Law: Income Tax Act, 1961

Section: 80J(4)(iii),80J(6),80J,32A,256(2),33(1)( b)(B)(ii)

Section 80J of the Income-tax Act, 1961 - Deductions - Profits and gains from newly established industrial undertakings/ships or hotels - Assessment years 1976-77 to 1978-79 - Whether foodstuff prepared by cooking or by any other process from raw materials such as cereals, pulses, vegetables, meat or like can be regarded as commercially distinct commodity and it can be held that such foodstuff is manufactured or produced - Held, no - Whether an assessee who is carrying on a trading activity of business of a hotel can claim benefit granted to an industrial undertaking by contending that it also produces foodstuff or food packets - Held, no - Whether flight kitchen operated by assessee-hotel, which was ancillary to hotel business of assessee, would be entitled to get benefit of section 80J - Held, no Section 32A of the Income-tax Act, 1961 - Investment allowance - Assessment year 1978-79 - Whether an assessee who is engaged in hotel business is entitled to investment allowance on ground that it produces foodstuff from raw materials - Held, no Words & phrases - 'industrial undertaking' and 'manufacture' in the context of sections 32A and 80J of the Income-tax Act, 1961 FACTS The assessee, having business of a hotel or chain of hotels, contended that the activity pertaining to the flight kitchen was not a hotel activity as it was a separate industrial undertaking which was engaged in manufacture or production of food packages on a large, organised and mechanised basis for the use of various international airlines and, therefore, entitled to get benefit of section 80J. The Commissioner came to the conclusion that the flight kitchen was engaged in the manufacture or production of articles within the meaning of section 80J(4)(iii) and it was not part of the hotel activity of the assessee and, accordingly, allowed deduction under section 80J. In some other cases, the assessee-hotels sought benefit of investment allowance under section 32A contending that the assessees were industrial undertakings engaged in the manufacturing activity which included activity of preparing articles of food from raw materials. But that claim was rejected by the Tribunal by holding that…

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