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Issues: Claim for deduction under section 80HHA for the business of toddy contracts.
In this judgment by the Appellate Tribunal ITAT COCHIN, the appeals were raised by the assessee against the consolidated order passed by the CIT(A) for the assessment years 1978-79 and 1982-83. The appeal for the year 1978-79 was not pressed by the assessee and was dismissed. However, the appeal for the year 1982-83 raised a ground regarding a claim for deduction under section 80HHA for the business of toddy contracts. The Income-tax Officer had denied the claim stating that the assessee did not come under the category of small-scale industry and did not engage in the manufacture or production of any article as required by sec. 80HHA. The CIT(A) acknowledged that the assets of the assessee were within the specified limits but held that the assessee could not claim to have manufactured any article, thus confirming the rejection of the claim by the Income-tax Officer. The learned representative for the assessee cited a previous judgment by the Bangalore Bench of the Tribunal in the case of Sri Ranganatha Enterprises, where it was held that tapping toddy does not constitute production of an article. The representative tried to argue that as per the Excise Rules, conditions for tapping and processing toddy involve human activity, which could be considered as production. However, the departmental representative contended that these activities did not meet the criteria of manufacture or production under section 80HHA. The Tribunal emphasized that the conditions for tapping were primarily to ensure the health of the trees and the fitness of toddy for consumption, which are related to marketing aspects rather than production. The Tribunal also addressed the argument that toddy tapping is an industrial operation akin to manufacturing alcohol from sugarcane or rice, as mentioned in a previous case. However, the Tribunal clarified that this statement was made in a different context and does not establish toddy tapping as a manufacturing activity. Referring to the decision in the case of Sri Ranganatha Enterprises, the Tribunal concluded that tapping toddy does not constitute manufacture or production of an article, thus denying relief under section 80HHA. Consequently, the appeals by the assessee were dismissed.
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