2011 (6) TMI 738 - HC - Income Tax

Summary

Issues involved: Appeal against tribunal's judgement regarding eligibility for benefit u/s 80IB of the Income Tax Act based on manufacturing activity.

Judgment Summary:

Issue 1: Whether the activity carried out by the assessee qualifies as manufacturing for benefit u/s 80IB.

The central issue revolved around determining if the respondent assessee was engaged in manufacturing activity to avail benefits under Section 80IB of the Income Tax Act. Both the CIT(Appeals) and the tribunal ruled in favor of the assessee after examining the evidence on record. The tribunal noted that the claim was supported by documentary evidence, including licenses and registrations under various statutes. The process described by the assessee involved multiple steps of assembling various components, leading to the creation of a new product. The tribunal emphasized that the entire manufacturing process should be considered as a whole, not individual steps. The CIT(Appeals) also concluded, based on the evidence, that the activities constituted manufacturing. The High Court concurred with the tribunal's view, noting that the assessee obtained necessary licenses for the manufacturing activities, and upheld the decision.

Issue 2: Interpretation of the term "manufacture" u/s 2(29BA) of the Income Tax Act.

The High Court examined the definition of "manufacture" as per Section 2(29BA) of the Income Tax Act, which involves a change in a physical object resulting in a new and distinct object with different characteristics or the creation of a new object with a different composition or structure. Based on this definition and the evidence presented, the Court found that the activities carried out by the assessee met the criteria of manufacturing. Consequently, the Court concluded that no substantial question of law arose in this case, leading to the dismissal of the Tax Appeal.

Therefore, the High Court upheld the tribunal's decision, confirming that the assessee's activities constituted manufacturing, making them eligible for benefits under Section 80IB of the Income Tax Act.