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2010 (9) TMI 917 - HC - Income TaxDeduction under section 80I - assessee is carrying on the activity of manufacturing, selling and laying of mosaic tiles and the same was used for flooring for the purpose of construction of building – had also entered into contract with its customers for laying the tiles using its own manpower and skills and, thereafter, for even getting it polished. Held that :- As AO made distinction and took a view that polishing activity did not qualify for deduction under section 80-I for the simple reason that in the activity of laying and polishing there is no product or article produced from out of this activity and the mere fact that the assessee had a comprehensive contract with its customers by paying lump sum amount for the entire activity of laying and polishing of tiles manufactured by it. As decided in CIT v. Agrawal Brothers [1996 (5) TMI 23 - MADHYA PRADESH HIGH COURT], that section 80-I interpret the provision in favour of the Revenue to hold that an activity under the nature of contract of overhead water tanks is not an activity of manufacturing or even the activity under-taken by the assessee is an industrial undertaking. The condition required under clause (iii) of sub-section (2) of section 80-I of the Act is not definitely made in this case as the assessee has claimed deduction for the assessment year 1996-97 whereas in terms of clause (iii) the benefit of the notification is available for initial period of ten years next following March 31, 1981 - in favour of the Revenue.
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