2014 (6) TMI 187 - HC - Income Tax

Benefit of deduction u/s 80IB of the Act - Revenue contended that in mixing, the complete manufacturing does not occur and it is only one of the several processes involved in the work, therefore, the claim that mixing charges also constitute income from manufacturing was rejected Held that - Following Midas Polymer Compounds P. Ltd. v. Asst. CIT 2010 (12) TMI 414 - Kerala High Court - The Tribunal has held that the assessee is eligible for such deduction - the Revenue did not file special leave petition before the Supreme Court as the tax effect was below the prescribed monetary limits for filing special leave petition thus, there is no need for interference in the order of the Tribunal Decided against Revenue.

Summary

Issues involved:
- Eligibility of deduction under section 80-IB of the Income-tax Act for income from mixing on job work basis in a private limited company engaged in pre-cured tread rubber manufacturing.

Analysis:

The High Court of Kerala addressed the issue of whether income from mixing on job work basis in a private limited company engaged in pre-cured tread rubber manufacturing is eligible for deduction under section 80-IB of the Income-tax Act for the assessment year 2007-08. The Revenue contended that the income from mixing on job work basis should not be considered for deduction under section 80-IB. The Assessing Officer rejected the claim of the assessee, stating that the income from mixing did not constitute income from "manufacturing" as it was only one of the several processes involved in the work. The first appeal was also rejected. However, the Tribunal, upon considering a Full Bench decision of the High Court, held that the assessee was eligible for the deduction. The Revenue did not file a special leave petition before the Supreme Court, and the Full Bench decision became the law declared on the subject matter.

The High Court, considering the Full Bench decision as the law declared on the subject matter, declined to interfere with the orders of the authorities concerned. Therefore, the appeal was dismissed in terms of the Full Bench decision, which established the eligibility of the assessee for deduction under section 80-IB for income from mixing on job work basis in the private limited company engaged in pre-cured tread rubber manufacturing.