M.M.KUMAR, J. - (1.) THE Revenue has approached this Court under s. 260A of the IT Act, 1961 (for brevity 'the Act') challenging the view respect of asst. yr. 1990 -91. The Revenue has claimed that following substantial question of law would arise for determination of this Court : "Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee which is running a poultry farm is entitled to deductions under ss. 80HH and 80 -I of the IT Act, 1961 -
(2.) BRIEF facts of the case are that the assessee respondent is a private limited company and is running a poultry farm. It the assessee claiming deductions under ss. 80HH and 80 -I of the Act at Rs. 40,738 and Rs. 48,885 respectively. The AO disallowed the claim of the assessee made under s. 80HH of the Act at Rs. 40,738 holding that the business activities of the assessee respondent could not be considered as that of industrial undertaking which was the view taken in respect of asst. yr. 1984 -85. Likewise, the claim of the assessee under s. 80 -I of the Act at Rs. 48,885 was also not accepted.
(3.) RESPONDENT was an industrial unit and therefore was entitled for deductions under ss. 80HH and 80 -I of the Act. Accordingly a direction was issued to the AO to calculate the amount of such deduction as per law after giving an opportunity of hearing to the assessee. On further appeal, the Revenue challenged the order before the Tribunal. The farm and has been allowed specific deductions under s. 80JJ of the Act. After hearing learned counsel we are of the view that this appeal deserves to be accepted as the matter is covered in its favour. The Hon'ble Supreme Court in the case of CIT vs. Venkateswara Hatcheries (P) Ltd. (1999) 153 CTR (SC) 105 : (1999) 237 ITR 174 (SC) has come to the conclusion that poultry farm would not be covered by the expression 'industrial undertaking' as the chicks are the natural and biological process. The observations of their Lordships in Venkateswara Hatcheries's case (supra) read as under : " ... The formation of chicks is a natural and biological process over which the assessee has no hand or control. Infact what the assessee was doing was to help the natural or biological process of giving birth to chicks. The chicks otherwise can also be produced by conventional or natural method and in that process also, the same time is taken when the chicks come out from the eggs. What the assessee by application of mechanical process does in the hatchery is to preserve and protect the eggs at a particular temperature. But the coming out of chicks from the eggs is an event of nature. The only difference seems to be that, by application of mechanical methods, the mortality rate of chicks is less and the assessee may get chicks more in number. This, however, would not mean that the assessee produces chicks and that chicks are 'articles or things'. We are, therefore, of the opinion that the assessee is neither an industrial undertaking nor does the business of hatchery carried out by the assessee fall within the meaning of s. 32A and s. 80J of the Act.";