2015 (10) TMI 1060 - HC - Income Tax

Entitlement to deduction u/s. 80IB - whether process of galvanizing of H.R. strips/Coils/CR Coils amounts to manufacture/production of article/thing? - Held that - Revenue appeal dismissed concluding process of galvanizing of H.R. strips/Coils/CR Coils amounts to manufacture/production of article/thing entitling the assessee to deduction u/s. 80IB - See The Commissioner of Income Tax Versus Silvassa Wooden Drums 2012 (4) TMI 593 - BOMBAY HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Challenge to order passed by Income Tax Appellate Tribunal regarding deduction under section 80IB of the Income Tax Act, 1961 for the assessment year 2004-05.

Analysis:
The case involves an appeal by the Revenue challenging the order of the Income Tax Appellate Tribunal regarding the deduction claimed under section 80IB of the Income Tax Act, 1961 for the assessment year 2004-05. The Assessee, a firm engaged in manufacturing galvanized steel tapes and cold rolled strips, filed a return of income declaring total income after claiming deduction. The Assessing Officer rejected the deduction claim, but the Commissioner allowed the Assessee's appeal. The Tribunal confirmed the Commissioner's order based on a previous order of the High Court. The Commissioner relied on the specific use of the product in armoring jelly-filled polythene telephone cables for entities like Bharat Sanchar Nigam Limited and Indian Railways. The Tribunal considered whether the manufacturing process amounts to manufacture, but followed the High Court's authoritative pronouncement in the Assessee's case for granting the deduction under section 80IB.

The Tribunal's decision was based on a previous order of the High Court in a similar case, where it evaluated the nature of the process carried out by the Assessee. The Tribunal considered the manufacturing flow chart, input and output materials, and the distinct uses of the final product in various industries. It concluded that a new and distinct product emerges during the manufacturing process, and even if two views were possible, the Commissioner should not have exercised jurisdiction under section 263 of the Income Tax Act. The Tribunal's decision was consistent with the law laid down by the Supreme Court and was based on the material on record.

The High Court upheld the Tribunal's decision, stating that the facts and circumstances were identical to a previous case involving the same Assessee. The Court found that the Tribunal did not commit any error of law apparent on the face of the record in following the High Court's view. As the Tribunal's order was not perverse and did not raise any substantial question of law, the Appeal was dismissed without costs.