9911796707
TMI Blog1984 (9) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... filled. The Commissioner (Appeals) has upheld this finding and the assessee has now come in appeal before us and the point to be considered at present is whether those conditions are satisfied. 3. Sub-section (1A) of section 35B was inserted with effect from 1-4-1978, by the Finance Act, 1978, and was omitted with effect from 1-4-1980 by the Finance Act, 1979. That sub-section was in force in the assessment year 1979-80, with which we are concerned in this appeal. That sub-section was as follows : " (1A) Notwithstanding anything contained in sub-section (1), no deduction under this section shall be allowed in relation to any expenditure incurred after the 31st day of March, 1978, unless the following conditions are fulfilled, namely :-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the assessee does not own any smallscale industrial undertaking. According to the assessee, it purchases goods from small-scale industrial undertakings and then exports them. The ITO and the Commissioner (Appeals) have held that the said fact, even if established, would not bring the assessee in the category of 'small-scale exporter' and as such, condition under clause (a)(i) of sub-section (1A) of section 35B would not be fulfilled. 7. The contention on behalf of the assessee is that the words 'owned by him' in clause (a) of the Explanation, qualified the word 'undertakings' only and that the said words did not qualify the prior word 'undertaking', with the result that what all that was necessary, in order to come within the ambit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controversy about meaning. 9. Our attention was drawn to the fact that in the Circular No. 240, dated 17-5-1978---Taxmann's Direct Taxes Circulars, Vol. 2, 1980 edn., p. 618---issued by the Board explaining the scope of sub-section (1A), the words 'small-scale industrial undertaking' were put under inverted commas and it was contended that this indicates that the Board itself had thought that the words 'owned by him' governed the word 'undertakings' only and not the words 'any small-scale industrial undertaking'. We are unable to draw this inference from omission in the circular to put the words 'undertakings owned by him' inside the inverted commas in juxtaposition with the words 'small-scale industrial undertaking'. We have perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to the assessee, plant, machinery and the services of staff of other company to carry on its manufacturing activity and the products were manufactured by other company under the direct supervision of the assessee's own technically qualified staff and the assessee's own quality control All raw materials were purchased and supplied by the assessee. It was on these facts that it was held that operation amounted to manufacture of pharmaceuticals by the assessee, with the result that the assessee came within the ambit of the term 'industrial company' in the Finance Act, 1966. In our case, we are concerned with the expression 'goods manufactured or produced in any small-scale industrial undertaking owned by him' (the assessee). The cloth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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