Law:

Section:

Section 80HH, read with section 80J, of the Income-tax Act, 1961 - Deductions - Profits and gains from hotels or industrial undertakings, etc., in backward areas - Assessment years 1976-77 and 1977-78 - Whether manufacturing process includes within its ambit raw material to be filled in plant in such a shape and condition, which may be acceptable or can be fed in plant - Held, yes - Whether various processes starting from purchase of raw material till sale of finished goods form an integral part of manufacturing process and workers and labourers employed in these processes are workers employed in manufacturing process within meaning of sections 80J and 80HH - Held, yes - Assessing Officer disallowed assessee's claim for relief under sections 80HH and 80J on ground that its rice plant was automatic and did not employ ten or more workers in manufacturing process - Tribunal found that workers employed for bringing paddy bags from outside and keeping same in factory, drying paddy and cleaning plant and removing bhoosi, husk, etc., were workers engaged in manufacturing process within meaning of sections 80HH(2)(iv) and 80J(4)(iv) - Whether there was no legal error in order of Tribunal and assessee was entitled to relief under said sections - Held, yes FACTS The assessee was a registered firm manufacturing rice and dealing in food grains. Its claim for relief under sections 80HH and 80J was disallowed by the ITO on the ground that assessee's rice plant was automatic and it did not employ ten or more workers in the manufacturing process and, therefore, did not satisfy the conditions of sections 80J(4)(iv) and 80HH(2)(iv). On appeal, the AAC allowed the claim of the assessee accept-ing assessee's contention that the words 'manufacturing process' should be given wide interpretation and it starts with procurement of raw material and terminates with the production of the finished articles and that all the workers engaged throughout the process would be considered to be employed in the manufacturing process of rice and rice bran. The Tribunal also held that the books of account, inter alia, showed details of persons who were engaged as palledar, hulling labour, bhoosi…

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