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TMI Blog1984 (11) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the business of purchasing forests, felling the trees and converting them into logs and subsequently sawing them into timber of various sizes and varieties fit to be used in construction of buildings and also for being put to other uses inclusive of manufacture of furniture. The business operations of the assessee were carried on in a backward area. Deduction under s. 80HH was claimed in respect of the profits and gains derived from the industrial undertaking consisting of the above mentioned operations. In the assessments completed on 5th Oct., 1981, 17th Nov., 1981, 22nd March, 1982 and 12th May, 1982 for these years, the deductions claimed in this behalf were allowed by the ITO. 3. The CIT, Nagpur, on going through the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h activity and allow deduction under s. 80HH only in respect of those activities which actually represented manufacturing of commodity. 5. Aggrieved with the same, the assessee is in appeal before us. The submissions made on behalf of the assessee may be summarised as under. The CIT failed to give a specific direction as to which activity of the assessee did not qualify for being categorised as manufacturing activity and, therefore, his order is illegal inasmuch as, he has left it to the ITO to made fresh enquiries in this regard. Reliance was placed on J. P. Srivastava Sons (Kanpur) Ltd. vs. CIT (1978) 111 ITR 326 (All). The following passage at p. 329 of this decision was relied upon. "We are of the opinion that the approach of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing activities, the appellant's representative brought to our notice the following two decisions of the Calcutta High Court under the ST Act wherein, it was held that sawing the of planks from timber or sizing the same amounts to manufacture and the person carrying on such business is a manufacture. Our attention was also drawn to the second decision wherein, it has been held by the Calcutta High Court, that, chopping of timber into firewood is a manufacturing process, and, therefore, firewood is a manufactured article: (1) Shaw Bros. Co. vs. State of West Bengal (1963) 14 STC 878 (Cal). (2) Bachha Tewari Anr. vs. Division Forest Officer Ors. (1963) 14 STC 1067 (Cal). On the basis of the above decisions, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Departmental Representative made the following submissions. The CIT considered the entire deduction as erroneous and, therefore set aside the assessment for being done after a thorough scrutiny in the light of the remarks made in his order and, therefore, there was no legal lacuna in the order of the CIT. The CIT had not confined himself to the profits granted by sale of firewood and the reference made by him to the same was only to indicate, that, the same would not be entitled to be treated as manufacturing activity. Under s. 263, the CIT has the power to pass such orders as the circumstances of the case warrant including an order enhancing or modifying the assessment or cancelling the assessment and direction a fresh assessment. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d commodity. The contention on behalf of the appellant-assessee in that case was that by sawing the timber and producing planks of various sizes, no manufactured commodity had come into existence. The Calcutta High Court did not agree with this view. They held as follows: "When planks or sawed out of logs, what is produced is a different thing from logs capable of being put to different uses. Therefore, when planks are made from logs or damaged wood, a new kind of commodity is manufactured because plank made out of timber is not timber in its nascent state." In the second case (1963) 14 STC 1067 (Cal), the same High Court has held, that, chopping of timber into firewood is a manufacturing process and, therefore, firewood is a manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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