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TMI Blog2013 (9) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... sembling was done prior to export the subassemblies and components to the ultimate destination. This process is also required for containerization and packing of these items on account of size which is necessary for transportation and installation. Reliance has been placed upon the judgment in the case of CIT vs. Jackson Engineers Ltd [2009 (12) TMI 649 - Delhi High Court ], wherein it was held that activity of assembling gensets from various components amount to manufacture or production – Apart from it, reliance has been placed upon various other case laws s.a. CIT vs. I. Tech Electronics [2012 (4) TMI 223 - Gauhati High Court ]; CIT vs. Chiranjjeevi Wind Energy Ltd [2011 (1) TMI 421 - MADRAS HIGH COURT], wherein it was held that assembling amounting to manufacture – In the present case, relying upon the judgments in above cases, it was held that assessee was engaged in the manufacturing of assembling the plants which were disassembled for exports – Relief granted u/s 10B of the Income tax act – Decided against the Revenue. - ITA No.880/Del./2011, ITA No.1833/Del./2012,CO No.51/Del/2011, ITA No.880/Del./2011,CO No.193/Del/2012 ITA ,No.1833/Del./2012 - - - Dated:- 18-4-2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other income and job work/local sales is found to be correct. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. The assessee has taken the following grounds in cross objection no.193/Del/2012 :- 1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of expenditure on proportionate basis for Rs.3,14,240/- u/s 14A read with rule 8D of the Income Tax Rules. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming of action of Ld. AO in making disallowance of Rs.3,14,240/- is bad in law and against the facts and circumstances of the case. 3. That the cross objector craves the leave to add, amend, modify, delete any of the ground(s) of cross objection before or at the time of hearing. 4. Thus, in both the revenue s appeal, the issue involved is deleting the addition made on account of disallowance of exemption claimed u/s 10B of the Income-tax Act, 1961. While pleading on behalf of the revenue, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer s objections that assessee has erected cement/steel rolling mill abroad and such tasks were not possible to be carried out there at the site of the assessee at Noida Unit is not true. No doubt assessee manufactures cement and steel rolling mills and these are supplied in various sub-assemblies and components manufactured by the assessee or after getting them manufactured as per the prescribed specifications. These assemblies and components are transported to NSEZ, Noida unit and after performing certain operations, these items are exported. Ld. AR submitted that manufacturing of intermediary products which are ultimately used in final product is also a manufacturing activity. Further, ld. AR submitted that motor speed controller, pneumatic material conveyors, klin feeding mechanisms, vertical shaft klin and so many other things are manufactured with the help of raw material purchased and such manufacturing takes place with the help of skill workers hired from time to time. The assessee produced the wage register before the Assessing Officer. The Assessing Officer s objection that assessee disassembles the finished goods is not manufacturing is not correct. The assessee is fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed such reduction in the Assessment Year 2006-07. Although the principle of res judicata is not applicable to income-tax proceedings but such position should not be deviated unless there are change in the facts. In the assessee s case, there is no change in the facts. The quantum of deduction should not have any bearing on the allowability of deduction u/s 10B in view of the rule of consistency. For this proposition, the learned AR relied on the decision of Hon'ble Delhi High Court in the case of CIT vs. Neo Poly Pack P. Ltd. - 245 ITR 492 (Delhi) and Hon'ble Supreme Court in the case of Radha Swami Satsang vs. CIT - 193 ITR 321 (SC). Ld. AR also relied on following decisions :- (i) CIT vs. Jackson Engineers Ltd. - (2010) 231 CTR (Del.) 348; (ii) CIT vs. Tech Electronics - (2012) 67 DTR (Gau) 257; (iii) CIT vs. Chiranjeevi Wind Energy Ltd. - (2011) 243 CTR Mad (195); (iv) CIT vs. Anand Affiliates - (2009) 221 CTR (P H) 167; (v) CIT vs. Mahesh Chandra Sharma - (2009) 221 CTR (P H) 163; (vi) Mihir Engineers Limited vs. JCIT - (2007) 112 TTJ (Mumbai) 940; (vii) Subhash Chander Sehgal - IA No.1126 (Del.)/2008 1867 (Del)/2008 dated of order 27.02.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Column "A" of this table were purchased by assessee as per its technical specifications and drawings and after inspection they were assembled into subassemblies assemblies to manufacture Pneumatic material conveyors and Kiln feeding mechanism. The equipment are assembled together to ensure exact mating of the parts and tested for efficiency by injecting compressed air. The large sections are then disassembled into subassemblies, packed and containerized for shipment. For details lease refer to Appendix 1 . 3. (a) Instruments. (b) Kiln hood. (c) Nodulizer feed hopper overflow screw conveyor. (d) Pneumatic Cylinder. (e) Refractory bricks Powder. (f) Repair kit for cylinder (g) Screw Conveyor (h) Settling Chamber (i) VSK Gearbox and accessories (j) VSK Shell and Chimney (k) Nodulizer The equipment mentioned in the Column "A" of this table were purchased by assessee as per its technical specifications and drawings and after inspection they were assembled into subassemblies assemblies to manufacture Vertical Shaft Kiln. The large sections are then disassembled into subassemblies, packed and containerized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. (a) Table Feeder. (b) Table Feeder The equipment mentioned in the Column "A" of this table were purchased by assessee as per its technical specifications and drawings and after inspection they were assembled together to make a Material Proportionator by assembling with it scrapper, drive shaft, gearbox, motor etc and fixing the assembly to the Hopper; after testing the system is disassembled into subassembly called Table type material proportionator. For details refer to Appendix 7. 9. Grit Separator The equipment mentioned in the Column "A" of this table were purchased by assessee as per its technical specifications and drawings and after inspection they was assembled together to make a Coarse Particle Cyclone which is fitted in the Raw Mill section to perform its duty of recycling under done material to the Raw Mill. For details please refer to Appendix 3 10. Slide Gate The equipment mentioned in the Column "A" of this table was purchased by assessee as per its technical specifications and drawings and after inspection it was fixed to a hopp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engine with the alternator - Chain pulley blocks are used to lift the engine and the alternator at the time of coupling, as these are very heavy components-After the coupling is done, the engine and the alternator are mounted on a base frame - Engine and the alternator are affixed to the base frame by means of nuts and bolts fitted in the grooves-Other components are fitted to complete the DG set - Function of the control panel is to indicate the voltage and the current that is generated-It is fitted with switches and instruments to regulate and control the power supply - Function of the battery is to provide the initial current required to start the engine and the function of the silencer is to diminish the sound of I the DG set. when it runs while the function of the radiator is to maintain the temperature of the DG set - Above components constitute the inputs in the manufacture of a diesel generating set - DG set is the final product which has a distinctive name, character and function different from each of the components - Therefore, the activity of assembling gensets from various components amounts to manufacture or production for the purpose of deduction under s. 80-IA - Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als and the process conducted by the assessee resulting in production of automobile filter element, which is supplied to the automobile manufacturer. The assessee brings together various raw materials and after carrying out process, assembles the same leading to' the equipment being produced. It is well settled that every change or process cannot be termed as manufacture or production. Well known tests applied for determining whether a process amounted to manufacture or production are that a new and distinct commercial product is produced. In each case, it may be a question of fact whether a particular process involves manufacture or not. The question may be of degree and extent of change and though the issue may at times be debatable, by applying the relevant tests, the Tribunal has recorded a finding and such finding cannot be held to be perverse, it cannot be held that a substantial question of law arises. The Tribunal has applied the correct test and recorded a finding that the process undertaken by the assessee involved manufacture. Merely because a different view can be taken will not be a ground to hold that a substantial question of law arises.-Anand Affiliates vs. ITO (200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of deduction under s. 80-IA in respect of components manufactured for round bottle cooling towers. The perusal of the facts of the case clearly reveal that the assessee has established a new unit for the manufacturing of components of XE series and CM series of cooling towers in collaboration with GEA, which is an independent unit. In respect of the manufacturing activities connected with components of RB series of cooling towers, the moulds and plant and machinery initially utilized for the purpose have been shifted from the old unit to the new unit for the purpose of better control and management. The assessee is entitled to the claim of deduction under s. 80-IA in respect of components manufactured in respect of XE series and CM series of cooling towers. The assessee is not entitled to the benefit of deduction under s. 80-IA in respect of manufacture of components of RB series of cooling towers. The contention of the assessee is that it had shifted only 11 per cent of total value of plant and machinery from old unit to be part of the new unit has no relevance in view of the finding that the manufacture of components for RB series is independent of manufacture of components fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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