urban locations. However, the Director of Legal Affairs of the KVIC had in his communication informed the Deputy Director of Income Tax that under Section 2(i) of the KVIC Act any industry recognized as a village industry located in an area other than a rural area at any time before the commencement of the KVIC (Amendment ) Act, 1987 shall continue to be a village industry under the Act. Since the units of the Petitioner were established prior to 1987 in areas which are now termed as urban areas, they were required to be treated as village industries. Moreover, it was stated that the Schedule to the Khadi and Village Industries Commission Act, 1956 furnishes a list of village industries one of which is the Cottage soap industry. As regards the seventh reason, it was stated that since the assessee provides quality products to consumers, raw material used is under strict control and supervision and therefore, the cost of production of the assessee may be more than the cost of production of other commercial organizations. As regards the eighth reason, it was stated that the main object of the assessee is to provide self employment to needy women, which is followed by the trust. Similarly, as regards the ninth reason, it was submitted that out of the total assets of Rs.68.94 crores for the year ending 2004, about Rs. 20.11 crores were invested in immovable property and the balance is invested in movable properties, closing stock, loans, advances, deposits to members, staff and others and fixed deposits. The Petitioner submitted that no case was made out for reopening the assessment under Section 148 of the Income Tax Act, 1961.
