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TMI Blog2013 (8) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IC is being granted to the units set up in certain specified areas which are industrially backward - assessee is invoicing majority of finished goods from Dehradun whereas that substantial production is carried out at Chennai. The assessee has adopted colourable devise to take undue advantage of benevolent provisions of the Act - Decided in favour of Revenue. - I.T.A. Nos. 1326, 1327/Mds/2012 & 917/Mds/2013 - - - Dated:- 17-7-2013 - Dr. O. K. Narayanan And Shri Vikas Awasthy,JJ. For the Petitioner : Shri Shaji P. Jacob, Addl. CIT For the Respondent : Shri R. Badhreenath, C.A. ORDER Per Vikas Awasthy, Judicial Member The three appeals- ITA No. 1326/Mds/2012 for the Assessment Year 2007-08, ITA No. 1327/Mds/2012 for the Assessment Year 2008-09 ITA No. 917/Mds/2013 for the Assessment Year 2009-10 have been filed by the Revenue impugning the order of Commissioner of Income Tax(Appeals)-III, Chennai for the respective Assessment Years. 2. Since the issue involved in all the three appeals is same, all the three appeals are taken up for adjudication together. At the request of the ld. DR, the facts are taken from ITA No. 1327/Mds/2012 relevant to the AY. 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Section 80IC of the Act. The ld. DR further contended that without prejudice to his submissions on the activities being carried out by the assessee termed as manufacturing, the assessee is not entitled to claim deduction u/s. 80IC as whatever activities the assessee is carrying they are done at Chennai and not at Dehradun. The ld. DR referred to detailed chart given in the assessment order at Page Nos. 1 2. The chart gives the break-up of sales and expenses of the assessee at Chennai and Dehradun units. Referring to the chart, the DR submitted that the sale at Chennai unit is to the tune of Rs. 1,03,66,381/- and the cost of production is Rs. 1,12,64,953/-. The DR highlighted that the cost of production is higher than the sales. The assessee has Plant Machinery worth Rs. 1,71,52,060/- and has Moulds to the tune of Rs. 2,47,51,348/- at Chennai. On the other hand, the sale at Dehradun unit is to the tune of Rs. 7,42,43,567/-, whereas the cost of production for the same is Rs. 5,22,79,354/-, value of Machineries at Dehradun is Rs. 3,12,739/- and the Moulds are to the tune of Rs. 9,828/- only. The ld. DR further pointed out that although there is higher amount of sales a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a non-living physical object or article or thing,-- (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;] The definition of 'Manufacture' has been introduced in the Act w.e.f. 01-04-2009, prior to that, the term 'Manufacture' has been explained in various judgments of the Hon'ble Supreme Court of India as well as various High Courts. The Hon'ble Apex Court in the case of Aspinwall Co., Vs. CIT reported as 251 ITR 323 while explaining the term 'Manufacture' has relied on another decision of the Hon'ble Supreme Court in the case of Deputy CST v. Pio Food Packers and held as under: This court while determining as to what would amount to a manufacturing activity held in Deputy CST v. Pio Food Packers [1980] 46 STC 63 ; [1980] Supp. SCC 174 : that the test for determination whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken with the aid of Hand Operated Press. v. The reflector/PCB is then fitted with a metal negative contact using two metal screws fitted with the help of pneumatic hand held crew drivers. vi. This reflector/PCB is then fitted into a plastic head along with a Lens. c. In the third process line, following process are undertaken resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use: i. The torch heads are tested for focus and minimum lux output. ii. The battery case from first Process Line is fitted with head from Second Process Line and thereafter both are tested for fitting and current flow. iii. The battery case is inserted with a set of batteries and tested for operating and switch efficiency. iv. Thereafter a support rope is installed mechanically to the bottom of the Torch Barrel for additional hand support. v. The torch is subjected to drop test and hammer test and retested for all operational efficiency. vi. The torch along with a set of batteries is packed in to a Retail Display Packing. vii. The torch display packing is punched using a pneumatic press fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Chennai unit is higher than the sales. Whereas the cost of production at Dehradun is less viz -a- viz sales. The ld. AR of the assessee has not been able to convincingly explain disparity in cost of production and volume of sales in Chennai unit and Dehradun unit. A further perusal of the chart shows that the written down value of Machinery and Moulds in Chennai is much more than the written down value of Machinery and Moulds at Dehradun, still the volume of sales from Dehradun is higher than Chennai unit. The ld. AR has tried to put forth an argument that since Dehradun is labour intensive unit, therefore, not much machinery is installed at Dehradun. However, we do not find much force in this argument of the ld. AR. The expenditure on salaries and wages are higher in Chennai than in Dehradun. As regards power consumption, the power consumption in Dehradun is only Rs. 6,432/- where as expenditure on power consumption in Chennai is Rs. 29,13,563/-. Similarly, for Repairs and Maintenance, the expenditure incurred at Dehradun unit is Rs. 3,419/- whereas expenditure on Repairs and Maintenance at Chennai is Rs. 18,66,797/-. The ld. AR has not been able to give any plausible reason fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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