TaxTMI 
TaxTMI 
2004 (12) TMI 59
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....tion 80J of the Income-tax Act, 1961?" The facts giving rise to the present reference are as follows: The assessment year 1981-82 is involved. The assessee-respondent is a company and it claimed deduction under section 80J of the Act which was not allowed by the assessing authority as no production took place during the previous year relevant to the assessment year 1980-81. The only trial production took place in this relevant assessment year. The regular production had started only in June, 1981, i.e., during the subsequent assessment year. The claim was also not accepted by the Commissioner of Income-tax (Appeals). The Tribunal directed the Income-tax Officer to allow the deduction claimed under section 80J, in case other conditions are ....
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....ns to manufacture or produce articles or to operate its cold storage plant or plants or the ship is first brought into use. The words "begins to manufacture or produce article" are indicative of the legislative intention. These words do show that manufacturing or production of article should be on regular basis, i.e., in the sense of commercial production with a view to sell the manufactured goods or articles in the market. Regular manufacturing activity is different from trial production. In the case of trial production only the working of the plant and machinery and the quality of the things produced is checked not with a view to sell the manufactured goods or produced articles in the open market. This is only a testing of the machinery a....
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.... case of Addl. CIT v. Southern Structurals Ltd. reported in [1977] 110 ITR 164, in which it has been held that for the purposes of section 84 (as it then was) with the mere manufacture of a prototype would not be enough to say that the assessee had commenced manufacture of an article which can be sold ultimately. In that case also a question arose as to when the assessee undertaking began to manufacture or produce articles. The assessee undertaking would be eligible for relief under section 84 with reference to the beginning of production or manufacture of article. The assessee was a manufacturer of wagons. It was held that mere production of a prototype is not production of articles, as such, because if the Ministry of Railways had rejecte....