Court denies relief under section 80J(1) of Income-tax Act for grinding activities.

The High Court of Bombay ruled in favor of the Revenue, denying the assessee's claim for relief under section 80J(1) of the Income-tax Act, 1961. The Court determined that the grinding activities undertaken by the company did not amount to the manufacture of articles or things, as the end product, powder, was not considered a new article. The Court considered legal precedents and held that the grinding process did not result in the production of a new article, thus upholding the decision of the Income-tax Officer and Commissioner of Income-tax (Appeals) in denying the deduction claimed by the assessee.

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Issues involved: Interpretation of eligibility for relief under section 80J(1) of the Income-tax Act, 1961 for an 'industrial company' engaged in grinding activities.

Summary:
The High Court of Bombay considered a reference made by the Income-tax Appellate Tribunal regarding the eligibility of an assessee, engaged in grinding activities, for relief under section 80J(1) of the Income-tax Act, 1961. The assessee, a company involved in the purchase and sale of chloride powder and grinding of soap-stones and minerals, claimed deduction under section 80J of the Act. The Income-tax Officer initially denied the claim, stating that no new article had been produced through the grinding process. The Commissioner of Income-tax (Appeals) upheld this decision, but the Income-tax Appellate Tribunal ruled in favor of the assessee, noting that the end product, the powder, was different from the original product. The Revenue challenged this decision, arguing that no new article emerged from the grinding process, citing legal precedents to support their stance.

The High Court analyzed the legal precedents referred to by the Revenue, including a case where it was held that crushing boulders to obtain smaller stones did not constitute a process of manufacture. After careful consideration, the Court concluded that the grinding activities undertaken by the assessee did not amount to the manufacture of articles or things. Therefore, the Court ruled in favor of the Revenue, denying the assessee's claim for relief under section 80J(1) of the Income-tax Act, 1961.

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