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TMI Blog2010 (8) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... - IT Appeal No. 2175 (Mum.) of 2010 - - - Dated:- 6-8-2010 - S. V. MEHROTRA, VIJAY PAL RAO, JJ. Mrs. Aarti Vissanji for the Appellant. Hargovind Singh for the Respondent . ORDER Vijay Pal Rao, Judicial Member This appeal filed by the assessee is directed against the order dated18-2-2010of CIT(A) IX, Mumbai for the assessment year 2006-07. 2. The assessee has raised the following effective grounds: 1. The ld. CIT(A) has grossly erred in rejecting the claim of the assessee under section 80-IC and erred in holding that the assessee was not done any manufacturing activity at Parwano. 2. The ld. CIT(A) has grossly erred in upholding the disallowance made on account of sales tax penalty. The Ld. CIT(A) failed to appreciate that the payments were not made for any infringement of law. 3. Ground No. 1, regarding the disallowance of deduction under section 80-IC. 4. Brief facts emerging from the record relevant to the issue are that the assessee is a company and is in the business of manufacturing and sale of leather products. The assessee entered into an agreement with M/s. Madura Garments to use brand names such as Louis Phillipe, Van Heusen, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her belt strips. She has further submitted that the assessee produced the evidence of purchase and sale by filing the purchase bill vide letter dated6-12-2008 during the course of assessment proceedings. She has referred invoice at page 30 of the paper book regarding the goods purchased by the assessee and proof of movements at pages 31 and 35 of the paper book. 8. The learned AR has also invited our attention to the invoice for purchase of buckles at page No. 36 and declaration under Excise and Taxation Department of Himachal Pradesh at page 37 of the paper book. She has again referred the invoice for sale of Leather waist belts at pages 38 to 53 of the paper books. She has also invited our attention to the Plant and Machinery Ledger Account at page 54 and bill for purchase of furniture and punching machines as well as Toggle Press at pages 56 and 57 of the paper book. She has also referred the details of the various employees, salary and wages paid to them at page 65 of the paper book. 9. The ld. AR of the assessee has submitted that the assessee has set up the undertaking which is duly registered with the Department of Industries vide Permanent Registration certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 ITR 546 1 (SC). 10. On the other hand, the learned DR has submitted that the assessee failed to prove before the lower authorities that the assessee has carried out any manufacturing activity and the assessee was not having any undertaking and required machinery for the work which requires precession and making the whole in the leather strips. He has relied upon the order of the CIT(A). 11. We have considered the rival contentions and carefully examined the relevant record. The assessee s undertaking is duly registered with the Registrar of Industries, Himachal Pradesh and Registration Certificate of Department of Industries for manufacturing of Leather waist belts is also available with the assessee. The assessee was also registered under the General Sales Tax Rules with the Sales Tax Department of Himachal Pradesh. From the record produced by the assessee the assessee has purchased the machinery for hole punching of leather strips and toggle machine for embossing and hot stamping. The relevant invoice and the tax paid record has been produced by the assessee. The lower authorities have doubted the required capacity and machinery available with the assessee for car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the operation/process falls within the meaning of the word manufacture . Applying the above test to the facts of the present case, we are of the view that, in the present case, we are of the view that, in the present case, the assessee has undertaken an operation which renders a blank CD fit for use for which it was otherwise not fit. The blank CD is an input. By the duplicating process undertaken by the assessee, the recordable media which is unfit for any specific use gets converted into the programs which is embedded in the master media and, thus, the blank CD gets converted into recorded CD by the afore stated intricate process. The duplicating process changes the basic character of a blank CD, dedicating it to a specific use. Without such processing, blank CDs would be unfit for their intended purpose. Therefore, processing of blank CDs would be unfit for their intended purposes. Therefore, processing of blank CDs dedicating them to a specific use, constitutes a manufacture in terms of section 80-IA(12) read with section 33B of the Income-tax Act. Similarly, in the case of Emptee Poly-Yarn (P.) Ltd. ( supra ), the hon ble Supreme Court has followed the decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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