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TMI Blog2014 (3) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... assesse. - ITA No.401/PN/2013, ITA No.437/PN/2013 - - - Dated:- 27-3-2014 - SHRI SHAILENDRA KUMAR YADAV AND SHRI SHAILENDRA KUMAR YADAV, JJ. For The Assessee : Shri Nikhil Pathak For The Department : Shri P.L. Pathade ORDER PER SHAILENDRA KUMAR YADAV, J.M: Both these cross appeals arising from the common order of Commissioner of Income Tax (Appeals)-V, [(in short CIT(A)] Pune dated 15.11.2012 pertain to the same assessee for A.Y. 2009-10. So these were heard together and are being disposed off by this consolidated order for the sake of convenience. 2. In ITA No.401/PN/2013, the revenue has filed the appeal on the following grounds: 1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in allowing the assessee's claim of ₹ 1,31,38,957/- claimed as deduction u/s 80IB(5)(i) of the IT Act, 1961, when the assessee is not involved in manufacturing or producing activity but is only carrying out the activity of assembling at its Silvassa Unit. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in allowing deduction u/s 80IB(5)(i) of the IT. Act, by holding that assemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilvassa as well as Chakan Units when separate books of accounts are being maintained for both the units and audited under the provisions of the IT. Act, 1961. The learned CIT-Appeals wrongly applied section 80IA(10) / 80IB(13) of the IT Act, 1961 while passing the order and disallowing the deduction claimed. 3. The appellant craves leave to add, alter, amend and / or withdraw any of the ground either before or at the time of hearing, as may be necessary. 4. The first issue pertains to allowability of claim of _ 1,31,38,957/- u/s.80IB(5)(i) of I.T. Act. This issue has been decided in favour of assessee in assessee s own case for A.Y. 2007-08 and 2008-09 in ITA No.2056 2057/PN/2012, wherein it was decided by observing as under: 4.2 After going through the rival submissions and material on record, we find that the assessee is engaged in the business of manufacturing generator sets under the brand name Kala . The assessee company has two units at Chakan as stated above and one unit at Silvassa. The assessee company has claimed deduction in respect of Chakan and Silvassa units. The deduction available at Chakan Unit was at 30% of the profit while in respect of Silvassa Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product was generator set which was totally different product having a separate name and identity in the market. Accordingly, the assessee submitted that assembly amounts to manufacture and hence, the deduction should be allowed. The assessee has assembled gensets. According to him, the assessee is paying excise duty on the gensets manufactured. Secondly, he has also accepted that the final product i.e. generator set is a new product vis-a-vis the raw material used. Accordingly, he has accepted the claim of the assessee and has allowed the deduction. The Hon ble Madras High Court in the case of Chiranjeevi Wind Energy Ltd.[2011-TIOL-91-HC-MADIT] has held that the assessee engaged in the activity of procuring different parts of windmills and thereafter, assembling them to form windmill was engaged in manufacturing activity. The relevant para of the decision is as under: The assessee was engaged in the activity of procuring different parts for assembling windmills. According to the appellant, since the assessee merely procured the different parts of the windmill and assembled the same, it could not amount to either 'manufacture' or 'production' of any article or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Babcock and Wilcox India Ltd. (supra) is not applicable to the facts of the present case. In said case, the assessee was engaged in the activity of erection of boilers as a sub contractor. It was held that such an activity of erection of boilers did not amount to manufacture. In the said case, the issue was whether assembly amounts to manufacture was not involved. Accordingly, the ratio of Babcock and Wilcox India Ltd. (supra) is not applicable to the facts of the present case. In this background, we hold that CIT(A) was justified in allowing the claim of the assessee u/s.80IB(5)(i) by holding that assembling various components amounts to manufacturing. This reasoned factual and legal finding of CIT(A) on the issue needs no interference from our side. We uphold the same. Similar issue arose in ITA No.2057/PN/2012 for A.Y. 2008-09. Facts being similar, so following the same reasoning, We uphold the order of CIT(A) on the issue. Accordingly, we hold that grounds Nos.1-5 of revenue s appeal are dismissed. The other grounds raised by revenue are similar to that of issues raised in assessee s appeal which will be taken care in the assessee s appeal on the said issue. 4.8 As a resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third parties. The stand of the assessee has been that the comparable rates adopted by the Assessing Officer were not correct since the canopies sold to third parties i.e. Kirloskar Oil Engines Ltd. were having totally different features. The assessee also explained various reasons for which the net margin in the Chakan unit was lesser as compared to the net margin in Silvassa unit. In appeal, the CIT(A) held that the assessee was not able to substantiate the variation in the net profit margin between the two units. Accordingly, in para 24 of his order, the CIT(A) has held that the same net profit ratio should be considered for both the units and hence, he has calculated the excess profit loaded to Silvassa unit at ₹ 1,38,75,693/-. We find that main reason for making addition that there is difference in net profit ratio of both units. The allegation is that the canopy sold by Chakan unit to Silvassa unit were at much lesser rate as compared to charged to third parties. The stand of the assessee has been that he has sold 33 canopies to Kirloskar Oil Engines Ltd. Apart from this sale, the assessee has not sold to any other third party. In this regard, the contention of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities have not appreciated that the difference in depreciation was basically because substantial plant and machinery was pertaining to canopy manufacturing division. The relevant chart is enclosed on page 49 of the Paper Book. The higher employee and manufacturing expenses were because of the fact that the canopies were being manufactured in Chakan unit which was not the case in Silvassa unit. The chart giving the details of the profit earned by the two units as enclosed on page 146 of the Paper Book. 6.8 The Assessing Officer has invoked sub section 10 of Section 80IA. In this regard, the stand of the assessee is that sub section 10 is not applicable since it is applicable to the transactions between the assessee and third person. In this case before us, the transactions are between the two units of the assessee and if at all, any provision is to be applied i.e. sub section 8 of section 80IA. As per the said section, if any goods are transferred to an eligible business from other business and the consideration of the goods transferred does not correspond to the market value then the Assessing Officer has the power to re-compute the price and disallow the deduction. For apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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