TMI Blog1994 (11) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... l undertaking ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the certificate given by the auditors under rule 18C in the course of assessment proceedings could be considered for the purpose of allowing deduction under section 80J ? " The assessee is a registered firm. It runs a modern poultry farm. The assessee collects eggs which are initially subjected to various processes like fumigation, cooling and incubation. These eggs are hatched by a mechanical process keeping the humidity and temperature constant as required. The chicks which are hatched out are given special food so that they turn out to be layers. Considerable amount of mechanical process is applied by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the certificate from the auditors along with the return as required by rule 18C of the Income-tax Rules and held that the requirement of filing of the certificate under the said rule was directory and hence the certificate submitted during the course of the assessment proceedings had to be considered. Dissatisfied with the order of the Tribunal, the Revenue has come to this court by way of reference of the questions of law set out in paragraph 1 above, under section 256(1) of the Act. Learned counsel for the Revenue submits that the Tribunal was wrong in holding that the assessee being engaged in the business of running a poultry farm was an industrial undertaking engaged in the production of articles or things. The business of poult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical reasons. 4. The incubation period of eggs is 21 days. Even in the natural process it takes the same time, but there are certain research works which show that the incubation period of broilers particularly, can be reduced to 18 days. The assessee, however, follows the same 21-day incubation period. The incubation period can be divided into two stages ; (i) first 18 days and (ii) last 3 days. For first 18 days, the eggs are incubated large scale in automatic machines where the temperature, humidity and changing of position of the eggs every hour is done automatically. After completion of 18 days, the same eggs are transferred to another machine in which except turning, the rest are the same like the above machine. On completion of 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be termed as an " industrial undertaking " for manufacturing or producing articles. Much reliance is placed on the expression " production of articles ". According to counsel for the assessee, chicken are produced from eggs by use of mechanical process and hence, the poultry farm is an industrial undertaking. We have given our careful consideration to the above submission. We, however, find it difficult to hold that the " business of poultry farming " which uses mechanical process, can be characterised as an industrial undertaking engaged in the manufacture or production of articles. Though the word " production " has a wider connotation than the word " manufacture " when used in juxtaposition with the word " manufacture " it takes in brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept the decision of the Andhra Pradesh High Court in CIT v. Sri Venkateswara Hatcheries (P.) Ltd. [1988] 174 ITR 231, where it held that an assessee who runs a eggs are hatched and chicken produced on a large scale by adopting scientific and technological methods, would be entitled to deduction under section 80J of the Act. The ratio of the decision of this court in CIT v. Yavatmal Co-operative Ginning and Pressing Factory Ltd. [1993] 203 ITR 874 on which reliance was placed by the assessee, has no application to a hatchery. Other decisions of this court relied upon by the assessee are also not relevant for determination of the controversy in this case. The above conclusion of ours also gets support from the provisions of section 80JJ of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, a deduction as specified hereunder, namely:-- (a) in a case where the amount of such profits and gains does not exceed, in the aggregate, ten thousand rupees, the whole of such amount ; and (b) in any other case, one-third of the aggregate amount of such profits and gains or ten thousand rupees, whichever is higher. " From a conjoint reading of sections 80J, 10(27) and 80JJ of the Act, it is clear that Parliament has made provision for giving incentive to per sons engaged in the business of livestock breeding or poultry or dairy farming distinct and different from those made for industrial undertakings producing or manufacturing articles. The income from the business of livestock breeding, poultry and dairy farming w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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