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TMI Blog1992 (1) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-79 deductions under (i) section 32A, (ii) section 80HH of the Income-tax Act, 1961 (" the I. T. Act "). Both the deductions were disallowed by the Income-tax Officer as well as the Appellate Assistant Commissioner. The Tribunal, however, allowed the deduction on both the counts and at the instance of the Revenue made this reference only in respect of deduction allowed under section 80HH. One Kabra Brothers, a partnership firm, was carrying on the business of selling diesel engines at Chanda (backward area) in the trade name of Chanda Diesels up to September 30, 1976. The business assets of Chanda Diesels were valued at Rs. 35,066. The assessee-firm was formed by a deed dated October 1, 1976. It took over the said business and assets and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reconstruction, of a business already in existence in any backward area : Provided that this condition shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section ; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose in any backward area ; (iv) it employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either of them, there could be an industrial undertaking. That case pertained to the business of a contractor who had undertaken the construction of an irrigation project. Chanda Diesels, when taken over by the assessee, had neither any machinery nor was it making fuel injection pipes. It was carrying on only the business of selling diesel engines. Its business assets were only worth Rs. 35,066. The assessee made investment to the tune of Rs. 79,726 in purchasing new machinery for the purposes of making fuel injection pipes for diesel engines by making nipples and giving shape at both the ends of the tubes. Tube was the raw material and the fuel injection pipe was undergone a change as a result of the operation performed on it by men and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT v. Associated Cement Companies Ltd [1979] 118 ITR 406, wherein it is held that if a new industrial unit is established as a part of an already existing industrial establishment and if the newly established unit is itself an integrated independent unit in which new plant and machinery is put up and that by itself is capable of production of goods independently of the old unit, even the said unit could be classified as a newly established industrial undertaking, and will qualify for the relief. Thus, looked at from any point of view, the conclusion is inevitable that the assessee was entitled to deduction also under section 80HH. We, therefore, answer the question in the affirmative and in favour of the assessee. No order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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