Law:

Section:

Deduction under section 80-I is allowed in respect of profit and gains from industrial undertaking only and is not available to all activities of an assessee Section 80-I of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings, etc., after certain dates/infrastructure undertakings - Assessment years 1982-83 and 1983-84 - Whether deduction under section 80-I is allowed in respect of profits and gains from industrial undertaking only and not to all activities of an assessee - Held, yes - Whether where assessee neither owned any plant or machinery nor had employed 10 or more persons as required in an industrial undertaking, he would not be entitled to relief under section 80-I - Held, yes FACTS The applicant purchased yarn from the market and gave the same to the weavers to weave cloth as per his design. The cloth was then got dyed and calendered on job work basis from others. The applicant did not have any factory or machinery of his own. During the relevant assessment year, the applicant claimed deduction under section 80-I. The claim was rejected by the Assessing Officer which was upheld by the AAC. On appeal, the Tribunal held that admittedly, the applicant was not engaged in business wherein he might be carrying on any manufacturing process with the aid of power and might be engaging 10 or more workers and, therefore, the applicant was not entitled to the deduction. On reference : HELD On a conjoint reading of clause (iv ) of sub-section (2) of section 80-I and Explanation 3 to sub-section (2) of section 80-I, read with clause (b) of the Explanation below sub-section (8) of section 80HHA, it is clear that for claiming deduction under section 80-I, the industrial undertaking should be involved in manufacturing or producing any articles or things by employing 10 or more workers with the aid of power or 20 or more workers in the manufacturing process carried on without the aid of power. Moreover, the industrial undertaking should also either own the plant and machinery or should have taken the plant and machinery on hire. [Para 15] It may be mentioned that under section 80-I, deduction is allowed in respect of profit and gains…

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