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TMI Blog2003 (4) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounting year but within the period permissible under the Sales Tax Act, no addition should be made invoking the provisions of section 43B – Thus, additions were rightly deleted by tribunal - - - - - Dated:- 29-4-2003 - Judge(s) : Y. R. MEENA., SHASHI KANT SHARMA. JUDGMENT On an application under section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions for the opinion of this court: For the assessment years 1983-84 to 1985-86: "Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that deduction under section 80-I of the Income-tax Act, 1961, was allowable to the assessee-company even though the industrial undertaking was not run by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs, the assessee is entitled for deduction under section 80-I of the Act. Heard learned counsel for the parties. Mr. Mathur, learned counsel for the applicant, submits that unless the assessee manufactures or produces any article or things himself/itself, the assessee is not entitled for benefit of section 80-I. The conditions laid down in sub-section (2) of section 80-I are mandatory. He placed reliance on the decision of the Delhi High Court in the case of CIT v. Northern India Iron and Steel Co. Ltd. [1997] 226 ITR 342; CIT v. Phoenix Scrap Processors [1995] 211 ITR 341 (Bom) and CIT v. Mahavir Rubber Works [2002] 256 ITR 667 (Raj). On the other hand, Mr. Kasliwal, learned counsel for the assessee-respondent submits that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or things, and is not entitled for deduction under section 80J of the Act, 1961. In CIT v. Phoenix Scrap Processors [1995] 211 ITR 341, the Bombay High Court has taken the view that for deduction under section 80J, the condition precedent, inter alia, is that the assessee itself should run the industrial undertaking and derive profit and gains from that. The provision of sub-section (4) of section 80J is pari materia to the provision of sub-section (2) of section 80-I. Mr. Kasliwal submits that section 80-I is designed to give encouragement to certain industries. Therefore, it requires that provision be liberally construed. The issue before us is whether the assessee is manufacturing any articles or things. In CIT v. U.P. State Agro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from that. The assessee is eligible for investment allowance. This case also has no application as the word used in section 32A is not identical with that of sub-section (2) of section 80-I of the Act. Therefore, this decision of their Lordships has also no application. The facts are not in dispute that the assessee has leased out its industry and does not manufacture any article or things by itself. But Mr. Kasliwal submits that even if the assessee does not manufacture any article or things, but the income from leasing out machinery is a business income, therefore, the assessee is eligible for deduction under section 80-I of the 1961 Act. Whether the assessee is eligible for deduction under section 80-I, sub-section (2) lays down som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing is carried on without power, the assessee should employ 20 or more workers in the industrial undertaking. The employee can be employed only by the employer and not by the industry, therefore, manufacturing should be with the help of the employees employed by the assessee. If we read clause (iv) in its entirety, the net result is that there should be manufacturing activity by the assessee himself/itself for deduction under section 80-I of the Act. If he does not carry on the manufacturing activities himself and leases out the factory to a third party and the third party carried on the manufacturing activity, the assessee is not entitled for deduction under section 80-I of the Act. In this view of the matter, the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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