TMI Blog1978 (9) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... riority industry " within the meaning of s. 8OB(7) was entitled to a deduction as provided in s. 80-I of the Act. The ITO negatived the claim. In appeal the judgment of the ITO was affirmed by the AAC of Income-tax. The AAC held that the assessee stored the potatoes belonging to others by maintaining the temperature at 35 degrees. It further found that by trying to preserve the seeds in the same condition in which it was placed, it cannot be said that the assessee was engaged in the production of processed seeds. The assessee took up the matter to the Income-tax Appellate Tribunal. The Appellate Tribunal agreed with the view of the AAC and held that the assessee was not entitled to any relief under s. 80-I. Thereupon, on an application unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Government." The case of the assessee was that as it was engaged in the production of processed seeds mentioned at item No. 28 of the Sixth Schedule, as such, it was entitled to the benefit of the aforesaid provision. The first question that arises for consideration is whether the assessee is a priority industry. In order to be a priority industry it is essential that it must be engaged in the business of construction, manufacture or production of any one or more of the articles or things specified in the list in the Sixth Schedule. Admittedly, the assessee was neither constructing nor manufacturing any one or more of the articles or things specified in the list in the Sixth Schedule. Its claim was based on the basis of production. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f production of processed seeds. The income-tax authorities found that the assessee used to store the potatoes belonging to others and by maintaining the temperature at 35 degrees, it tries to preserve them in the same condition in which it was placed. The benefit of s. 80-I could accrue to a person who was engaged in the production of the processed seeds. Processing of seed is different from the keeping of potato-ware in the cold storage. In the present case, what was established from the record was that the assessee was storing the potatoes in its cold storages and was trying to preserve them in the same conditions. There is no evidence on record to show nor was it the case of the assessee that the entire potatoes so stored was consumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were used or meant to be used as seeds in the assessment years 1969-70 and 1970-71, with which we are concerned in the present case. It is clear from the judgments of the income-tax authorities that they also negatived the claim of the assessee on this basis and found that the keeping of potatoes would not amount to the assessee's engagement in the production of processed seeds. The potatoes kept could be used for multifarious purposes but the benefit is confined to the matter of production of processed seed. It cannot be extended or applied to the entire quantity of potatoes which used to be kept by the assessee in cold storages. That being so, even if it is accepted that preservation or keeping of potatoes in cold storages amounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended by Bihar Act No. VI of 1949. At page 152, the Supreme Court observed as under : " The appellant-company is carrying on mica mining operations by which crude mica is taken out of the mine and processed into split mica, which is a commercial commodity. What happens is that there is a winning of crude mica from the earth which is split into thinner plates and cut into commercial sizes." This case does not assist us inasmuch as the activity with which the Supreme Court was concerned in the said case was processing and winning of crude mica from the earth. On the facts of the present case, the ratio of the Supreme Court decision does not help the assesse. For the reasons stated above, we answer the question referred to us in the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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