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Issues involved: Interpretation of section 84 of the Income Tax Act, 1961 regarding relief for industrial undertakings engaged in manufacture and production of articles.
Summary: The case involved a private limited company claiming tax exemption under section 84 of the Income Tax Act, 1961 for its business activities including galvanizing work. The Income Tax Officer (ITO) denied the relief under section 84 for the galvanizing work done for outsiders. The Appellate Authority Commissioner (AAC) upheld the ITO's decision, stating that the work did not amount to manufacturing goods. The Income-tax Tribunal, however, ruled in favor of the assessee, considering the galvanizing work as falling under section 84(2)(iii). The High Court analyzed the definition of "manufacture" and "produce" in fiscal legislation and referred to relevant case laws to determine if the galvanizing process constituted manufacturing or production of new goods. The court concluded that galvanizing did not result in the creation of new goods and therefore, the assessee did not fulfill the conditions of section 84(2)(iii) of the Act. The judgment was in favor of the revenue, denying the tax relief to the assessee for the galvanizing work. This judgment clarifies the interpretation of section 84 of the Income Tax Act, 1961 in the context of industrial undertakings engaged in manufacturing and production activities. The court's analysis of the definition of "manufacture" and "produce" provides guidance on what constitutes the creation of new goods for the purpose of tax relief under the Act. The decision highlights the importance of meeting specific criteria outlined in the legislation to qualify for tax exemptions related to industrial activities.
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