Law:

Section:

Section 80HH, read with section 80-I, of the Income-tax Act, 1961 - Deductions - Profits and gains from hotels or industrial undertakings, etc., in backward areas - Assessment years 1988-89 and 1989-90 - Whether, where assessee was engaged in business of fire works on job work basis and was supplied with raw materials by its customers and had engaged 200 labourers for producing end- product of crackers, it could be said that assessee had satisfied test of manufacturer as well as an industrial undertaking - Held, yes FACTS The assessee was engaged in the business of fire works on job work basis. It was supplied with the raw materials by its customers, and had engaged coolies, viz., 200 labourers, to produce crackers. The assessee claimed deduction under sections 80HH and 80-I. The Assessing Officer disallowed the claim of the assessee on the ground that the assessee was only a labour contractor and not an industrial undertaking eligible for the benefits of sections 80HH and 80-I. However, the Commissioner (Appeals) as well as the Tribunal held that the assessee was an industrial under-taking eligible for the benefits of sections 80HH and 80-I. On revenue's appeal : HELD In the instant case, it was not in dispute that the assessee had only been supplied with the raw materials by its customers and of course, the assessee had engaged coolies, viz., 200 labourers, to produce the end-product of crackers. Thus, the assessee satisfied the test of manufacturer by producing the new material, namely, crackers, and also satisfied the test of industrial undertaking, as the assessee had involved in a systematic activity, organized by cooperation between employer and employees, viz., 200 labourers, and for the production and distribution of goods, viz., new product, crackers. [Para 10.3] In that view of the matter, the Commissioner (Appeals) and the Tribunal rightly held that the assessee was an industrial undertaking eligible for the benefits of sections 80HH and section 80-I . [Para 11] CASES REFERRED TO C. Kadarkarai v. CWT [1989] 176 ITR 121/ 42 Taxman 42 (Mad.) [Para 3], CIT v. Prabhudas Kishordas Tobacco Products (P.) Ltd. [2006] 282 ITR 568 (Guj.) [Para 6.1], Anwar…

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