COMMISSIONER OF INCOME TAX Vs. RAWAT JEWELLERS

JUDGEMENT

(1.) THE Tribunal has referred the following question of law arising out of its order dt. 2nd Sept., 1983 in respect of asst. yr. 1979-80 under s. 256(1) of the Act :

(2.) THE brief facts of the case are that the assessee is engaged in the business of precious and semi precious stones including import/export thereof and claimed deduction under s. 35B of the Act. THE ITO found that as per provisions of s. 35B(1A), no deduction can be allowed in respect of expenditure incurred after 31st March, 1978, unless the assessee is engaged in the export of goods and is a small scale exporter. THE Expln. to sub-s. (1A) defines small scale exporter as a person which export goods manufactured or produced in any small scale industrial undertaking owned by him. THE small scale industrial undertaking was considered having the meaning assigned to it in cl. (2) of the Expln. below sub-s. (2) of s. 32A. THE assessee firm was not having its own plant or machinery and the goods were manufactured outside through labourers. THE claim was rejected. In appeal before the CIT(A), it was contended that the business of the firm of such a nature does not require any machinery or in any case could not be valued for expending of Rs. 10,000. THE CIT(A) came to the conclusion that the appellant is a small scale exporter within the meaning of s. 35B (1A) and appeal was accordingly allowed. In the second appeal before the Tribunal, the appeal preferred by the Revenue was dismissed. This matter was considered by this Court in DB IT Ref. No. 101/1983, CIT vs. Dhandia Gems Corpn, decided on 29th Oct., 1993 [since reported at (1994) 121 CTR (Raj) 96] and in view of the interpretation taken in that case, we are of the view that the Tribunal was not justified in holding that the assessee is a small scale exporter and is entitled to get deduction under s. 35B of the IT Act. THE reference is accordingly answered in favour of Revenue and against the assessee. No order as to costs.