Law:

Section:

Section 80-I of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings, etc. after certain dates - Assessment year 1971-72 - Assessee, a priority industry, had receipts from sale of scrap which was bye-product of industry, and also received money in consideration for services rendered to its customers in respect of supplies - Whether assessee would be entitled to relief under section 80-I in respect of receipts from service charges and sale of scraps - Held, yes FACTS The assessee being a priority industry, claimed relief under section 80-I on the receipts from the sale of scrap, which was a bye-product of the industry and, on charges received by it in consideration for the services rendered to its customers in respect of their supplies. The Department did not take note of those receipts on the ground that relief was restricted to any profits and gains attributable to any priority industry occurring in section 80-I, and that the said receipts did not answer the description of profits and gains 'attributable to the priority industry'. On appeal, the Tribunal allowed the assessee's claim. On reference: HELD Following the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84, it was to be held that the assessee was entitled to the relief under section 80-I in respect of the service charges and sale of scraps. EDITOR'S NOTE It was also held that the entire technical aid fees paid to the foreign collaborator should be allowed as a revenue expenditure and no portion of it should be disallowed as capital expenditure. Note: The case was decided in favour of the assessee. CASES REFERRED TO CIT v. Wheels India Ltd. [1983] 141 ITR 748 (Mad.), CIT v. Sundaram Clayton Ltd. [1982] 136 ITR 315 (Mad.) and Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC). JUDGMENT Balasubrahmanyan, J.-Two questions of law have been referred to us by the Income-tax Appellate Tribunal in this reference under the I.T. Act, 1961. The first question of law is as follows: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire…

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