COMMISSIONER OF INCOME TAX Vs. RAJA JEWELLERS

JUDGEMENT

(1.) The Tribunal has referred the following question of law for our opinion arising out of its order dt. 30th Jan., 1984, under S. 256(1) of the IT Act in respect of the asst. year 1979 -80 : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the assessee is a small scale industrial undertaking and entitled to weighted deduction under s. 35B of the IT Act, 1961 -

(2.) THE assessee -firm is dealing in the business including exports of precious and semi -precious stones. The trading accounts are under the head "Emerald rough accounts, exports goods accounts, and jawaharat accounts". The main trading activity is in the jawaharat accounts wherein the assessee has shown a gross profit of Rs. 1,79,240 on the total sales of Rs. 6,57,537 giving a gross profit are of 27.2%. On income shown, the assessee has claimed deduction under S. 35B Rs. 16,627 on total expenses of Rs. 49,881. The ITO refused to grant deduction to the assessee on the ground that the weighted deduction under S. 35B of the Act only can be allowed if the assessee owned the industrial undertaking. The assessee -firm is not in possession of any plant or machinery, therefore, he refused to allow weighted deduction under S. 35B of the Act. But at the Tribunal's stage, the weighted deduction under S. 35B of the Act has been allowed. Against that order, the Department has filed an application under S. 256(1) of the Act to infer the question for opinion of the High Court.

(3.) AT the outset of the arguments, it is pointed out that the issue is squarely covered by the decision of this Court in D.B. IT Ref. No. 101 of 1983 [CIT vs. Dhandia Gems Corpn. (1994) 121 CTR (Raj) 96 : (1994) 208 ITR 923 (Raj)]. We have perused the judgment of this Court in the case of Dhandia Gems Corpn. (supra). After detailed discussion, the answer has been given in favour of the Revenue and against the assessee.