Law:

Section:

Section 80HHA of the Income-tax Act, 1961 - Deductions - Profits and gains from newly established small-scale industrial undertakings - Assessment year 1989-90 - Notification issued by Central Government specified that assessee would be entitled to deduction under section 80HHA if unit of assessee was situated within a distance of 8 kilometres from municipality, Assessing Officer was not justified in denying benefit on erroneous footing that assessee's unit was situated within fifteen kilometres from municipal limits [In favour of assessee] The assessee claimed deduction under section 80HHA. The Assessing Officer held that since the assessee had set up its business within the limits of the greater Gandhidham municipality which was not a rural area, it was not entitled to claim deduction under section 80HHA. Held that for the purpose of falling within the ambit of sub-clause (ii ) of clause (a) of the Explanation to section 80HHA, the unit of the assessee should be situated within the distance of 8 kilometers from the municipal limits of Gandhidham. In the instant case, the Income-tax Officer had held that the assessee was not eligible for the benefit under section 80HHC as it was situated within a distance of fifteen kilometers from the municipal limits of Gandhinagar. However, under the notification issued by the Central Government, it is only if the unit of the assessee was situated within a distance of eight kilometers from Gandhidham that the assessee would fall within the ambit of sub-clause (ii) of clause (a) of section 80HHA. In the circumstances, it was apparent that the Income-tax Officer had proceeded on an erroneous footing by holding that the assessee was not eligible for the benefit of section 80HHA. M.R. Bhatt for the Commissioner. Kirtikant Thaker for the Assessee. JUDGMENT Ms. Harsha Devani, J. - The Income-tax Appellate Tribunal, Rajkot Bench, Rajkot (the Tribunal), has referred the following questions for the opinion of this court under section 256(2) of the Income-tax Act, 1961 (the Act) : "(i)Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income-tax (Appeals) allowing the…

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