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THE COMMISSIONER OF INCOME TAX-II Versus HYNOOP FOOD & OIL IND. LTD

2016 (7) TMI 454 - GUJARAT HIGH COURT

Entitlement to deduction u/s 80HH and 80I - engagement in manufacturing activities - Held that:- As decided in Commissioner of Income Tax v. Hynoup Food & Oil Industries [2011 (7) TMI 1222 - GUJARAT HIGH COURT ] the activity carried on by the assessee was a manufacturing activity and the assessee is entitled to deduction under Sections 32A, 80HH and 80I of the Income Tax Act. Tribunal also further relying on decision of the Supreme Court in case of CIT v. Vegetables Products Ltd. reported in (19 .....

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JHAVERI) 1. By way of this Appeal, the Appellant has challenged the judgment and order dated 08.12.2006 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' in ITA No.1432/Ahd/2000 for Assessment Year : 1994-1995. 2. While admitting the matter on 30.09.2008, the following substantial question of law was framed by the Court for consideration :- Whether on facts and in the circumstances of the case the Tribunal is right in law in holding that the assessee was engaged in manufacturing .....

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pping up, same is firstly dealt with in the present appeal. At the outset it needs to be stated that other Tax Appeals in case of this very assessee have been dealt by this Court. One such tax appeal being Tax Appeal No.10/2001 where identical issue is decided by this Court in the following manner : 9. Quite apart from the above observations, we find that the tribunal had examined the materials on record which included the data of the turnover, Gross Profit rate and process loss for several year .....

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tton seed oil and consequently refined cotton seed oil. Quality of raw material would depend on several factors such as rainfall, quality of soil and other such factors. It was also noted that if the raw cotton seed oil is obtained from crushing of inferior quality of cotton seed, then the process loss was likely to be higher, but Gross Profit rate may go up since the assessee may have purchased the raw material at a cheaper rate. Tribunal also noted that there were instances where though proces .....

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oil who had stated that process loss is typically found depending on the quality of raw cotton seed and functioning of the plant and would normally range between 2.65% to 4.20%. It can thus be seen that It can thus be seen that the tribunal based its findings on several factors and came to the conclusion that without any evidence or base the Assessing Officer could not have held that the process loss claimed by the assessee(in the present case at the rate of 3.05%) was inflated or excessive. 10 .....

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oyed by farmers for production, soil, rainfall, irrigation and so on. In absence of any additional material, only on basis of an isolated answer by one of the Directors of the company, the Assessing Officer could not have come to the conclusion that the process loss was artificially inflated. Tribunal had also relied on certificate given by the supplier of machine who stated that typically the process loss ranges between 2.65% to 4.20%. 11. In addition to above, we also notice that in earlier ye .....

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the Revenue. 6. Question No.(A) relates to entitlement of assessee for direction under Section 32A where the Assessing Officer allowed such deduction by not treating the activities carried out by the assessee as manufacturing activity. CIT(Appeals) allowed the same and the tribunal also confirmed the view of CIT(Appeals). 7. While dealing with the issue tribunal had depended on decision of Apex Court in case of Parshuram Pottery Works Co. Ltd. V.s ITO reported in (1977) 106 ITR 1. Tribunal also .....

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