1996 (7) TMI 79 - HC - Income Tax

Court dismisses petition for lack of referable questions, affirming Tribunal decision. Failure to provide evidence leads to benefit denial.

Asian Techs Limited Versus Commissioner Of Income-Tax

The court dismissed the petition as there were no referable questions, affirming the Appellate Tribunal's decision. The petitioner's failure to provide ... Application For Reference, Deduction In Respect, New Industrial Undertaking Issues Involved:1. Entitlement to benefits under sections 80J and 80HH of the Income-tax Act, 1961.2. Alleged violation of principles of natural justice by the Appellate Tribunal.3. Justification of the Appellate Tribunal's requirement for immediate production of details.4. Consistency of the Appellate Tribunal's findings with prior appellate orders and Supreme Court observations.Issue-wise Detailed Analysis:1. Entitlement to Benefits under Sections 80J and 80HH:The petitioner sought a direction for reference regarding whether the assessee is entitled to the benefits under sections 80J and 80HH of the Income-tax Act, 1961, for profits referable to articles, products, or things manufactured during construction activities. The court noted that both sections have similar conditions that must be satisfied for claiming deductions. These conditions include that the industrial undertaking should not be formed by splitting up or reconstructing an existing business, should not use previously used machinery or plant, must commence production before a specified date, and must employ a specific number of employees.The court observed that the claim for deduction was initially rejected in the assessment order dated March 24, 1987, and the appellate authority upheld this rejection. The Tribunal had followed the Supreme Court's decision in CIT v. N. C. Budharaja and Co., which held that the terms 'manufacture' and 'production' are generally associated with movables and not construction activities like dams or buildings. Thus, the Tribunal concluded that the assessee was not entitled to the claim under sections 80J and 80HH.2. Alleged Violation of Principles of Natural Justice:The petitioner contended that the Appellate Tribunal's refusal to allow the assessee to produce details during the hearing amounted to a violation of natural justice. The court noted that the Tribunal had granted several adjournments but ultimately denied further adjournments due to repeated delays. The Tribunal had asked for a list of articles manufactured by the assessee and the cost of such articles, but the assessee failed to provide the details. The court held that the Tribunal's decision was in line with the law declared by the Supreme Court and did not constitute a violation of natural justice.3. Justification of Immediate Production of Details:The petitioner argued that the Tribunal's requirement for immediate production of details was unjustified, especially since the Assessing Officer had not applied his mind to this aspect. The court found that the Tribunal had asked for specific details to determine the eligibility for deductions, and the assessee's inability to furnish these details justified the Tribunal's decision. The court emphasized that each assessment year is a separate unit, and there was no continuation for review or reopening beyond the statutory period of limitation.4. Consistency with Prior Appellate Orders and Supreme Court Observations:The petitioner claimed that the Tribunal's findings were inconsistent with its earlier orders for the assessment years 1983-84 and 1985-86, which had granted deductions based on the decision in R. M. Enterprises v. First ITO. However, the court noted that the Supreme Court's decision in CIT v. N. C. Budharaja and Co. ruled the situation, and the Tribunal was bound to follow this precedent. The court also observed that there was no material evidence presented to support the claim for deductions under sections 80J and 80HH, and the Tribunal's decision was consistent with the Supreme Court's observations.Conclusion:The court dismissed the petition, finding no referable questions and concluding that the Tribunal had correctly followed the Supreme Court's decision. The court also noted that the petitioner failed to provide necessary details and material evidence to support the claim for deductions under sections 80J and 80HH. A copy of the judgment was directed to be sent to the Income-tax Appellate Tribunal, Cochin Bench, for passing consequential orders.