TMI Blog2011 (11) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 132 of 2004 - - - Dated:- 25-11-2011 - Hemant Gupta and G.S. Sandhawalia, JJ. Sanjay Bansal, Sr. Adv., with Robin Jarial, Adv., for the Appellant Rajesh Katoch, Adv., for the Respondent JUDGEMENT Hemant Gupta: This order shall dispose of ITA No.183 of 2002 and ITA No.132 of 2004 arising out of the assessment years 1990-91 and 1991-92 from the separate orders of the Income Tax Appellate Tribunal dated 31.5.2002 and 18.12.2003. Since the issue raised are common, the same are being taken up for hearing together. Learned counsel for the assessee fairly pointed out that most of the questions of law, such as in respect of cash compensatory allowance, trading profits, interest incomes, rental incomes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income on advances to various firms and companies while dealing with deduction under Section 80-1 to the tune of ₹ 33,71,360/-; and (ii) rental income to the tune of ₹ 72,000/-. The Commissioner of Income Tax set aside part of the order passed by the Assessing Officer whereas the finding recorded by the Commissioner of Income Tax are upheld by the Tribunal. The only issue raised by learned counsel for the assessee in the present appeals is that process of dry cleaning is a part of the manufacturing process and thus, the income derived from dry cleaning, job work of the third parties, is also income derived from industrial undertaking having direct and proximate nexus with its manufacturing activities and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, referred to in sub-section (1B), derived by the assessee from the export of such goods or merchandise: 80-I (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel or the business of repairs to ocean-going vessels or other powered craft, to which this section applies, there shall, in accordance with an subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof: Firstly, we will examine the claim of the assessee for deduction under section 80-HCC. Learned counsel for the assessee has vehemently argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that it is not necessary that the assessee should earn such income in respect of the raw material of the assessee alone but even if the assessee has undertaken such job of a third party, it is still part of the manufacturing process, therefore, it is an income derived from industrial undertaking and, thus entitled to deduction under Section 80-I of the Act. Reliance is placed upon an order passed by this Court in CIT v. Impel Forge and Allied Industries Ltd. (2009) 183 Taxman 38 and also judgments of the Delhi High Court reported as NU-Look (P) Ltd. v. CIT (1957) 157 ITR 25 and CIT V. Northern Aromatics Ltd. (2005) 196 CTR 479. Reliance was also placed upon the Full Bench judgment of this Court reported as CIT v. Sovrin Knit Works, (1993) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew forms, qualities or combinations whether by hand, labour or machine. It is, thus, contended by the learned counsel for the revenue that the process of dry cleaning does not give rise to any new article or qualities in the product, therefore, dry cleaning cannot be treated to be a part of manufacturing process. Reference is also made to (2009) 317 ITR 218 (SC), Liberty India v. CIT, wherein it has been held that Sections 80-IA and 80-IB have a common scheme. The words derived from are narrower in connotation as compared to the words attributable to . By using the expression derived from , the Parliament intended to cover sources not beyond the first degree. That was a case where benefit/entitlement pass scheme was declined as an incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an industrial undertaking, would be eligible for deduction under Section 80-I of the Act is a question of fact keeping in view the nature of the process. The two Division Benches of the Delhi High Court in Northern Aromatics, NU Look (P) Ltd. and Impel Forge and Allied Industries Ltd., have found so in view of the facts of the case. But we find that the facts on record do not suggest a finding that the process of dry cleaning undertaken by the assessee is such which relates to a step in the manufacturing process. Though, in the case of Emptee Poly-Yarn (P) Ltd. it has been held that texturising and twisting of yarn constitute manufacturing, i.e., even without giving such materials a new formation, qualities or combinations as observed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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