Law:

Section:

Section 80-I of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings, etc., after certain dates/Infrastructure undertakings - Assessment years 1993-94, 1994-95 and 1996-97 - Assessee, a multi-State co-operative society, was manufacturer of urea and ammonia - It supplied ammonia gas through two pipeline connections from its plant directly to Heavy Water Plant of Department of Atomic Energy - Assessee was reimbursed for cost of ammonia and in addition it received service charges and production linked incentives - Commissioner (Appeals) as also Tribunal gave a finding that service charges did not depend upon manufacturing activity of assessee, but were given with reference to production in Heavy Water Plant and, accordingly, deduction under section 80-I was not admissible to assessee - Whether any substantial question of law arose from Tribunal's order - Held, no FACTS The assessee, a multi-State co-operative society, was a manufacturer of urea and ammonia. It supplied ammonia gas through two pipeline connections from its plant directly to the Heavy Water Plant of the Heavy Water Board (Department of Atomic Energy) which was located next to the assessee's plant. The assessee was reimbursed for the cost of ammonia manufactured and supplied by it and in addition thereto, it received service charges and production linked incentives. The Commissioner (Appeals) observed that the service charges received by the assessee could not be viewed as profits arising from the assessee's own manufacturing activity but those were given with reference to the production in the Heavy Water Plant and, therefore, the deductions as envisaged in section 80-I were not admissible to the assessee. The Tribunal upheld the findings of the Commissioner (Appeals). On appeal, the assessee contended that the service charges were relatable to the business of the assessee, and that the splitting up of the price into cost of production and service charges was only for convenience and could not result in the denial to the assessee of the benefit of section 80-I to the extent of such service charges. HELD On a consideration of the facts of the case and the object of…

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