Himachal Pradesh High Court
Commissioner Of Income-Tax vs Nayyars Minerals Export Pvt. Ltd. (No. ... on 29 November, 1996
Equivalent citations: [1998]231ITR868(HP)
Author: M. Srinivasan
Bench: M. Srinivasan, Lokeshwar Singh Panta
JUDGMENT M. Srinivasan, C.J.
1. Two questions are referred to us which are as follows :--
"Assessment year 1978-79 :
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that hiring of certain machineries from sister concern would not amount to transfer as provided under Section 80J(4)(ii) of the Income-tax Act, 1961 ?
Assessment year 1079-80 :
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that hiring of certain machineries from sister concern would, not amount to transfer as provided under Section 80J(4)(ii) and whether the assessee is entitled to relief under Section 80J even though there was no exploitation of forest and sizing of timber during the accounting period relevant to this assessment year but sales were effected of the material already produced from such activity in earlier years ?"
2. The first question and the first part of the second question are the same as that referred to this court in CIT v. Nayyars Minerals Export (P.) Ltd. (No. 1) [1998] 231 ITR 864 (Income-tax Reference No. 3 of 1983) which we have answered just now in the affirmative. Hence, the same answer will have to be given here and the first question and the first part of the second question are answered in affirmative. The second part of the second question had to be raised on account of the contention by the Departmental representative before the Tribunal that in respect of the exploitation of forest and sizing of timber no activity was undertaken during the accounting period relevant to the assessment year under appeal and, therefore, the benefit of that section was not available to the assessee. It was rejected by the Tribunal by the following reasoning in paragraph 4 of its order dated September 14, 1985. The said paragraph reads :
"4. In our opinion, the assessee deserves to succeed. The issue already stands covered in favour of the assessee by an earlier decision of the Bench referred to above. The only additional contention is that during the year there was no industrial activity and the same was only of the goods brought forward from the earlier years. In our opinion, this fact is also not material. Sub-section (1) of Section 80J provides for deduction under Section 80J in respect of profits and gains derived from an industrial undertaking. We have, therefore, to consider whether the profits and gains from which deduction under Section 80J has been claimed in respect of activity in timber are derived from the industrial undertaking. We have no doubt in our mind that the income is derived from such activity. It is immaterial whether any manufacturing was done during the accounting period relevant to the assessment year under appeal so long as the goods sold were from such activity even in earlier years. The goods which were sold during the accounting period relevant to the assessment year under appeal were manufactured by the assessee in the industrial undertaking though in the earlier year. It, therefore, cannot be said that the goods sold during the accounting period relevant to the assessment year under appeal were not from the goods produced by the assessee in its industrial activity. We, therefore, do not find any merit in this additional contention as well. The assessee will, therefore, be entitled to relief under Section 80J in respect of slate and timber business."
3. We are entirely in agreement with the view expressed by the Tribunal in that paragraph. Hence, we answer the second part of the question in the affirmative and hold that the assessee is entitled to relief under Section 80J even though there was no exploitation of forest and sizing of timber during the accounting period relevant to the assessment year but sales were effected of the material already produced from such activity in earlier years.