Dhariwal Industries Ltd. v. Dy. CIT

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The Tax Publishers2009 TaxPub(DT) 1710 (Pune-Trib) : (2009) 029 (II) ITCL 0108 : (2009) 318 ITR 0193 : (2009) 120 ITD 0001 : (2009) 123 TTJ 0613 : (2009) 025 DTR 0058 Dhariwal Industries Ltd. v. Dy. CIT INCOME TAX ACT, 1961 Appeal (Tribunal) - Deduction under section 80-IA/80-I -Allowability of Assessee was engaged in business of manufacturing of Gutka and claimed deduction under sections 80-I and 80-IA. Tribunal observed that Gutka, retains all qualities of tobacco, including pharmacology of nicotine and physiological and psychological effects of nicotine and, therefore, a tobacco preparation hit by item 2 of Eleventh Schedule to Act, and hence it was not eligible for deduction under sections 80-I and 80-IA in respect of profits derived from said undertaking. It viewed on harmful effects of tobacco on health of citizens. Assessee contended that harmfulness of tobacco on health would not decide issue of admissibility of deduction under sections 80-I and 80-IA and, thereafter, he applied for rectification of said order. *Held:* Tribunal had nowhere based its conclusion regarding non-allowability of deductions under sections 80-I and 80-IA on Gutka by holding same as tobacco preparation on basis of such general observations regarding effect of tobacco on health of people. As allowability of deduction under sections 80-I and 80-IA on Gutka and fact that Gutka was a tobacco preparation had been dealt by Tribunal on merits on basis of facts of case and law applicable thereto, and, therefore, no interference under section 254 was called for. Income-tax Act, 1961, Section 254, read with sections 80-I and 80-IA A.Y. : 1993-94 to 1995-96 and 1997-98 to 2001-02 Decision: In favour of assessee. Case Law Analysis:Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227/ 173 Taxman 322 (SC) (para 8) and CIT v. Ramesh Electric & Trading Co. [1993] 203 ITR 497/[1994] 77 Taxman 43 (Bom.) (para10), Naresh K. Pahuja v. ITAT 19 DTR (Bom.) 273; CIT v. S. Kumar Tyres Mfg. Co. [2008] 305 ITR 360 (MP); Honda Siel Power Products Ltd. v. CIT [2007] 295 ITR 466/ 165 Taxman 307 (SC); Dhirajlal Girdharilal v. CIT [1954] 26 ITR 736 (SC) (para 3); Champa Lal Chopra v. State of Rajasthan [2002] 257 ITR 74/[2003] 131 Taxman 417 (Raj.) (para 3); CIT v. Tirupati Construction Co. [2000] 241 ITR 833/[2002] 124 Taxman 673 (MP) (para 3); Seth Madan Lal Modi v. CIT [2003] 261 ITR 49/[2003] 126 Taxman 129 (Delhi) (para 3); Blue Star Engg. Co. (Bombay) (P.) Ltd. v. CIT [1969] 73 ITR 283 (Bom.) and M. Visvesvaraya Industrial Research & Development Centre v. ITAT [2001] 251 ITR 852/ 116 Taxman 760 (Bom.) (para 3) SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2009 TaxPub(DT) 1710 (Pune-Trib) : (2009) 029 (II) ITCL 0108 : (2009) 318 ITR 0193 : (2009) 120 ITD 0001 : (2009) 123 TTJ 0613 : (2009) 025 DTR 0058

Dhariwal Industries Ltd. v. Dy. CIT

INCOME TAX ACT, 1961

Appeal (Tribunal) - Deduction under section 80-IA/80-I -Allowability of

Assessee was engaged in business of manufacturing of Gutka and claimed deduction under sections 80-I and 80-IA. Tribunal observed that Gutka, retains all qualities of tobacco, including pharmacology of nicotine and physiological and psychological effects of nicotine and, therefore, a tobacco preparation hit by item 2 of Eleventh Schedule to Act, and hence it was not eligible for deduction under sections 80-I and 80-IA in respect of profits derived from said undertaking. It viewed on harmful effects of tobacco on health of citizens. Assessee contended that harmfulness of tobacco on health would not decide issue of admissibility of deduction under sections 80-I and 80-IA and, thereafter, he applied for rectification of said order. Held: Tribunal had nowhere based its conclusion regarding non-allowability of deductions under sections 80-I and 80-IA on Gutka by holding same as tobacco preparation on basis of such general observations regarding effect of tobacco on health of people. As allowability of deduction under sections 80-I and 80-IA on Gutka and fact that Gutka was a tobacco preparation had been dealt by Tribunal on merits on basis of facts of case and law applicable thereto, and, therefore, no interference under section 254 was called for.

Income-tax Act, 1961, Section 254, read with sections 80-I and 80-IA

A.Y. : 1993-94 to 1995-96 and 1997-98 to 2001-02
Decision: In favour of assessee.

Case Law Analysis:Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227/ 173 Taxman 322 (SC) (para 8) and CIT v. Ramesh Electric & Trading Co. [1993] 203 ITR 497/[1994] 77 Taxman 43 (Bom.) (para10), Naresh K. Pahuja v. ITAT 19 DTR (Bom.) 273; CIT v. S. Kumar Tyres Mfg. Co. [2008] 305 ITR 360 (MP); Honda Siel Power Products Ltd. v. CIT [2007] 295 ITR 466/ 165 Taxman 307 (SC); Dhirajlal Girdharilal v. CIT [1954] 26 ITR 736 (SC) (para 3); Champa Lal Chopra v. State of Rajasthan [2002] 257 ITR 74/[2003] 131 Taxman 417 (Raj.) (para 3); CIT v. Tirupati Construction Co. [2000] 241 ITR 833/[2002] 124 Taxman 673 (MP) (para 3); Seth Madan Lal Modi v. CIT [2003] 261 ITR 49/[2003] 126 Taxman 129 (Delhi) (para 3); Blue Star Engg. Co. (Bombay) (P.) Ltd. v. CIT [1969] 73 ITR 283 (Bom.) and M. Visvesvaraya Industrial Research & Development Centre v. ITAT [2001] 251 ITR 852/ 116 Taxman 760 (Bom.) (para 3)