TMI Blog1987 (3) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Tribunal is right in law in allowing relief under section 80HH to the assessee holding that the assessee is producing an article ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and facts in granting relief to the assessee under section 80HH especially when the assessee is only doing processing of raw fish and that too in another concern ? " The assessee's claim for deduction of the purchase tax paid during the relevant year in respect of the prawns said to have been produced and exported by the assessee was disallowed by the Income-tax Officer to the extent of Rs. 12,696. The claim was, however, allowed by both the appellate authorities as an expenditure allowable under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The legislative intent is to encourage new industries in backward areas with a view to the progress of those areas. Section 80HH of the Act only one of the several sections of the Income-tax Act which are meant sub-serve that object. Section 33 of the Act is of course not specially meant for backward areas, although the development rebate allowed under section is meant for a new ship or new machinery or plant. With view to encouraging new industry, wherever located, the Legislature has by section 33 of the Act allowed the benefit of development rebate for a certain number of years and subject to certain conditions. Clause B of that section reads. "33. Development rebate.-(1) ...... (B) in the case of machinery or plant, (i)where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that the legislative intent is to exclude production process from the ambit of the section, because clause (iv) of sub-section (2) does not refer to production but only to " manufacturing process ". Therefore, counsel says, production which does not involve a manufacturing process is excluded. The benefit of section 80HH is available whenever a new industrial undertaking is started in a backward area and that undertaking begins to manufacture or produce articles. The fact that clause (iv) of sub-section (2) refers to the manufacturing process alone does not mean that production process is excluded. Every manufacturing process naturally involves production process, for the object of manufacture is the production of goods. The ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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