TMI Blog2002 (5) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... ginally on 27-3-1991. Thereafter the CIT(A), Jodhpur, vide his appellate order dated 3-9-1991 in Appeal No. 15/91-92 directed the Assessing Officer to consider the claim made in this behalf and decide the same on merits. This claim was, later on, allowed by the Assessing Officer vide his order dated 19-2-1992 to the extent of Rs. 10,856 and Rs. 8,684 only under section 80HH and 80-I respectively. While allowing the assessee s claim the Assessing Officer observed as under : ( a )Addition of Rs. 1,77,222 representing unexplained cash credits was not available for inclusion in total income for the purposes of computation of the amount of deduction under section 80HH and 80-I. ( b )Deduction under section 80HH and 80-I will not be allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001] 166 CTR (Raj.) 383. 7. The next ground is regarding addition of cash credits eligible for deduction. On the point of availability of the amount of addition representing unexplained cash credits for the purposes of section 80HH and 80-I, it was submitted by the Ld. A.R. that the Assessing Officer had considered this amount of Rs. 1,77,222 as income of the assessee-firm. The only source of income of the assessee is from manufacture and production of cloth. There is no other source of income in this case. Therefore, the concealed income is also generated from this source of income. 8. The profits even though not falling under the head profession, gain or business must qualify for deduction as it is deemed income of an industrial u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The next ground is regarding allowing of deduction under section 80HH and 80-I on part of production process by outside agencies. The Ld. A.R. explained that the entire production process includes ( i ) purchase of yarn, ( ii ) weaving of yarn and producing grey cloth, ( iii ) mending i.e., to remove cheera etc. ( iv ) to get such cloth processed ( v ) grading i.e., to shape the cloth to make it marketable in thans, lump, by removing the extra side cloths and by cutting ( vi ) putting the logo/name of the assessee company/its trade name and to market the product. Out of these various activities, the activity of processing has all along been done outside and the Assessing Officer never disputed in the past or in the later years t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1992] 196 ITR 813 (Bom.). (c) Addl. CIT v. A. Mukherjee Co. (P.) Ltd. [1973] 113 ITR 718 (Cal.). (d) Orient Longman Ltd. v. CIT [1981] 130 ITR 477 (Delhi) (e) CIT v. Talwal Khullar (P.) Ltd. [1999] 235 ITR 70 (All.) 13. The Ld. A.R. further submitted that it is notable that the sections 80HH and 80-I nowhere requires the assessee itself to remain engaged in the production/manufacturing as against the various other provisions under the IT Act viz., sections 80-IA, 80-IB(14)( c )( iii ), 80HHC, etc. The use of the word "engage" signifies the very involvement of the assessee itself in the entire process of production/manufacturing whereas on the contrary the absence of this word from sections 80HH and 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax, tax was levied at a concessional rate in case of an "industrial company". The Hon ble Calcutta High Court held ( Addl. CIT v. A. Mukherjee Co. (P.) Ltd. [1973] 113 ITR 718 in the case of a Publisher also to be an industrial company though the job of printing of books as also binding thereof was got done outside. It is notable that even the CBDT vide its circular No. 347 dated 7-7-1982 has accepted the aforesaid decision vide para 2 and directed the Assessing Officer that the book publishing companies should be treated industrial companies under section 104 even though they themselves may not be engaged in printing or binding. In absence of the definition of the "industrial company" under the Income-tax Act, 1961, for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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