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TMI Blog1989 (5) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... were rejected by the Income-tax Officer almost for identical reasons. In appeal, the CIT(A) sustained the rejection in respect of the relief under section 80HH. But the claim for 80J relief succeeded before the first appellate authority. The assessee is in appeal re-asserting its claim for relief under sec. 80HH. The revenue has brought an appeal objecting to the relief allowed under sec. 80J. Since the related facts are mostly common, the two appeals were consolidated for a common hearing. 3. Some relevant facts may be stated at the outset. Though the office of the assessee is in Quilon, the location of the industry is in a backward area and the CIT(A) mentions that there was no dispute about this. The assessee's business activity is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It follows that the new product is different from the article with which a start was made. It is a familiar principle that when a commercially new article is produced, either by a manual force or mechanical force or even by nature's own process, such as drying in sunlight, there is manufacture or processing of goods. If an authority is required, reference may be made to the decision of the Kerala High Court in the case of CIT v. Casino (P.) Ltd. [1973] 91 ITR 289 and this is what their Lordships have stated while considering the phrase "manufacture or processing of goods" : "The term 'manufacture or processing of goods' has not been defined by the Finance Act, 1968. In its ordinary meaning 'manufacture' is a process which results in an al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Industries v. ITO [1987] 23 ITD 364 held that the activity of decortication of groundnuts into kernel should be held to be a manufacturing activity to be entitled to relief under section 80HH. 6. Another point raised by the revenue was that the assessee did not own any plant or machinery and that it has no industrial undertaking, for the work of roasting and dehusking is got done by a third party. To repeat, the assessee dries the raw cashew nuts in sunlight. The ultimate packing is also done by the assessee. So part of the manufacturing activity is carried on by the assessee. It is true that the assessee gets the work of roasting and dehusking done by a third party. But it is under the direct supervision of the assessee. In this connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess expenditure. There appears to be no dispute that the daily workers had been employed in addition to the nine workers on the permanent roll. The question is answered by the decision of the Karnataka High Court in the case of CIT v. K.G. Yediyurappa Co. [1985] 152 ITR 152 wherein it is held that "worker", for the purpose of section 80HH, may be either casual, permanent or even temporary. Such being the case, the conditions in sec. 80HH(2)(iv) are clearly fulfilled because the assessee had employed many casual workers in addition to the nine persons on the permanent roll. 8. It was argued that the assessee might have engaged casual or temporary workers during the part of the year and that is not sufficient compliance of the law. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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