasized that production does not have a rigid definition and must align with the statute's purpose. Various definitions of "produce" were considered to understand the term "production" in the context of the Act. The court found that the company's activity of storing potatoes in cold storage did not amount to the production of processed seeds. The court highlighted the need for evidence showing the company's engagement in seed production to claim benefits under Section 80-I. The court referenced a previous case where keeping potatoes in cold storage was considered processing but clarified that this did not establish the company's engagement in seed production. The court rejected the company's argument that storing potatoes in cold storage for preservation aligned with seed production. It distinguished a Supreme Court case involving mica mining as not applicable to the present case. Ultimately, the court ruled against the company, stating that merely storing potatoes in cold storage did not qualify as production of processed seeds, thereby denying the claim for relief under Section 80-I. In conclusion, the court answered the question in the negative, in favor of the department, and awarded costs to the Commissioner of Income Tax.
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