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TMI Blog2005 (8) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... owned machinery worth Rs. 3,891.48 which finds place in the balance-sheet under the head "Assets" whose details are given in the machinery accounts. The Tribunal also found that the assessee is registered as a small scale industrial unit by the Director of Industries, Government of U.P. in respect of brassware - both the questions referred above, are answered in the affirmative, i.e., in favour of the assessee - - - - - Dated:- 9-8-2005 - Judge(s) : R. K. AGRAWAL., RAJES KUMAR. JUDGMENT The judgment of the court was delivered by Rajes Kumar J.-The Income-tax Appellate Tribunal has referred the following questions of law under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, which was allowed. The Tribunal held as follows: "We have heard the learned representatives on both the sides. The Income-tax Officer has admitted that the assessee is an old concern and had been dealing in export activity for the .... His only observation is that the assessee is not originally a manufacturer and that it is basically a process doer of the items which are exported by it. We find that in the profit and loss account, machinery expenses of Rs. 1,263.10 and tools expenses of Rs. 1,122.02 have been shown. In the balance-sheet, machinery worth Rs. 3,891.48 shown under the head 'Assets' whose details are given in the machinery account. In the trading account expenses have been shown for the purchase of 'koramal' and for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the assessee was purchasing "koramal" from "karkhanedars" in pieces and thereafter, has only carried on the process of welding, polishing, lacquering, engraving, colouring, etc., and is not an original manufacturer and, therefore, does not fall within the small scale undertaking and as such, is not entitled for the benefit of section 35B, inasmuch as it does not fulfil the requirement as required under section 35B(1A). In support of his contention, he relied upon the decision of this court in I.T.R. No. 51 of 1988-CIT v. Bhatia Impex (India), decided on December 1, 2004. Sri Vikram Gulati, learned counsel for the assessee, contended that the assessee is a small scale exporter as defined under the Explanation to section 35B(1A), be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to in that sub-section is incurred by the assessee wholly and exclusively for the purposes of the business referred to in sub-clause (i) or, as the case may be, sub-clause (ii) of clause (a). Explanation.- For the purposes of this sub-section,- (a) 'small scale exporter' means a person who exports goods manufactured or produced in any small scale industrial undertaking or undertakings owned by him: Provided that such person does not own any industrial undertaking which is not a small scale industrial undertaking; (b) 'Export House Certificate' means a valid Export House Certificate issued by the Chief Controller of Imports and Exports, Government of India; (c) 'provision of technical know-how' has the meaning assigned to it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e undertaking did not exceed ten lakh rupees. Admittedly, the value of machinery or plant installed for the purposes of the business of the assessee is not exceeding Rs. ten lakhs. The activity carried on by the assessee, namely, welding, soldering, polishing, lacquering, etc., after purchasing the "koramal" from the "karkhanedars" amounts to "producing" the goods. Thus, the assessee clearly falls within the meaning of "small scale exporter" as defined under the Explanation to section 35(1A) and entitled for the deduction under section 35B(1). The apex court as early as in 1961, in Chrestien Mica Industries Ltd. v. State of Bihar [1961] 12 STC 150, defined the word "production", albeit, in connection with the Bihar Sales Tax Act, 1947. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been set aside by the Tribunal. On these facts, this court held that the assessee itself does not own any undertaking where the manufacturing or production activity can be done. Thus the case is clearly distinguishable and does not apply in the present case. In the present case, the Tribunal found that the assessee owned machinery worth Rs. 3,891.48 which finds place in the balance-sheet under the head "Assets" whose details are given in the machinery accounts. The Tribunal also found that the assessee is registered as a small scale industrial unit by the Director of Industries, Government of U.P. in respect of brassware. In view of the foregoing discussion, both the questions referred above, are answered in the affirmative, i.e., in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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