MAHENDER KUMAR AGGARWAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Tribunal, Delhi, has referred the following question of law under Section 256(1) of the IT Act, 1961 ('the Act'), for opinion of this Court:

(2.) Briefly stated, the facts giving rise to the present reference are as follows : The applicant is an individual. He purchases yarn from the market and gives the same to the weavers to weave cloth as per his design. The cloth is then dyed and calendered. The applicant gets this work done on job basis from others. He does not have any factory or machinery of his own. During the asst. yrs. 1982-83 and 1983-84 he claimed deduction under Section 80-I of the Act. The claim was rejected by the AO, which has been upheld by the AAC as also by the Tribunal. The Tribunal has held that admittedly, the applicant has no manufacturing activity wherein he might be carrying on any manufacturing process with the aid of power and wherein he might be engaging 10 or more workers. It was of the view that a small scale industrial undertaking to be taken under Section 80-I of the Act, a person has to own plant and machinery or has to hire plant and machinery, the value of which should be Rs. 20 lakhs or less. The manufacturing process should be undertaken in the premises of the assessee's industrial undertaking and 10 or more persons should be employed.

(3.) We have heard Sri Vikram Gulati, learned counsel for the applicant, and Sri Shambhoo Chopra, learned standing counsel for the Revenue.