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TMI Blog1987 (5) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... e any article but only made the latex more concentrated by adding preservatives. He also held that the assessee's claim u/s 80HH was not tenable as the assessee's concern was not an industrial undertaking which manufactured or produced any article or thing. 3. Aggrieved by the order of the ITO, the assessee preferred an appeal to the CIT (Appeals). The CIT(A), following the order of the Tribunal dated 23-12-1983 in ITA Nos. 187 188 (Coch.) 82 in the assessee's own case for the assessment years 1977-78 and 1978-79 upheld the action of the ITO. He also examined the assessee's claim u/s 80J by looking to the provisions of section 80J(4)(iv) of the IT Act, 1961. He asked the assessee's counsel to furnish information in that regard. After examining the statement filed by the assessee's counsel before him he held that he was not convinced that 10 persons had been employed by the assessee even if it was to be held that they were engaged in a manufacturing operation. Against the order of the CIT(A) the assessee preferred the present appeal. 4. At the time of hearing the assessee's counsel filed a paper book of 16 pages containing agreement dated 1-4-1976 between the assessee and M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India by virtue of the powers conferred on it under rule 8(1) of the Central Excise Rules, 1944 exempted " preserved latex ", " latex concentrate ", " smoke rubber sheets " and " crepe rubber and crump rubber ", falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944, from the whole of the duty of excise leviable thereon under section 3 of the said Act. The said notification is dated 8-7-1983 in No. 189/83-Central Excises. From this notification it is evident that the Government of India considered the preserved latex, latex concentrate, etc., as manufactured goods. But they have granted exemption from the duty of excise leviable u/s 3 of the said Act. This notification was not brought to the notice of the Tribunal when it considered the assessee's case for the assessment years 1977-78 and 1978-79. As the assessee is manufacturing the preserved latex it is entitled to the deduction u/ss. 80J and 80HH. The decision of the Kerala High Court in CIT v. Woodland Estates Ltd. [1965] 58 ITR 612 applies only to the case of conversion of latex into sole crepe. The said decision is not applicable to centrifuged latex. Further the Hon'ble High Court itself me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternal combustion engines amounted to manufacture. The Kerala High Court in the case of CIT v. West India Steel Co. Ltd. [1977] 108 ITR 601 (FB) held that conversion of steel ingots and billets into M.S. Rods and steel sections by machinery amounted to manufacture of iron and steel. The Madras High Court in the case of CIT v. R. Narayanaswami Naicker Sons [1984] 149 ITR 283 held that ginning of cotton by which cotton and seeds are separated amounted to manufacturing process. Regarding the observations of the CIT(A) with reference to the employment of 10 workers by the assessee-company kind attention of the members of the Tribunal is invited to page No. 4 of the paper book wherein the details of wages and the number of workers employed month-wise have been furnished. From this it could be seen that more than 10 workers have been employed in the months of September 1979 to February 1980. Thus, there has been substantial compliance with the provisions of section 80J(4)(iv) of the IT Act, 1961. Reliance is placed on the decision of the Bombay High Court in the case of CIT v. Harit Synthetic Fabrics (P.) Ltd. [1986] 162 ITR 640. 5. The arguments of the departmental representative w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said goods as goods produced or manufactured in India. If preserved latex was not to be considered as goods produced or manufactured in India, there would have been no necessity of exempting the same by issuing the notification under rule 8 of the Central Excise Rules, 1944. From this it has to be fairly inferred that the Government of India itself considered that preserved latex was an item manufactured or produced. The Central Excises and Salt Act, 1944 and the Income-tax Act, 1961 are both Central enactments. The words used in the relevant sections are " produced or manufactured ". So the decision of the Government taken under the Central Excise Act has to be applied with equal force under the Income-tax Act, 1961 also. In this view of the matter we hold that the assessee is entitled to deduction u/ss. 80J and 80HH. The assessee also succeeds in its claim as per the reasonings given in the order of the Special Bench of the Tribunal in Poyilakkada Fisheries (P.) Ltd.'s case which has almost been approved by the Calcutta High Court in Union Carbide India Ltd.'s case and the Kerala High Court in CIT v. Maxwell Sea Foods [1987] 1 KLT 696. Regarding the requirements of employment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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