Law:

Section:

Section 80HH of the Income-tax Act, 1961 - Deduction - In respect of incomes of industries or hotels in backward area - Assessee, an exporter of prawns, bought prawns which were processed and thereafter exported - There was a detailed process by which prawns were prepared for export and one of the vital stages of that process was beheading, peeling and deveining of the prawns - Whether assessee was entitled to deduction under section 80HH - Held, yes Facts The assessee, an exporter of prawns used to buy prawns which were processed and ultimately exported. The assessee claimed deduction under section 80HH. The ITO disallowed the assessee's claim on the ground that the aforesaid business of the assessee was not one in which either manufacture or production was involved so as to attract the provisions of section 80HH. On appeal, the Tribunal observed that, there was a detailed process by which prawns were prepared for export and one of the vital stages of that process was beheading, peeling and deveining of the prawns and, thus, allowed the deduction under section 80HH. On reference: Held Like in section 33, so also in section 80HH, the word 'manufacture' or 'produce' appear. While both the words appear in clause (i ) of sub-section (2) of section 80HH only the word 'manufacturing' appears in clause (iv ) of that sub-section. The benefit of section 80HH is available whenever anew industrial undertaking is started in a backward area and that undertaking begins to manufacture or produce articles. The facts that section 80HH(2)(iv ) refers to the manufacturing process alone does not mean that production process is excluded. Every manufacturing process naturally involves production process for the object of manufacture is the production of goods. It processed or frozen fish and fish products can be regarded as articles manufactured or produced' for the purpose of the development rebate, it was the Legislature intent to attribute the same meaning to the identical expression appearing in another provision of the same statute, the object of which is to confer a benefit in the newly established industrial undertaking with a view to the advancement of the backward areas.…

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