1987 (4) TMI 22 - HC - Income Tax

Court affirms bus-body building company qualifies for tax benefits as motor bus manufacturer.

Commissioner Of Income-Tax Versus Jayanand Khira And Company Pvt. Limited

Commissioner Of Income-Tax Versus Jayanand Khira And Company Pvt. Limited - [1988] 170 ITR 31, 63 CTR 268, 32 TAXMANN 434 Issues Involved:The judgment involves the assessment of whether the assessee, a bus-body building company, qualifies for higher development rebate and deductions under sections 80E/80-I for the assessment years 1967-68, 1968-69, and 1969-70. The main contention is whether the business of bus-body building constitutes the manufacture or production of motor buses, making the assessee eligible for the mentioned benefits.Assessment years 1967-68 and 1968-69:The Tribunal referred questions of law to the court regarding the assessee's business activities and entitlement to relief under sections 80E/80-I. The court analyzed the relevant provisions, including section 33(1)(b)(B), section 80E, and section 80-I, which provide for deductions related to specific industries listed in the Fifth Schedule. The court considered the definition of 'priority industry' under section 80B(7) and the significance of items in the Fifth and Sixth Schedules, particularly motor trucks and buses.The court addressed the argument that bus-body building does not constitute the manufacture or production of motor buses, emphasizing the legislative intent behind the provisions granting relief to incentivize certain industries. It was noted that no manufacturer in India produces complete motor trucks or buses, as some focus on chassis while others build bodies. The court agreed with the Tribunal's decision that bus body builders are engaged in manufacturing motor buses, entitling them to higher development rebate and deductions under the relevant sections.Assessment year 1969-70:Similar to the previous assessment years, the Tribunal raised questions regarding the assessee's business activities and entitlement to development rebate. The court reiterated its analysis of the relevant provisions and the interpretation of 'priority industry' to determine the eligibility of the assessee for benefits under the Income-tax Act.The court considered the arguments presented by the Revenue and the assessee's counsel, ultimately concluding that the assessee's business of bus-body building qualifies as the manufacture of motor buses. Drawing on precedents and distinguishing relevant Supreme Court decisions, the court affirmed the Tribunal's decision in favor of the assessee, granting higher development rebate and deductions under the specified sections.In conclusion, the court answered all questions of law in favor of the assessee, affirming their eligibility for higher development rebate and deductions under sections 80E/80-I for the assessment years in question.