1992 (7) TMI 95 - AT - Income Tax

Summary

Issues:
1. Whether the assessee qualifies as an industrial company for concessional tax rate and deduction under section 80-I.
2. Whether the assessee's activity of manufacturing plate bending machines qualifies as manufacturing for tax purposes.

Analysis:
1. The appeal pertains to the assessment year 1983-84 where the assessee claimed to be an industrial company eligible for concessional tax rate and deduction under section 80-I. The Income Tax Officer (ITO) rejected these claims citing that the assessee's industrial undertaking had not commenced functioning as the main project was still under construction. The Deputy Commissioner of Income Tax (Appeals) upheld the ITO's decision based on reports indicating no manufacturing activity had started. The Tribunal considered the submissions and evidence, including the director's report mentioning the fabrication of a machine resulting in profit, sales figures, and the company's memorandum empowering manufacturing activities. Relying on various legal precedents and CBDT Circular No. 347, the Tribunal held that the activity of manufacturing the plate bending machine qualified as manufacturing, even though components were made by other units under the supervision of the assessee's directors. The Tribunal concluded that the assessee was an industrial company entitled to concessional tax rate and deduction under section 80-I, directing the ITO to grant the relief if other conditions were met.

2. The key issue revolved around whether the assessee's activity of manufacturing plate bending machines constituted manufacturing for tax purposes. The ITO and the Deputy Commissioner of Income Tax (Appeals) argued that since the main project was still under construction and no significant manufacturing had commenced, the assessee did not qualify as an industrial company. However, the Tribunal analyzed the evidence provided, such as sales figures, raw material purchases, and the supervision of directors in the manufacturing process. Citing legal precedents and CBDT Circular No. 347, the Tribunal determined that the activity of manufacturing the plate bending machine, even if components were made by other units under supervision, qualified as manufacturing. The Tribunal's decision hinged on the interpretation that the assessee's actions met the criteria for manufacturing, thereby entitling them to the benefits of an industrial company and deduction under section 80-I.