COMMISSIONER OF INCOME TAX Vs. RELISH FOODS

JUDGEMENT

(1.) AT the instance of the Revenue, the Tribunal (in short "the Tribunal") has referred the following two questions of law for the decision of this Court :

(2.) THE respondent is a firm. It is an assessee to income tax. We are concerned with the asst. yr. 1977 78. The assessee claimed deduction under S. 80HH on the ground that the business of purchasing shrimps, peeling and freezing and exporting them, involved manufacture or production. The plea was negatived by the ITO. For the years 1974 75, 1975 76 and 1977 78, the assessee claimed depreciation and relief under S. 80J of the IT Act. The assessee was getting subsidy from the Government, The plea of the assessee was that depreciation and relief under S. 80J of the Act should be afforded ignoring the subsidy received from the Government. The ITO took the view that the subsidy received from the Government should be reduced from the value of the assets for computation of depreciation and relief under S. 80J of the Act. The ITO rejected the claim. In appeal, the CIT (Appeals) accepted the plea of the assessee and allowed relief. He held that the subsidy could not be reduced from the cost of assets for the computation of depreciation and for relief under S. 80J of the Act. He further held that the assessee was involved in production of goods and so he is entitled to relief under S. 80HH of the Act. The matter was taken in appeal by the Revenue before the Tribunal. The Tribunal upheld the decision of the CIT (Appeals). The order of the Tribunal is dated November 26, 1981. Thereafter, at the instance of the Revenue, the above two questions were referred for the decision of this Court.

(3.) IN the light of these decisions, it is idle to contend that the subsidy received by the respondent assessee should be deducted from the cost of the assets for the purpose of allowing development rebate and depreciation on such assets and computation of relief under S. 80J of the Act. In this view of the matter, our answer to question No. 1 referred to us is in the negative, against the Revenue and in favour of the assessee.