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TMI Blog2014 (12) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... double or multiple yarn threads. In its returns submitted for the assessment year 1992-1993, the respondent claimed certain deductions, referable to Sections 80HH and 80I of the Act. The Assessing Officer took the view that no process of manufacture whatever is undertaken by the respondent, and thereby, it is not entitled to claim deductions under Sections 80HH and 80I of the Act. Aggrieved by the order of the Assessing Officer, the respondent carried the matter in appeal to the Commissioner of Income Tax (Appeals). The Commissioner allowed the appeal, through order, dated 27.03.1996. Challenging the same, the department filed I.T.A.No.1309/Hyd/1996, before the Hyderabad Bench A of the Income Tax Appellate Tribunal (for short the Tribunal) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in incentives to encourage the establishment of industries and hotels in backward areas. Section 80HH of the Act is one such provision. Bereft of the other details, sub-section (1) thereof reads as under: Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this section applies, thee shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof. In addition to that, an industrial undertaking or a hotel, is extended the benefit of deduction under Section 80I of the Act, independently, irre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther a particular activity can be treated as an independent activity of manufacture, so that the product coming out of it, becomes liable for excise duty. Before undertaking any further discussion on this aspect, a semblance of caveat needs to be added to the effect that the parameters for manufacture that become applicable under the Central Excise Act, are totally different from those under the Income Tax Act, wherever the occasion arises. While the Central Excise Act is primarily concerned with the activity of manufacture, as it has to depend upon only that activity for levy of excise duty, the occurrence of the word manufacture, is rare and incidental under the Income Tax Act. Further, the verification of the actual activity of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be recognised as still retaining its original identity. In fact, this was taken note of by the Commissioner himself. In the context of Section 80HH of the Act, the Parliament guardedly used the expression manufacturing process, or manufacture, or produce articles in sub-section (4) and other parts thereof. What becomes entitled to claim exemption under Section 80HH of the Act, is an industrial undertaking, as is evident from the very heading of the Section, than the nature of activity taken up by it. Once the assessee answers the description of an industrial undertaking, it is immaterial whether it is manufacturing, or producing or processing. The amount that qualifies for deductions is the profits and gains of such an undertaking to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the benefit of MODVAT credit. That is not the situation in the instant case.
The Bombay High Court in Commissioner of Income Tax v. Emptee Poly-Yarn Private Limited 305 ITR 309 examined the matter from the purview of the Act and held that the product involved therein was independent of its raw material, and thereby, the questions were answered in favour of the assessee. The same was affirmed by the Supreme Court in Commissioner of Income Tax, Mumbai v. Emptee Poly-Yarn Private Limited (2010) 2 SCC 720.
We do not find any ground to interfere with the order passed by the Tribunal.
The appeal is accordingly dismissed. There shall be no order as to costs.
The miscellaneous petitions filed in this appeal shall also stand disposed of. X X X X Extracts X X X X X X X X Extracts X X X X
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