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TMI Blog1996 (7) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... 93, amounts to a violation of the principles of natural justice which vitiates the appellate order ? (iii) Whether, on the facts and circumstances of the case, having considered the entitlement of the assessee to the benefits under sections 80J and 80HH of the Income-tax Act, 1961, in respect of the profits referable to the articles, products or things manufactured by the assessees in the course of its construction activities, which issue was left open by the Supreme Court in CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412, the Appellate Tribunal was justified in requiring the assessee to immediately produce the details of such profits especially when the Assessing Officer himself had not applied his mind to this aspect and for which reason the Appellate Tribunal had in the appellate orders of the assessee's 1983-84 and 1985-86 assessments remanded the case back to the Assessing Officer to quantify the eligible deduction under sections 80J and 80HH of such profits ? (iv) Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in finding, after having held in the appellate orders for the assessment years 1983-84 and 1985-86 following the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of production and that is with reference to section 80J of the Act as well as section 80HH. It states that the commencement of manufacture or production of articles before the specified date as specified independently in the section requires satisfaction with reference to any particular industrial undertaking. The fourth condition is the requirement of employees with reference to the industrial undertaking and in regard to this specific number of employees find mention in the two provisions. Therefore, the assessee invoking the provisions of sections 80J and 80HH of the Act has to satisfy compliance of the conditions generally specified hereinbefore. It appears that by the assessment order dated March 24, 1987 (exhibit P-1), the claim for deduction as specified hereinbefore was rejected and the reasoning appears to be that it was because the claim was rejected in the prior assessments based on the same arguments. Further travel of the proceedings for the year in question 1984-85 granted a partial relief to the assessee to the extent of section 32A of the Act. The appellate authority in regard to the claims based on sections 80J and 80HH followed the same reasoning that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course. of the judgment that the question as to whether the work undertaken could be characterised as an industrial undertaking was not being considered as " no arguments were advanced for the Revenue questioning the view taken by the High Court ". With regard to the role of the contractor in the context of the expressions " manufacture " and " produce ", after a resume of decided cases in regard thereto it is observed that manufacture is the end result of one or more processes through which the original commodity is made to pass and it is only when the change or a series of changes take the commodity to a point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Similarly, the apex court considered the words " production " or " produce " and observed that in the process the by-products, intermediate products and residual products show their emergence. It is in this process of reasoning, the apex court has observed a hypothetical situation that it may be that the respondent himself is manufacturing some of the articles like gates, windows, doors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther wanted to know whether at least the contracts under which the work was undertaken by the assessee was on the basis of 'cost plus', and if so the cost of such articles and the profit relatable thereto. The learned advocate was unable to furnish the details but pleaded for an adjournment. This case has seen several adjournments, first on January 18, 1993, second on March 31, 1993, third on September 9, 1993, and we are not inclined to grant any further adjournments. " It would thus be seen that the Tribunal, as bound, has followed the law declared by the Supreme Court, in accordance with the spirit of article 141 of the Constitution of India. We have already stated that the application for reference has been rejected, accepting the contention of the Revenue that the decision of the apex court in CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 would rule the situation. An earlier judgment dictated by my brother (Mohammed J.) before the recess in Original Petition No. 397 of 1996 (Bhagheeratha Engineering Ltd. v. CIT [1997] 227 ITR 504 (Ker)) having examined the situation we have already held that the decision of the apex court rules the situation in regard to the claim f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice, remand also requires its prior satisfaction that such order of remand would assure justice not in a vacuum but in an effective manner. Even if we peruse the questions there is no doubt that the assessee has to satisfy the statutory requirements of sections 80J and 80HH. In addition thereto we have also to give expected weight to the observations of the Tribunal that the proceedings before it were adjourned several times making it helpless to observe that it could not be inclined to grant further adjournments. The Tribunal also has observed that only an argument is developed in the course of passing observations of the apex court without any material before us. We also record our own assessment of the situation. The assessee in the travel of the proceedings has proceeded on erroneous presumption. From the situation that the Income-tax Officer rejected the claim and in support thereof recorded a reason, a situation leading to the presumption that the officer has accepted that other conditions or conditions of the statutory requirement are satisfied. There is no factual matrix required for consideration of the claim and learned counsel, in answer to a pointed qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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