9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (9) TMI 574 - AT - Income TaxDeduction u/s 80IB Whether assessee can claim deduction u/s 80IB where manufacturing process carried out by an assessee on job work basis - Held that - As it makes no difference in the manufacturing process carried out by an assessee whether the raw material belongs to the assessee himself or owned by some other person. In both the circumstances, manufacturing activities are carried out in the same process by using the similar plant and machinery and similar manpower. No material could be brought on record by the Revenue to show that the risk incidental to manufacturing was not of the assessee and was liability of any other person. Therefore, dismiss the grounds of appeal. Decision in favour of assessee
Issues Involved:
1. Disallowance of Deduction under Section 80IB of the Income Tax Act for various assessment years. Issue-wise Detailed Analysis: 1. Disallowance of Deduction under Section 80IB: The sole issue raised by the Revenue is the disallowance of deduction under Section 80IB of the Income Tax Act. The Revenue contends that the assessee, engaged in the manufacture of goods on a job work basis under the supervision of M/s Brakes India Ltd, is not entitled to the deduction. The Assessing Officer (AO) disallowed the deduction, citing that the assessee was not the real manufacturer and referred to the amendment in Section 80IA, which disqualifies persons executing work contracts from claiming deductions. Arguments by the Departmental Representative (DR): The DR argued that the facts and issues in all the appeals are similar and supported the AO's orders. The lead year of appeal is the assessment year 2005-06, where the CIT(A) allowed the deduction, which was followed in subsequent years. Arguments by the Assessee's Representative (AR): The AR supported the CIT(A)'s orders, emphasizing that the assessee is the actual manufacturer. The AR cited several judicial decisions, including those from the jurisdictional High Court, which supported the claim that sub-contractors engaged in manufacturing are entitled to deductions under Section 80IB. CIT(A)'s Observations and Findings: The CIT(A) allowed the appeal for the assessment year 2005-06 and subsequent years, stating that: - The assessee is engaged in manufacturing automobile components. - The AO's contention that deductions cannot be allowed for job work basis manufacturing is incorrect, supported by decisions from the jurisdictional High Court (e.g., Taj Fire Works Industries, Heat Treatment & Fettling Services, Sundaram Fasteners Ltd). - The AO's test of direct supervision and control by the original manufacturer does not disqualify the assessee as the manufacturer. - The engineer from the customer company (Brakes India Ltd) supervising the process is remunerated by the assessee, indicating the assessee's control over manufacturing. - The assessee has separate excise registration, sales-tax registration, and power connection, indicating it operates as an independent manufacturing unit. - The reliance on Section 80IA(7) by the AO is misplaced as it pertains to infrastructure companies, not manufacturing activities. Tribunal's Decision: The Tribunal found no specific error in the CIT(A)'s order. It upheld the CIT(A)'s view that the manufacturing process and the risk associated with it are borne by the assessee, regardless of who owns the raw material. The Tribunal confirmed the CIT(A)'s order and dismissed the Revenue's appeals for all assessment years under consideration. Conclusion: The appeals by the Revenue were dismissed, and the CIT(A)'s orders allowing the deduction under Section 80IB were upheld. The Tribunal emphasized that the assessee's manufacturing activities and risks justify the entitlement to the deduction, aligning with judicial precedents.
|
