2014 (7) TMI 392 - HC - Income Tax

Deduction u/s 80IB of the Act Manufacturing activity - Held that - The decision in The Commissioner of Income Tax Central-II Versus Sunilbhai S. Kakad 2014 (7) TMI 261 - GUJARAT HIGH COURT followed - the activity carried out by the assessee can be said to be manufacturing activity and not simple assembling as held by the AO the activity is held to be manufacturing activity and the assessee is entitled to deduction u/s 80IB of the Act - there is specific finding given by the CIT(A) that as such the Unit had employed atleast ten persons the finding is a question of fact, it cannot be said that the assessee was not entitled to the benefit of deduction under Section 80IB of the Act Decided against Revenue.

Summary

Issues:
1. Common question of law and facts arising from group of appeals challenging the Tribunal's order regarding deduction under Section 80IB of the Income Tax Act for different Assessment Years.

Analysis:
In a group of appeals before the Gujarat High Court, the issue revolved around the entitlement of the assessee to claim a deduction under Section 80IB of the Income Tax Act. The appeals were filed by the revenue against the Tribunal's order for different Assessment Years. The main question posed by the revenue was whether the Tribunal was correct in deleting the disallowance of the deduction under Section 80IB made by the Assessing Officer. The Court considered the arguments presented by the revenue's advocate and examined the assessment orders, the Commissioner of Income Tax (Appeals) order, and the Tribunal's judgment.

The crux of the matter was whether the activities of the assessee, involving buying basic computer items and assembling them, could be considered as manufacturing activity to qualify for the deduction under Section 80IB. The revenue contended that the activities did not amount to manufacturing, while the assessee argued that it involved manufacturing through assembling. The Court noted that a Division Bench of the same Court had previously held a similar activity by another individual to be manufacturing activity, entitling the assessee to the deduction. The Court agreed with the Division Bench's view and held that the assessee's activities indeed qualified as manufacturing for the purposes of Section 80IB.

Regarding the contention that the assessee did not employ more than ten persons, a condition for claiming the deduction under Section 80IB, the Court pointed out that the Commissioner of Income Tax (Appeals) had found that the unit had employed at least ten persons. Since this was a factual finding, the Court ruled that the assessee met the conditions for the deduction. Relying on the precedent set by the Division Bench in a previous case, the Court held the questions raised in the appeals against the revenue and in favor of the assessee. Consequently, all the tax appeals were dismissed in favor of the assessee.