Commissioner of Income Tax vs Pink Jewellers

The Income Tax Appellate Tribunal has referred the following question of law arising out of its order dated June 30, 1983, in respect of the assessment year 1979-80 u/s 256(1) of the Income Tax Act, 1961 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee-firm is an industrial undertaking and consequently in directing to allow deduction u/s 35B(1A) of the Income Tax Act, 1961 ?"

The brief facts of the case are that the assessee-firm is engaged in the business of processing and sale of precious stones and Rs. 12,636 was claimed u/s 35B(1A). The claim of the assessee is that he is a small-scale exporter. The claim was not allowed by the Income Tax Officer and it was observed that processing of stones cannot be considered as an industry at all and, therefore, the grant of weighted deduction is not allowable. The Commissioner of Income Tax (Appeals), in an appeal preferred by the assessee, came to the conclusion that the definition of small-scale exporter has been given in the section, which means a person who exports goods manufactured or produced in any small-scale industrial undertaking or undertakings owned by him and came to the conclusion that the assessee is an industrial undertaking. The order of the Commissioner of Income Tax (Appeals) was challenged by the Revenue before the Tribunal and the Tribunal observed that the same issue came up for consideration before the Tribunal in the case of Dhandia Gems Corporation and on the basis of the said decision, the appeal of the Revenue was dismissed.

The submission of Mr. Bapna, counsel for the Revenue, is that the decision of Commissioner of Income Tax Vs. Dhandia Gems Corporation, which has been relied upon by the Tribunal is different and, therefore, the view which has been taken by the Tribunal should be considered in accordance with law. Shri T.C. Jain, for the assessee, submitted that the finding of facts has not been recorded and the ingredients necessary for the purpose of establishing the fact that the assessee is a small-scale industrial undertaking have also not come on record.

We have considered over the matter. It was for the assessee to prove, when deduction is claimed, that the goods produced or manufactured are in a small-scale industrial undertaking. The facts which have been found by the Tribunal are similar to those of Dhandia Gems Corporation and, therefore, it is to be presumed that the case of the assessee is similar to the case of Dhandia Gems Corporation as he himself placed reliance on the said decision before the Tribunal. The decision of the Tribunal in Dhandia Gams Corporation has already been considered by this court in the case of Commissioner of Income Tax Vs. Dhandia Gems Corporation, In the said decision, it was found that manufacture was done through labourers paid on the basis of work done. There was no document on the basis of which it could be said that the goods which were manufactured or produced were goods which were from a small-scale industrial undertaking owned by the assessee. The assessee was not entitled to weighted deduction u/s 35B(1A) of the Income Tax Act, 1961.

Accordingly, the reference is answered in favour of the Revenue and against the assessee. No order as to costs.