Law:

Section:

Section 80HH, read with section 80-I, of the Income-tax Act, 1961 - Deductions - Profits and gains from hotels or industrial undertakings, etc., in backward areas - Assessment years 1984-85 and 1985-86 - Whether an activity would amount to manufacturing activity, if final product does not retain identity of raw material after it has undergone processes of manufacture - Held, yes - Assessee-company purchased tendu leaves and tobacco and got them rolled into bidies by contract workers and thereafter, sold those bidies - Assessee claimed relief under sections 80HH and 80-I - Assessing Officer denied said claim by holding that activity carried on by assessee was not manufacturing activity because assessee merely purchased raw material to hand over same to outside party who, in fact, rolled bidies - Whether since tendu leaves and tobacco which are used as inputs do not retain independent identity after bidies are rolled and undergone several processes, in instant case, it could be said that activities carried on by assessee amounted to manufacture of bidies, entitling assessee to relief under sections 80HH and 80-I - Held, yes - Whether further relief claimed by assessee could not be denied merely because it got work done through contract workers - Held, yes Section 80-I/80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings, etc., after certain dates/infrastructure undertakings - Assessment years 1984-85 and 1985-86 - Whether for ascertaining monetary limit laid down for purpose of determining whether a unit is a small-scale industrial undertaking eligible for relief under section 80-I, only actual cost of plant and machinery, relatable to industrial undertaking has to be adopted and not all assets of business as a whole have to be taken into consideration - Held, yes - Whether, therefore, business assets like cars, trucks, pumps, etc., which are not plant and machinery would not be taken into consideration for purpose of ascertaining monetary limit for treating said unit as a small-scale industrial undertaking - Held, yes FACTS The assessee-company purchased tendu leaves and tobacco and got them rolled into bidies by…

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