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TMI Blog2014 (3) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... further process including stitching of seat covers - It simply produces the PT foam seats which are used for making end product to be fixed in different vehicles - the assessee do not manufacture the end product, namely seats to be fixed in vehicles. The decision in Commissioner of Income-tax Versus Vinbros & Co. [2012 (9) TMI 802 - SUPREME COURT] followed - the end product is totally different and is commercially different commodity than the major input rectified spirit which is not fit for human consumption - the changes made to the original product results in a new different commercial commodity which is recognized as to in the trade - the assessee manufactures is the foam in the shape of seats and therefore it cannot be stated that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of a product manufactured by it which is listed in the 11th schedule of the Income-Tax Act? 3. The very same question, though was not framed in so many words, was considered by the Tribunal, alongwith other questions. The Tribunal, answered the first question in favour of the assessee and against the Revenue holding that it cannot be stated that the assessee is engaged in the manufacture or production of polyurethane foam (for short the PT foam ). The Tribunal also held that one has to see the end product for holding whether the industrial undertaking is entitled to deduction under Section 80-IB(2)(iii) of the Income Tax Act, 1961 (for short the Act ). Then the Tribunal observed that the end product, in the present case, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under Section 80- IB of the Act. The order of the Assessing Officer was confirmed by the CIT(A) and in the second appeal by the assessee, the Tribunal reversed the same. The relevant observations made by the Tribunal find place in paragraph 12 of the order, which read thus: 12. As per section 80IB (2) (iii), deduction u/s.80IB is not allowable if the industrial undertaking manufactures or produces an article or thing specified in the 11th schedule. In the instant case, the assewssee company is manufacturing automobile seats, in which poly urethane foam along with other chemicals is also being used. It cannot be said that industrial undertaking is engaged in the manufacture or production of poly urethane foam. The assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial undertaking manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, is liable to be taxed. In other words, deduction as provided for under Section 80-IB is not allowable if the manufacturer or producer of any article or thing, manufactures or produces the articles mentioned in Entry 25 in the Eleventh Schedule. It is in this backdrop, learned counsel appearing for the Revenue submitted that what the assessee manufactures is the PT foam which is covered by Entry 25 in the Eleventh Schedule and are, therefore, not entitled for deduction. He submitted that the Tribunal misdirected itself and held that the assessee is not engaged in manufacture or production of the PT foa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apes of seats and do not make or undertake any further process to change its original character as PT foam. It remains as PT foam. It is not the case of assessee that after producing PT foam they carry out any further process, to change its original character as PT foam. The Managing Director of the assessee in his evidence confirmed that with the use of other components/ingredients, what they manufacture is PT foam, in the shapes as per their requirement. One of the questions that was put to the Managing Director and his reply to the same is relevant, which reads thus: Q.2: Please state if the item produced constitutes polyurethane foam which is further added by other components to make a seat then why the item produced should; not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he PT foam seats which are used for making end product to be fixed in different vehicles. Admittedly the assessee do not manufacture the end product, namely seats to be fixed in vehicles. 10. The Hon ble Supreme Court in VINBROS and Company while considering the question whether on the facts and in the circumstances of the case, the Tribunal was right in holding that blending and bottling of IMFL would amount to manufacture for the purpose of claiming deduction under Section 80-IB?. While considering the question, the Hon ble Supreme Court agreed with the decision of the Tribunal which observed that the end product is totally different and is commercially different commodity than the major input rectified spirit which is not fit for h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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