D P AGRAWAL Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS appeal has been preferred by the assessee against the order passed by the Income-tax Appellate Tribunal on October 6, 1999, in I. T A. No. 545/jab of 1997 relating to the assessment year 1994- 95.

(2.) THE Income-tax Appellate Tribunal has allowed the appeal filed by the Commissioner of Income-tax holding that deduction under Section 80hh , and Section 80-1 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), on the income arising from brass scrap obtained in the process of breaking and dismantling of guns is not an income derived from the industrial undertaking of iron rerolling and allowed the depreciation on truck at 25 per cent, as against 40 per cent, when the truck has been used for transporting the goods of others and hire charges amounting to Rs. 36,000 were received.

(3.) THE assessee carries on the business of running a rerolling mill wherein rerolled products of iron and steel are manufactured. The assessee filed a return of income supported by an audit report from the chartered account- ant under Section 44ab of the Act. The income as per account has been accepted in the assessment. In the profit and loss account, a profit of Rs. 17,11,794 was shown to be included, income from sale of brass scrap at Rs. 9,98,006. This was shown separately during the course of survey conducted at his place on January 15, 1994, under Section 133a of the Act. The assessee had offered to pay tax on Rs. 10 lakhs in respect of the brass so obtained. During the course of assessment the assessee was asked to explain surrender of Rs. 10 lakhs. It was submitted that he had purchased 182 HOW Carrier Guns from Central Ordinance Depot (COD), Jabalpur, in an auction vide letter dated June 30, 1993. In breaking and dismantling of the guns brass scrap 10. 96 MT in quantity was obtained and the balance was iron scrap. It was contended that this activity was production of goods, hence, income from industrial undertaking. The value of the brass was estimated at Rs. 10 lakhs and offered for taxation at the time of survey, this was sold for Rs. 9,99,006.