Law:

Section:

Section 32A, read with sections 80HH and 80J, of the Income-tax Act, 1961 - Investment allowance - Assessment years 1983-84 and 1985-86 - Whether de-embarking and seasoning tree trunks and converting same into logs would amount to production of a new commercial article or thing within meaning of sections 32A, 80HH and 80J - Held, yes - Whether assessee engaged in business of felling trees, cutting them into pieces and converting pieces into logs to make commercially saleable article was entitled to benefit of said deductions - Held, yes FACTS The assessee was engaged in the business of felling trees, cutting them into pieces and converting the pieces into logs to make commercially saleable article. The Tribunal denied the relief claimed by the assessee under sections 32A, 80HH and 80J on the ground that the establishment did not engage in manufacture of an article or thing. On appeal : HELD INTERPRETATION : PRINCIPLES : OBJECT AND PURPOSE : A plain reading of the provisions of sections 32A, 80HH and 80J clearly indicates from the very scheme that these are really in the form of incentives for industrial growth and development. The object cannot be overlooked while interpreting the statute. A construction, which advances the object, is to be preferred to that which is opposed to it. [Para 5] SECTIONS 32A, 80HH, 80J : PRODUCTION : MEANING OF : Section 32A provides for certain deduction in the computation of the income from the profits and gains from the business by way of investment allowance. Similar benefit is allowed further under section 80HH when such industrial undertaking is operating in backward areas. Further, similar incentive was allowed to new industrial undertaking under section 80J. Admittedly, the assessee had its industrial undertaking in the A&N Island, which was admittedly a backward area. The industrial undertaking of the assessee was established on 27-1-1977 whereas the cut off date of eligibility was 31-3-1976. Thus, factually the assessee, a new industrial undertaking, operating in a backward area having invested within the meaning of section 32AB, qualified for the test to come within the scope and ambit of the said three sections. But,…

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