1990 (4) TMI 98 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A) order directing IAC(A) to allow deduction u/s. 80-I and 80HH.

Summary:
The assessee, having an industrial unit in a backward area, received job charges for yarn twisting. The assessing officer rejected the u/s 80HH and 80-I claims, citing absence of a separate balance sheet, job work instead of manufacturing, and yarn twisting not constituting manufacturing. The CIT(A) allowed the deduction based on precedents. The assessing officer's reasons were deemed invalid as a separate Profit & Loss account sufficed for the claim determination. The Gujarat High Court precedent established that job work qualifies as manufacturing. The issue of yarn twisting constituting manufacturing was analyzed using legal precedents emphasizing that if a different commodity emerges from processing, it can be considered manufacturing. The ITAT upheld the CIT(A) decision, granting the deductions u/s 80HH and 80-I. The revenue's appeal was dismissed.