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

TAXAP/681/2005HC GujaratGJHC24034076200531 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 1992-93. The Assessing Officer denied the claim, viewing the assessee's activity as not constituting an industrial undertaking due to the lack of plant or machinery and the use of contract workers for rolling bidis. The Commissioner (Appeals) allowed the claim, relying on a High Court decision. The Tribunal upheld the Commissioner's order, noting that the issue was covered by previous Tribunal decisions for the assessee. 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, dated February 2, 2006, 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. Therefore, applying the principle laid down in that judgment to the present case, the High Court found no error in the Tribunal's decision. The appeal filed by the revenue was dismissed.

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 was therefore eligible for deductions under the specified sections. The Tribunal's decision was based on previous rulings in favor of the assessee for earlier assessment years and a High Court decision in a similar case. Revenue's Contention: The revenue contended that the assessee was not an industrial undertaking as defined by the Act, as it did not possess any plant or machinery and relied on contract workers for the rolling of bidis. The Assessing Officer's view was that this process did not amount to manufacturing.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

TAXAP/681/2005 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 681 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 ORAL JUDGMENT (Per :

The order continues below.

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