TaxTMI 
TaxTMI 
2004 (10) TMI 68
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....: The applicant is an individual. He purchases yarn from the market and gives the same to the weavers to weave cloth as per his design. The cloth is then dyed and calendered. The applicant gets this work done on job basis from others. He does not have any factory or machinery of his own. During the assessment years 1982-83 and 1983-84, he claimed deduction under section 80-I of the Act. The claim was rejected by the Assessing Officer, which has been upheld by the Appellate Assistant Commissioner as also by the Tribunal. The Tribunal has held that admittedly the applicant has no manufacturing activity wherein he might be carrying on any manufacturing process with the aid of power and wherein he might be engaging 10 or more workers. It was o....
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..... According to him, Explanation 3 to section 80-I(2) of the Act gives the same meaning of small scale industrial undertaking which has been given in clause (b) of the Explanation below sub-section (8) of section 80HHA of the Act. It provides that an industrial undertaking should employ 10 or more workers in a manufacturing process carried on with the aid of power, or employ 20 or more workers in a manufacturing process carried on without the aid of power. In support of the aforesaid plea, he relied upon the following decisions: (1) CIT v. Sri Meenakshi Asphalts [2004] 266 ITR 626 (Mad); and (2) CIT v. Vijay Granites P. Ltd. [2004] 267 ITR 606 (Mad). Having heard learned counsel for the parries, we find that the applicant had no manufactu....
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....anufactures or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power ... Explanation 3.- For the purposes of this subjection, 'small scale industrial undertaking' shall have the same meaning as in clause (b) of the Explanation below sub-section (8) of section 80HHA ... (b) an industrial undertaking shall be deemed to be a small-scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed....
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.... 1985 the value of machinery and plant installed for the purpose of business of the undertaking should not exceed rupees twenty lakhs and for this purpose the value of the machinery and plant in the case of any machinery or plant owned by the assessee is treated as the actual cost and where it is taken on hire the actual cost as in the case of the owner of such machinery and plant. Thus, from the aforesaid provision, it is absolutely clear that in order to claim the benefit of section 80-I of the Act, the assessee should own plant and machinery as also employ in the manufacturing process 10 or more persons as the case may be. In the case of Orient Longman Ltd. [1981] 130 ITR 477 the Delhi High Court was considering the question as to wheth....
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....tribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining". This court had held that the methods or techniques adopted to convert the plain white cloth into printed and dyed bed-spreads, scarves and garments entitles the business to be treated as an industrial undertaking belonging to the firm and, therefore, entitled to claim exemption. The aforesaid decisions are of no help to the applicant as the definition of small scale industrial undertaking as has been defined in clause (iv) of sub-section (2) of section 80-I of the Act is entirely different. In the case of Western Mechanical Industries (P.) Ltd. [1991] 187 ITR 265 the Bombay High Court had held tha....
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....he services of somebody else on a contract other than a contract of purchase. In the case of Sri Meenakshi Asphalts [2004] 266 ITR 626 the Madras High Court has held that no new product emerged from the process employed where the assessee which was a small scale industrial undertaking made blown bitumen. What was bitumen continued to be bitumen, but with lesser quantity of oil and moisture. The purposes for which it could be used were only the purposes for which the use of bitumen was appropriate. Heating of the scrap bitumen in order to obtain solid bitumen, by causing the moisture and oil in the scrap bitumen to evaporate or separate, could not be compared to curing of coffee and the conversion of raw berry into coffee beans and the asse....