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TMI Blog1979 (11) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... to the benefit provided under section 80HH of the Income-tax Act, 1961? " The relevant assessment years are 1974-75 and 1975-76. S.J.C. Nos. 97 and 98 of 1975 relate to one registered firm which had undertaken construction of a minor irrigation project in the district of Dhankanal. The first reference is with respect to the assessment year 1974-75 and the other for the subsequent assessment year. S.J.C. No. 99 of 1978 relates to assessment year 1975-76 and the assessee therein, another registered firm, undertook erection of the Sundar Irrigation Project. According to the assertion of the revenue, the firms had come into existence for execution of the particular works and were to stand dissolved when the works were over. The ITO while ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of engineering activities. In other words, it displaced certain materials from the site of the dam and brought other materials to the said site and performed various engineering processes. It is true that the net product is composed of its components but the commercial use and value of the net product is completely different from those of its components. These activities are not only 'processing' as held in the case of Addl. Commissioner of Income-tax v. Farukkabad Cold storage (P.) Ltd. [1977] 107 ITR 816, but also come within 'manufacture' as held in the case of Commissioner of Income-tax v. Tata Locomotive Engineering Co. Ltd. [1968] 68 ITR 325. The article finally produced had considerable commercial value for which a heavy payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 ........" The marginal heading of this section reads thus : " Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas." and the provision was inserted by the Direct Taxes (Amend.) Act of 1974 with a view to boosting of development activities in backward areas. Sub-section (1) provides the concession which extends to an industrial undertaking as also to the business of a hotel. Sub-section (2) lays down the conditions which an industial undertaking has to fulfil in order to entitle itself to the concessional benefit while sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the view indicated and, therefore, do not propose to deal with that aspect of the matter. The only question which arises for consideration is whether the assessee qualifies for the concession available under s. 80HH of the Act. At the hearing the learned standing counsel contends that in order to be entitled to the benefit as provided under sub-s. (1) of s. 80HH of the Act, the conditions indicated in sub-s. (2) thereof have to be fulfilled. There can be. no dispute so far as this submission goes. Counsel for the revenue next contends that the assessee must not only be an " industrial undertaking " as referred to in sub-s. (1) but must be manufacturing or producing articles as indicated in sub-s. (2)(i) of the Act. A firm of contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case has clearly recorded a finding of fact that the assessee had undertaken manufacture of certain materials which it ultimately utilised in the construction of the dam and it worked for the ultimate production of a dam. Assessee's counsel has canvassed that there is no warrant for the submission of learned standing counsel that a dam would not be an article. " Article ", according to the Shorter Oxford English Dictionary, means " a commodity; a piece of goods or property " : It need not be confined to movable property. There would be no justification to hold that a dam is not an article in that sense of the term. We would reiterate here that there is considerable force in Mr. Rath's argument that it was not the intention of Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X
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