COMMISSIONER OF INCOME TAX vs. PRABHUDAS KISHOREDAS TOBACCO PRODUCTS LTD.

TAXAP/680/2005HC GujaratGJHC24034075200531 March 2006Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE BANKIM.N.MEHTA4 pages
AI SummaryDismissed

What were the facts?

The assessee, Prabhudas Kishoredas Tobacco Products Ltd., engaged in manufacturing bidis, claimed deductions under Sections 80HH, 80HHA, and 80I of the Income-tax Act, 1961, for assessment year 1991-92. The Assessing Officer denied the claim, holding that the assessee's activity did not constitute an industrial undertaking as it lacked plant and machinery, and involved giving raw materials to contract workers for rolling bidis. The Commissioner (Appeals) allowed the claim, relying on a High Court decision. The Tribunal upheld the Commissioner's order, citing its own previous decisions in favour of the assessee for earlier assessment years. The Revenue appealed to the High Court.

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was correct in allowing deductions under Sections 80HH, 80HHA, and 80I. The Court followed its own prior judgment in Income Tax Reference No. 99 of 1995, which dealt with the assessee's case for assessment years 1984-85 and 1985-86. In that reference, the Division Bench had opined that the assessee company was an industrial undertaking engaged in the business of manufacturing bidis. Applying this precedent, the High Court found no error in the Tribunal's decision. The appeal filed by the Revenue was therefore dismissed. No specific issue was left undecided.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee is entitled to deduction under Sections 80HH, 80HHA and 80I of the Income-tax Act, 1961? Assessee's Contention: The assessee argued that its activity of manufacturing bidis constituted an industrial undertaking and that it was entitled to the claimed deductions. The Tribunal had previously ruled in its favour for assessment years 1984-85 and 1985-86. Revenue's Contention: The Revenue contended that the assessee was not an industrial undertaking as defined by the Act because it did not possess plant or machinery and outsourced the bidi rolling to contract workers. Therefore, the deductions under Sections 80HH, 80HHA, and 80I were not admissible.

Which sections of the Income-tax Act were involved?

Section 80HH,Section 80HHA,Section 80I,Section 260A

AI-generated summary — verify with the full judgment below

TAXAP/680/2005 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 680 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE J.M.PANCHAL HONOURABLE MR.JUSTICE BANKIM.N.MEHTA ===================================================================== 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 ? ===================================================================== COMMISSIONER OF INCOME TAX - Appellant(s)

Versus PRABHUDAS KISHOREDAS TOBACCO PRODUCTS LTD. - Opponent(s) ===================================================================== Appearance : MR MANISH R BHATT for Appellant(s) : 1, MS VAIBHAVI PARIKH with MR SN SOPARKAR for Opponent(s) : 1, ===================================================================== CORAM : HONOURABLE MR.JUSTICE J.M.PANCHAL and HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Date : 31/03/2006 OR

The order continues below.

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