2008 (10) TMI 6

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....undertaken by it? (2) Whether 'usance interest' partakes of the character of purchase price and, therefore, not liable to deduction at source under Section 195(1) of the Income Tax Act, 1961?" We may refer to C.A.Nos.6692-6723/2003 for deciding these appeals. Answer to Question No.1: The Income Tax, 1961 Act does not define the expression 'industrial undertaking'. Section 80HH falls under Chapter VIA. Section 80HH falls under sub-Chapter C which deals with "deductions in case of certain incomes". Section 80HH deals with deduction in respect of profits and gains from newly established industrial undertakings. Under Section 80HH(1), it is, inter alia, provided that where gross total income of an assessee includes any profits and g....

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....titute new goods and, consequently, in this case, the impugned judgment proceeds to hold that the assessee was not entitled to claim the benefit under Sections 80HH and 80I of the 1961 Act as there was neither production nor manufacture of new goods by the process of ship breaking. We do not agree with the view taken by the Gujarat High Court in the impugned judgment for the following reasons: Firstly, in the case of Ship Scrap Traders Vs. Commissioner of Income Tax, reported in 251 ITR 807, the Bombay High Court has analysed the entire ship breaking activity, the articles which emerged from that activity, the various steps which are required to be undertaken for ship breaking activity and, consequently, after placing reliance on the ....

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.... the meaning of the word in Section 32A (2)(b)(iii) of the 1961 Act? It was held that the word 'production' is wider than the word 'manufacture'. It was held that the word 'production' has a wider connotation than the word 'manufacture'. It was further held that the mined ore need not be a new product. In fact, the Department had raised an identical argument in that case stating that the mined ore was not a new product and, consequently, there was no production. This argument has been specifically rejected in Sesa Goa's case. For the aforestated reasons, therefore, we are of the view that the Tribunal in the present case was right in allowing the deduction under Sections 80HH and 80I to the assessee holding that the ship breaking activit....