NIRMAN SYNTEX PVT. LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX

TAXAP/435/2007HC GujaratGJHC24040354200703 December 2013Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.P.DHOLARIA4 pages
AI SummaryAllowed

What were the facts?

The assessee, Nirman Syntex Pvt. Ltd., filed these appeals against the common judgment and order of the Income Tax Appellate Tribunal (ITAT) dated September 8, 2006. The appeals pertain to Assessment Years 1995-96 and 1996-97. The core issue revolves around the eligibility of the assessee for deductions under Sections 80HH and 80I of the Income Tax Act. The ITAT had previously ruled that the process of texturising yarn did not constitute manufacturing or producing an article or thing, thereby disallowing the claimed deductions. The assessee is challenging this decision of the ITAT.

What did the High Court hold?

The High Court allowed the appeals, quashing and setting aside the impugned common order of the ITAT. The Court held that the process of twisting and texturising of partially oriented yarn amounts to manufacture in terms of Section 80IA of the Income Tax Act. This decision was based on the ratio laid down by the Hon'ble Supreme Court in the cases of Commissioner of Income Tax Vs. Emptee Poly-Yarn P. Ltd. and Commissioner of Income Tax Vs. Yashasvi Yarn Ltd. Consequently, the assessee was held to be entitled to the deduction under Sections 80HH and 80I of the Income Tax Act. The operative direction was to grant the relief to the assessee. No issue was expressly left undecided.

What were the issues?

1. Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the process of texturising of yarn is not manufacturing or producing an article or a thing so as to be eligible for claiming deduction under Section 80HH and 80I of the Income Tax Act? Assessee's contention: The assessee argued that the issue is covered by the Supreme Court's decision in Commissioner of Income Tax Vs. Emptee Poly-Yarn P. Ltd. ([2010] 320 ITR 665), which held that twisting and texturising partially oriented yarn amounts to manufacture for the purpose of Section 80IA. The assessee further submitted that this decision was followed by the Supreme Court in Commissioner of Income Tax Vs. Yashasvi Yarn Ltd. ([2013] 350 ITR 208). Revenue's contention: The revenue, represented by its counsel, was not in a position to point out any contrary decision to the Supreme Court's rulings.

Which sections of the Income-tax Act were involved?

Section 80HH,Section 80I,Section 80IA

AI-generated summary — verify with the full judgment below

O/TAXAP/435/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 435 of 2007 With TAX APPEAL NO. 436 of 2007

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ====================================== NIRMAN SYNTEX PVT. LTD.....Appellant(s) Versus ASSISTANT COMMISSIONER OF INCOME TAX....Opponent(s) ====================================== Appearance: MR SN SOPARKAR, SR. ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Appellant(s) No. 1 MS PAURAMI B SHETH, ADVOCATE for the Opponent(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH

The order continues below.

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