Tax Tribunal upholds s. 80HH relief for wood transport; Revenue appeal dismissed, assessee partly successful

The Tribunal upheld the Commissioner of Income Tax (Appeals)' decision for the assessment year 1977-78, granting relief under s. 80HH for transporting wood. For the assessment year 1978-79, relief was restricted to 1/5th of the total relief admissible under s. 80HH due to the specific circumstances of the case. The revenue's appeal for both years and the assessee's cross-objection for 1977-78 were dismissed, while the cross-objection for 1978-79 was partly allowed.

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Issues:
- Interpretation of s. 80HH relief for the assessment years 1977-78 and 1978-79.

Analysis:
1. The appeals of the revenue and cross-objections of the assessee concerning s. 80HH relief were consolidated for convenience. The assessee, a forest contractor, sought the benefit of s. 80HH for the assessment years 1977-78 and 1978-79. The Income Tax Officer (ITO) initially denied the benefit.

2. The Commissioner of Income Tax (Appeals) noted that a similar issue had been previously decided by the Tribunal in favor of the assessee, granting relief under s. 80HH for transporting wood from forests to depots. The Tribunal had allowed 2/5th of the relief after considering various factors. The CIT(A) followed this precedent, which was also acknowledged by both the departmental representative and the assessee's counsel.

3. The Tribunal upheld the CIT(A)'s decision for the assessment year 1977-78, as it was in line with the previous order and did not require interference. The reasoning from the earlier order was relied upon for consistency.

4. Moving to the assessment year 1978-79, a similar issue arose where the assessee had forests in non-backward areas but operated from a backward area. The mode of transport was through a river crossing both backward and non-backward areas. The ITO rejected the claim, leading to an appeal to the CIT(A) who directed the relief to be computed at 2.5% of the total relief admissible under s. 80HH.

5. The Tribunal considered the arguments of both parties regarding the computation of relief under s. 80HH for the assessment year 1978-79. The assessee pressed for 100% allowance, while the revenue disputed this, suggesting a lower percentage. The Tribunal, based on previous decisions and the specific circumstances of the case, restricted the relief to 1/5th of the total relief admissible under s. 80HH.

6. Consequently, the revenue's appeal for both assessment years 1977-78 and 1978-79, as well as the assessee's cross-objection for the assessment year 1977-78, were dismissed. However, the assessee's cross-objection for the assessment year 1978-79 was partly allowed, granting relief at 1/5th of the total relief admissible under s. 80HH.

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