1996 (11) TMI 24 - HC - Income Tax

High Court upholds Tribunal decision on machinery hiring not constituting transfer under IT Act

Commissioner Of Income-Tax Versus Nayyars Minerals Exports Pvt. Ltd. (No. 2)

Commissioner Of Income-Tax Versus Nayyars Minerals Exports Pvt. Ltd. (No. 2) - [1998] 231 ITR 868 Issues:1. Interpretation of the provisions of s. 80J(4)(ii) of the IT Act, 1961 regarding hiring of machineries from a sister concern for the assessment year 1978-79.2. Entitlement to relief under s. 80J for the assessment year 1979-80 despite no exploitation of forest and sizing of timber during the relevant accounting period but sales of material produced in earlier years.Analysis:1. For the assessment year 1978-79, the Tribunal had to determine whether hiring certain machineries from a sister concern constituted a transfer as per s. 80J(4)(ii) of the IT Act, 1961. The High Court referred to a previous judgment and concluded that the hiring of machineries did not amount to a transfer, affirming the Tribunal's decision. Therefore, the first question was answered in the affirmative.2. Regarding the assessment year 1979-80, the Tribunal addressed the issue of entitlement to relief under s. 80J despite no forest exploitation or timber sizing during the relevant accounting period, but sales of previously produced material. The Tribunal held that the assessee deserved relief under s. 80J, emphasizing that the profits and gains claimed were derived from industrial activities, even if no manufacturing occurred during the specific accounting period. The High Court agreed with the Tribunal's reasoning, stating that the goods sold during the relevant period were manufactured by the assessee in earlier years, thus qualifying for relief under s. 80J. Consequently, the second part of the question was answered in the affirmative, affirming the assessee's entitlement to relief under s. 80J for the assessment year 1979-80.