Commissioner of Income-tax Vs. Jansons and Co. - Court Judgment

Excerpt:
- land acquisition act, 1894 [c.a. no. 1/1894]. section 4; [sushil harkauli, s.k. singh & krishna murari, jj] acquisition of land held, court cannot issue a writ of mandamus directing the state authorities to acquire a particular land. land acquisition is not purely ministerial act to be performed by executive no direction in nature of mandamus whether interim or final can be issued by court under article 226 necessarily to acquire particular land in public interest. land acquisition is not a purely ministerial act to be performed by the executive and therefore, no mandamus can be issued by the court in exercise of its power under article 226 of the constitution, whether suo motu or otherwise, whether in public interest litigation or otherwise directing acquisition of land under the provisions of land acquisition act, 1894. it would, however, be open to the court in exercise of that power to invite the attention of the executive to any public purpose and the need for land for meeting that public purpose and to require the executive to take a decision, even a reasoned decision, with regard to the same in accordance with the statutory provisions, perhaps even within a reasonable time frame. however, the power of the court under article 226 must necessarily stop at that. thereafter, if the decision taken by the executive is capable of challenge and, there exist appropriate legal grounds for such challenge, it may also be open to the court to quash the decision and to require reconsideration. but no direction in the nature of mandamus whether interim or final can be issued by the court under article 226 to the executive to necessarily acquire a particular area of a particular piece of land for a particular public purpose. section 4; compulsory acquisition of land powers of state government held, renewal of lease in favour of petitioners would not take away power of state government of compulsory acquisition of land. renewal of lease would at best be taken into consideration for determining quantum of compensation. - the assessee, therefore, satisfied the requirements of 'small scale exporter' and 'small scale industrial unit by the directorate of industries, govt. thus, the assessee clearly falls within the meaning of 'small scale exporter' as defined under the explanation of section 35(1a) and entitled for the deduction under section 35(b)(1). 9. the apex court as early as in 1961, in chrestian mica industries ltd. thus the case is clearly distinguishable and does not apply in the present case.rajes kumar, j.1. the income tax appellate tribunal has referred the following questions of law under section 256(2) of the income tax act, 1961 (hereinafter referred to as 'act') for the assessment year 1079-80 for opinion to this court.'whether on the facts and in the circumstances of the case, tribunal was justified in law in holding that the assessee firm fulfilled all the relevant conditions prescribed in section 35b(1-a) as amended by theu finance act, 1978 and was entitled to weighted deduction under section 35a? whether the tribunal was justified in dismissing the department's second appeal on the issue of weighed deduction under section 35a when the tribunal itself has allowed department's reference application under section 256(1) in the case of united trading corporation, moradabad for the assessment year 1979-80 (c. a. no. 1493/del/of 1983 dated 18.6.1984)?' 2. the brief facts of the case are as follows:-the assessee/opposite party hereinafter referred to as 'assessee') was an exporter of brassware. the assessment year involved is 1979-80. the assessee claimed weighted deduction under section 35b(1a) as inserted by the finance act, 1978 w.e.f. 1.4.1978. it claimed to be a small scale exporter/however, the i.t.o. disallowed the claim. he held that the assessee's sphere of work was to purchase items from the local 'karigare'/'karkhanedars'' and that it was not the original manufacturer and basically a process done of the items which were exported by it. 3. in appeal, the learned appellate assistant commissioner confirmed the order of the income tax officer on the same basis.4. dealer filed appeal before the tribunal, which was allowed. tribunal held as follows:-'we have heard the learned representatives on both the sides. the i.t.o. has admitted that the assessee is an old concern and had been dealing in export activity for the.....his only observation is that the assessee is not originally a manufacturer and that it is basically a process doer of the items which are exported by it. we find that in the profit and loss account, machinery expenses of rs. 1,263.10 and tools expenses of rs. 1,122.02 have been shown. in the balance sheet, machinery worth rs. 3,891/48p shownunder the head 'assets' whose details are given in the machinery account. in the trading account expenses have beenshown for the purchase of 'koramar and for the payment of wages for polishing, lacquering, engraving, colouring and welding etc. the copy of the wages account shows the details of the wages paid to various labourers etc. for various jobs. ist was also explained to us on behalf of the assessee that the 'koramar which was received from the karkhanedars was in pieces which had to be welded and thereafter, oldered, engraved, lacquered and polished etc. in the assessee's premises were there were workmen employed under the assessee's control. the assessee, therefore, satisfied the requirements of 'small scale exporter' and 'small scale industrial unit by the directorate of industries, govt. of u.p. in respect of brasswares. we are also supported in the view, we are taking by the earlier decisions of the appellate tribunal in the cases of f.a.r. brass products, prince road, moradabad (vide order dated 0.8.1983 in i. t. a. nos. 1151 and 1152/del/83), order dated 12.11.1980 in the case of talwar & khuller i.t.a. no. 3609/79 and the order dated 19.9.1983 in the case of wajid sons exports (i. t. a. no. 314 and 315/82). accordingly, we are of the view that the claim of the assessee was entitled to be considered by the i. t. in accordance with law on a small scale exporter under section 35b(1a). this will be done by the i.t.o.' 5. heard sri a. n. mahajan, learned standing counsel and sri vikram gulati appearing on behalf of assessee. 6. learned standing counsel submitted that the assessee was purchasing 'koramal' from the 'karkhanedars' in pieces and thereafter, has only carried on the process of welding, polishing, lacquering, engraving, colouring etc. and is not a original manufacturer and therefore, do not all within the small scale under taking and as such, is not entitled for the benefit of section 35b, inasmuch as, does not fulfill the requirement as required under section 35b(1a). in support of his contention, he relied upon the decision of this court in i. t. r. no. 51 of 1988 c.i.t. v. bhatia impex (india), moradabad decided on 1.12.2004. sri vikram gulati, learned counsel for the assessee contended that the assessee is a small scale exporter as defined under the explanation of section 35b(1a). being small scale under taking as defined by clause-ii of the explanation below to sub section (2) of section 32a. he further submitted that the tribunal has recorded the finding that the assessee is a registered small scale industrial unit by the directorate of industries, govt. of u. p. in respect of brasswares and the balance sheet shows machinery worth rs. 3,891.48p under the head 'assets' and it was farther found that the assessee after purchasing the 'koromal' from the karkhanedars in pieces has done the further processing in the form of welding, soldering, engraving, lacquering and polishing etc.7. we have gone through the order of tribunal and submissions of learned counsel for the parties and given our anxious consideration. section 35b(1a) explanation (d) read with clause (2) of explanation below section 32a(2) sub section (2) of section 32a reads as follows:-(1a) notwithstanding anything contained in sub-section (1), no deduction under this section shall be allowed in relation to any expenditure incurred after the 31st day of march, 1978, unless the following conditions are fulfilled, namely:- (a) the assessee referred to in that sub section is engaged in- (i) the business of export of goods and is other a small scale exporter or a holder of an export house certificate or (ii) the business of provision of technical know-how, or the rendering of services in connection with the provision of technical know-how, to persons outside india; and (b) the expenditure referred to in that sub section is incurredby the assessee wholly and exclusively for the purposes of the business referred to in sub clause (i) or, as the case may be, sub clause of clause (a) explanation- for the purposes of this sub section - (a) 'small scale exporter' means a person who exports goods manufactured or produced in any small scale industrial undertaking or undertaking owned by him. provided that such person does not own any industrial undertaking which is not a small scale industrial undertaking. (b) 'export house certificate' means a valid export house certificate issued by the chief controller of imports and exports, government of india; (c) provision of technical know-how' has the meaning assigned to it in sub-section (2) of section 80mm; (d) 'small scale industrial undertaking has the meaning assigned to it in clause (2) of the explanation below sub-section (2) of section 32a'.clause 2 of explanation below sub-section (2) of section 32a reads as follows:- (2) 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:- (i) in a case where the previous year ends before the 1' day of august, 1980, ten lakh rupees; (ii) in a case where the previous year ends after the 31st day of july, 1980, but before the 18th day of march, 1985, twenty lakh rupees; and (iii) in a case where the previous year ends after the 17th day of march, 1985 thirty five lakh rupees) and for this purpose the value of any machinery or plant shall be0) (a) in the case of any machinery or plant owned by the assessee, the actual cost thereof to the assessee; and (iv) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant. 8. from a reading of the clause 2 of explanation to section 32a(2) of the act, an industrial undertaking is deemedlo be a small scale industrial undertaking where the value of any machinery or plant installed for the purpose of business of undertaking did not exceed ten lakh rupees. admittedly, the value of machinery or plant installed for the purposes of business of the assessee is not exceeding rs. ten lakh. the activity carried on by the assessee namely welding, soldering, polishing lacquering etc. after purchasing the 'kora mall' from the 'karkhanedars' amounts to 'producing' the goods. thus, the assessee clearly falls within the meaning of 'small scale exporter' as defined under the explanation of section 35(1a) and entitled for the deduction under section 35(b)(1).9. the apex court as early as in 1961, in chrestian mica industries ltd. v. state of bihar (1961) 12 stc 150, defined the word 'production', albeit, in connection with the bihar sales tax act, 1947. the definition was adopted from the meaning ascribed to the word in the oxford english dictionary as meaning 'amongst other things that which is produced a thing that results from any action, process or effort, a product; a product of human activity or effort'. it has been further held by the appex court in cit v. n.c. budharaja and co. : [1993]204itr412(sc) that the word 'production' is much wider than the word 'manufacture'. it was said;'the word 'production' has a wider connotation than the word 'manufacture'. while every manufacture can be charaterised as production, every production need not amount to manufacture....the word 'production' or 'produce' when used in juxtaposition with the word 'manufacture takes in bring into existence new goods by a process which may or may not amount to manufacture. it also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods.'10. in the case of commissioner of income tax v. ses a goa ltd. reported in 271 itr, 331, relying upon the aforesaid two decisions referred hereinabove, while dealing with the provisions of section 32a, the apex court held that the extraction and process of iron ore amounts to 'production' within the meaning of the word in section 32a(2)(b)(iii) of the income tax act, 1961.11. in the case of i. t. r. no. 51 of 1988 c.i.t. v. bhatia impex (india), moradabad, assessing authority recorded the finding that the assessee do not own any plant or machinery and the said finding has not been set aside by the tribunal. on these facts, this court held that the assessee itself does not own any undertaking where the manufacturing or production activity can be done. thus the case is clearly distinguishable and does not apply in the present case. in the present case, tribunal found that the assessee owned machinery worth rs. 3,891.48p which finds place in the balance sheet under the head 'assets' whose details are given in the machinery accounts. tribunal also found that the assessee is registered as a small scale industrial unit by the director of industries, government of u.p. in respect of brassware. in view of the foregoing discussions, both the questions referred above, are answered in affirmative i.e. in favour of assessee and against the revenue. there shall be no order as to costs.