IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 292 of 2001 With TAX APPEAL NO. 293 of 2001 With TAX APPEAL NO. 294 of 2001 With TAX APPEAL NO. 295 of 2001 With TAX APPEAL NO. 296 of 2001 With TAX APPEAL NO. 297 of 2001 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER 1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to civil judge ? INCOME TAX-OFFICER....Appellant(s) Versus SHRI FABS....Opponent(s) Appearance: MR KM PARIKH, ADVOCATE for Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for Opponent(s) No. 1 Page 1 of 6 Downloaded on : Thu Jul 30 08:51:19 IST 2020 O/TAXAP/292/2001 JUDGMENT CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 11/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. These are appeals, whereby, appellant-Revenue seeks to challenge order passed by ITAT, Ahmedabad Bench, Ahmedabad (for short, Tribunal), Dated : 15.02.2001, rendered in ITA No.3267/Ahd/1995 for A.Y.- 1987-88, ITA No.3263/Ahd/1995 for A.Y.-1991- 92, ITA No.3264/Ahd/1995 for A.Y.-1988-89, ITA No.3266/Ahd/1995 for A.Y.-1990-91, ITA No.3265/Ahd/1995 for A.Y.-1989-90, ITA No.3262/Ahd/1995 for A.Y.-1986-87, whereby, Tribunal dismissed appeals preferred by appellant-revenue. 2. brief facts of case are that respondent-assessee filed its returns of income for different assessment years, wherein, it claimed deduction under Section 80HHA and 80I of Income Tax Act, 1961 (for short, Act ). appellant-Revenue, hence, requested respondent-assessee to supply material in support of its claim for deductiona, as above. Page 2 of 6 Downloaded on : Thu Jul 30 08:51:19 IST 2020 O/TAXAP/292/2001 JUDGMENT According to appellant-revenue, respondent-assessee did not supply necessary material. Therefore, concerned AO disallowed claim of respondent-assessee for relevant assessment years. Being aggrieved thereby, respondent-assessee approached CIT(A) by filing different appeals and CIT(A) allowed appeals of respondent-assessee for A.Y.s- 1986-87 and 1991-92. Since, appellant-revenue was no satisfied with order passed by CIT(A), it challenged same before Tribunal, which, passed impugned common order. Hence, appellant-revenue preferred present appeals, raising following common question of law for consideration of this Court; Whether, Appellate Tribunal is right in law and on facts in allowing relief to assessee under Section 80I and 80HHA on ground that workers of contractor employed in manufacturing activities are also to be taken into account? 3. At very outset, Mr. Parikh, learned Advocate for appellant-revenue, and Mr. Soparkar, learned Advocate for respondent- assessee, invited our attention to decision of Division Bench of this Court in ITR No.3 of 1999 in case of COMMISSIONER OF INCOME TAX VS. VIKSHRA TRADING & INVESTMENT LTD. , wherein, Page 3 of 6 Downloaded on : Thu Jul 30 08:51:19 IST 2020 O/TAXAP/292/2001 JUDGMENT Division Bench, at Paras-8 and 9, has observed as under; 8. Section 80I of Act provides for granting deduction from profits and gains at specified percentage in case where gross total income of assessee includes such profits and gains derived from industrial undertaking which fulfills conditions laid down in section. Under sub-section (2) of section 80I of Act four different conditions are stipulated. Condition vide Clause No.(iii) of sub-section (2) of section 80I of Act stipulates that industrial undertaking must manufacture or produce any article or thing, but article or thing must not be specified in list in Eleventh schedule. Second Proviso thereunder carves out exception by providing that condition in Clause No. (iii) shall not operate in relation to small scale industrial undertaking even if such undertaking manufactures or produces any of articles or things enumerated in list in Eleventh schedule. Explanation 3 provides that for purposes of sub-section (2) of section 80I of Act small-scale industrial undertaking shall have same meaning as in clause (b) of Explanation below sub-section (8) of section 80HHA of Act. 9. Explanation (b) which defines small-scale industrial undertaking originally reads as under: (b) industrial undertaking shall be deemed to be small-scale industrial undertaking, if aggregate value of Page 4 of 6 Downloaded on : Thu Jul 30 08:51:19 IST 2020 O/TAXAP/292/2001 JUDGMENT machinery and paint (other than tools, jigs, dies and moulds) installed, as on last day of previous year, for purposes of [the business of undertaking does not exceed,- [(1) in case where previous year ends before 1st day of August, 1980, ten lakh rupees; (2) in case where previous year ends after 31st day of July,1980 but before 18th day of March,1985, twenty lakh rupees; and (3) in case where previouis year ends after 17th day of March, 1985, thirty-five lakh rupees,] and for this purpose value of any machinery or plant shall be,- (i) in case of any machinery or plant owned by assessee, actual cost thereof to assessee; and (ii) in case of any machinery or plant hired by assessee, actual cost thereof as in case of owner of such machinery or plant] 4. In case on hand also, from record it appears that AO did not take into account workers of contractor employed in manufacturing activity at time of passing assessment order. Therefore, Tribunal, while passing impugned order recorded that CIT(A) was justified in holding that workers of contractor employed in manufacturing activities are also to be taken Page 5 of 6 Downloaded on : Thu Jul 30 08:51:19 IST 2020 O/TAXAP/292/2001 JUDGMENT into account for purpose of granting benefit under Section 80HHA and 80I of Act. Tribunal, further, recorded that respondent- assessee had produced sufficient material to show that number of workers exceeds more than 10 during all relevant assessment years. Thus, in view of above discussion and in view of decision of Division Bench of this Court, as stated above, we find that these appeals sans merit and they deserve to be dismissed. issue is answered against revenue and in favour of respondent-assessee. 5. In result, all appeals fail and are DISMISSED. No order as to costs. (K.S.JHAVERI, J.) (K.J.THAKER, J) Income-tax Officer v. Shri Fab