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2017 (2) TMI 407 - AT - Income TaxRevision u/s 263 - process of printing was not in the category of Manufacturing as required under section 80IC(2) therefore AO has allowed the deduction wrongly - Held that - Since the process carried out by the assessee of slitting the Rolls and printing thereon has been held by the Tribunal to be a manufacturing process in the case of assessee itself, therefore, the assessee is eligible for the deduction under section 80IC of the Act and in such circumstances allowing deduction by the Assessing Officer cannot be said as erroneous. Since the facts and circumstances of the case in the year under consideration are identical to the facts in assessment year 2008-09, respectfully following the above decision of the Tribunal, we are of the opinion that that the assessment order passed by the Assessing Officer under section 143(3) of the Act cannot be said to be erroneous so as to be prejudicial to the interest of the Revenue. We accordingly hold the order passed by the learned Commissioner of Income Tax as an invalid order and the same is quashed. - Decided in favour of assessee
Issues Involved:
1. Validity of the order passed by the Commissioner of Income Tax (CIT) under Section 263 of the Income-tax Act, 1961. 2. Eligibility of the assessee for deduction under Section 80IC of the Income-tax Act, 1961. 3. Whether the process carried out by the assessee qualifies as "manufacturing" under Section 80IC(2) of the Act. Issue-wise Detailed Analysis: 1. Validity of the order passed by the Commissioner of Income Tax (CIT) under Section 263 of the Income-tax Act, 1961: The assessee challenged the CIT's order dated 19/02/2014, which cancelled the original assessment order passed by the Assessing Officer (AO) on 25/08/2011. The CIT had invoked Section 263, arguing that the AO's order was erroneous and prejudicial to the interest of the Revenue because the assessee did not manufacture any article or thing, a prerequisite for claiming deduction under Section 80IC. The Tribunal noted that the CIT's order was based on the view that the assessee's activities did not amount to manufacturing. However, the Tribunal found that the CIT's order was not valid as it did not provide specific findings on how the AO's order was erroneous and prejudicial to the Revenue's interest. The Tribunal quashed the CIT's order and restored the AO's original assessment order. 2. Eligibility of the assessee for deduction under Section 80IC of the Income-tax Act, 1961: The assessee argued that it was eligible for deduction under Section 80IC, having submitted all required details and explanations during the assessment proceedings. The Tribunal referenced its own decision in the assessee's case for the assessment year 2008-09, where it had accepted the assessee's process as manufacturing and allowed the deduction under Section 80IC. The Tribunal also considered the CBDT's circular No. 15/2016 dated 19/05/2016, which recognized printing and publishing as manufacturing or production, relying on the Delhi High Court's judgment in the case of Delhi Press Patra Prakashan Ltd. (2013) 355 ITR 14 (Del). Consequently, the Tribunal held that the assessee was eligible for the deduction under Section 80IC. 3. Whether the process carried out by the assessee qualifies as "manufacturing" under Section 80IC(2) of the Act: The Tribunal examined the process followed by the assessee, which involved purchasing jumbo rolls, slitting them, applying a chemical coating, and then printing on the foils. The Tribunal found that this process resulted in a new product, thus qualifying as manufacturing. The Tribunal referenced the Delhi High Court's judgment in CIT vs. Delhi Press Patra Prakashan Ltd., which held that printing alters the character of blank paper, making it a new product. The Tribunal also cited the Supreme Court's decision in CIT v. SESA Goa Limited, which recognized that processing iron ore amounted to manufacturing. Based on these precedents, the Tribunal concluded that the assessee's process constituted manufacturing, making it eligible for the deduction under Section 80IC. Conclusion: The Tribunal allowed the assessee's appeal, quashing the CIT's order and restoring the AO's original assessment order. The Tribunal held that the assessee's activities qualified as manufacturing, making it eligible for the deduction under Section 80IC. The decision was pronounced in the open court on 18th Nov., 2016.
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