TMI Blog2011 (7) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... N. Heat Treatment [1998 -TMI - 16154 - MADRAS High Court], set aside the order of the Tribunal - Answered in favour of the assessee. - 752 and 753 of 2004 - - - Dated:- 13-7-2011 - MRS.JUSTICE CHITRA VENKATARAMAN, MR.JUSTICE M.JAICHANDREN, JJ. For appellant : Mr.C.V.Rajan for M/s.Subbaraya Aiyar For respondent : Mr.T.Ravikumar Standing Counsel for Income Tax JUDGMENT CHITRA VENKATARAMAN, J. The above appeals are filed by the assessee relating to the assessment years 1989-90 and 1992-93 respectively. The following substantial question of law was raised by the assessee in T.C.No.752 of 2004: " Whether the Appellate Tribunal is right in excluding the receipts of Rs.34,37,154/- from sub contract for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was entitled to. 4. In the appeal filed as regards the assessment year 1989-90, the commissioner of Income Tax (Appeals) directed the Assessing Officer to consider the claim for the purpose of determination of relief under Section 80HH receipts. 5. As regards the assessment year 1992-93 (T.C.No.753 of 2004), the Assessing Officer pointed out in his order of assessment that the deduction under Section 80HH would have to be computed after setting off the losses of the same units for the immediate previous year, in which event, there would be no positive income for auto unit at Krishnapuram Unit and Precision Forgings Unit at Hosur. Consequently, the Officer held that the assessee would not be entitled to the deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) was set aside. Aggrieved by the ssame, the assessee has preferred these on appeals before this Court. 7. Learned counsel appearing for the assessee submitted that it is admitted by the Revenue that Krishnapuram Unit of the assessee is located in a backward area and that the assessee had positive income in respect of both the assessment years. He submitted that the Tribunal, however, misdirected itself in placing reliance on the decision of the Apex Court in the case of Pandian Chemicals Limited Vs. Commissioner of Income Tax reported in [2003] 262 ITR 278, which has no bearing to the claim in the present case. Given the fact that the Unit at Krishnapuram, located in a backward area, is engaged in the production of articles, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be denied to the assessee. However, the Assessing Officer viewed the receipt being one on sub contract, the assessee is not entitled to the relief. In this connection, the reliance placed by the assessee to the decision of this Court reported in [1999] 238 ITR 540 - CIT Vs. T.N. Heat Treatment and Fetting Services merits to be seen. 12. The decision reported in [1999] 238 ITR 540 - CIT Vs. T.N. Heat Treatment and Fetting Services is a case falling under Section 80 HH and 80-I of the Income Tax Act. This Court pointed out that the assessee receiving from its client untreated crankshafts, forgings, castings etc., and subjecting them to heat treatment, in order to toughen them to the requisite standards so that they could be sold in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out that the assessee therein satisfied the test of manufacture by producing the new materials, viz., crackers and also satisfied the test of industrial undertaking. Since the assessee therein was involved in a systematic activity, organised by the employer for the production and distribution of goods, following a series of decisions as mentioned therein, this Court held that the assessee was entitled for the benefit of Sections 80 HH and 80-I of the Income Tax Act. 14. Rightly the Commissioner of Income Tax (Appeals) directed the Officer who had laid down the correct legal principles, to work out the relief under Sections 80 HH and 80-I of the Income Tax Act to the assessee herein. Even though learned Standing Counsel appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m has its own accounts maintained separately as an independent unit and that out of the production process, it has derived income therein. Thus, it satisfied the test as given under Section 80 HH of the Income Tax Act, which qualifies for deduction in respect of receipts on job work done at the Krishnapuram Unit. Following the decisions reported in [1999] 238 ITR 540 - CIT Vs. T.N. Heat Treatment and Fetting Services and [2007] 288 ITR 92 - CIT Vs. Taj Fire Works Industries, we set aside the order of the Tribunal. Accordingly, the Assessing Officer is directed to give effect to the direction of the Commissioner of Income Tax (Appeals). 17. In the circumstances, the above Tax Case Appeals are allowed and the question of law is answered in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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