2000 (12) TMI 236 - AT - Income Tax

Summary

Issues:
- Appeal against order of Dy. CIT(A) and CIT(A)
- Common issue in both appeals
- Disallowance of deduction under sections 80HH and 80-I for hospital

Analysis:
1. The appeal involved two separate appeals, one by the assessee against the order of Dy. CIT(A) and the other by the Revenue against the order of CIT(A). Both appeals were heard together due to a common issue and were disposed of by a common order.

2. The assessee decided not to press their appeal, and it was dismissed as withdrawn. The Revenue's appeal, however, raised the issue of the CIT(A) allowing deductions under sections 80HH and 80-I for a hospital, contending that the hospital did not qualify for these deductions as it was not engaged in manufacturing or producing goods.

3. The facts leading to the appeal indicated that the assessee, a hospital, claimed deductions under sections 80HH and 80-I in their income tax return for a specific assessment year. The AO disallowed the claim, stating that the deductions were only available to industrial undertakings engaged in manufacturing or production activities. The CIT(A) overturned this decision based on a Tribunal ruling in the assessee's favor for a previous year.

4. The Revenue, in its appeal, argued that the hospital should be considered a service industry based on a certificate from the District Industries Centre. They contended that if any deduction were to be allowed, it should be limited to a percentage of income from relevant activities.

5. The assessee's counsel argued that the disallowance was solely based on the hospital not being involved in manufacturing or production. They cited a High Court decision in the assessee's favor for a previous year, similar to sections 80HH and 80-I, supporting their claim for deductions.

6. After reviewing submissions and relevant material, including the High Court judgment from a previous year, it was found that the hospital could be considered a small-scale industrial undertaking. The High Court had determined that the hospital's machinery and equipment were used for manufacturing or producing articles, making it eligible for deductions under sections 80HH and 80-I.

7. Consequently, the Tribunal upheld the CIT(A)'s decision to allow deductions under sections 80HH and 80-I for the hospital, dismissing the Revenue's appeal.