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TMI Blog2017 (2) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... The fact that the assessee is outsourcing certain processing activities does not disqualify the assessee to be placed in the status of a manufacturer, cannot be applied. In considered view, the facts of the case have not been properly appreciated which needs to be verified in order to arrive at proper finding of facts. Set aside the Revenue appeals back to the file of the ld. CIT(A) to decide the same afresh after verifying the relevant facts, survey material and statements, if any. - ITA 21/Ahd/2009, 2625/Ahd/2009, 2808/Ahd/2010, 22/Ahd/2009, 2602/Ahd/2009, 2816/Ahd/2010 - - - Dated:- 17-2-2017 - Shri R. P. Tolani, Judicial Member Revenue by : Shri Sumit Kumar Varma, DR Assessee by : Shri S.N. Soparkar, AR ORDER This is group of six Revenue appeals in the case of two above mentioned assessees which are group concerns. The issues and grounds being similar, these appeals were heard together and are being disposed of by this common order for the sake of convenience. 2. The common grounds raised in both assessees are to the effect that the ld. CIT(A) erred in law and on facts in . (a) Deleting the disallowance of deduction u/s 80IB as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the finished goods were produced by the M/s. Honey Paper Tube and M/s. Honey Paper Box, Phase-I, GIDC, Vapi and only sales vouchers in the name of above units were prepared. Therefore, the survey team came to the conclusion that no activities were conducted at the above premises and as such these units are not entitled for exemption u/s 80IB of the Act. Further the survey team has impounded the muster registers, since they will be useful in finalizing the assessment for AY 2005- 06. However, on verification of the impounded Muster Register, it was seen that the assessee had not employed 10 or more workers for the substantial period of the FY 2004-05 relevant to AY 2005-06. The Assessing Officer was of the view that as per the survey team s report, no manufacturing activity was carried out at the factory premises claimed by the assessee. In this connection, the assessee vide letter dated 07.11.2007 has explained as under:- We are hereby submitting the written submission by the assessee on eligibility of assessee for claim of deduction u/s.80IB. In the submission the assessee has in detail given the information that how it has complied with all the conditions laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, after reconciled the same, found that none of the bills were raised by HPT for any semi-finished product as claimed by the assessee. Thus, as rightly observed by survey team, the assessee was not manufacturing any product but got the finished product from HPT and the assessee had not conducted any manufacturing activity; therefore, the claim of 80IB deduction was rejected. 5. Aggrieved, the assessee preferred first appeal where the ld. CIT(A) allowed the assessee s claim by following observations:- 5.16. In the facts and circumstances of the case and after considering the aforesaid facts and rival submissions, I hold that the denial of the claim of the appellant that it has manufactured the products is unjustified. The records clearly establish that the appellant has manufactured goods. The disallowance of deduction u/s 80IB only on said premises that the appellant has not manufactured articles or goods is incorrect. There being no other deficiency noticed in the compliance of the said section 80IB by the appellant, the denial of deduction claimed on the said ground is incorrect. 5.17 The AO has proposed that alternatively, the deduction claimed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the change of one year was verified by CA or not, allowed the claim of the assessee. (b) The fact that the assessee was not carrying out any manufacturing activities as claimed by 28.03.2004 was corroborated by the evidences and the material impounded during the course of survey. Further, no explanation has been filed from the CA as to how the mistake was committed. Reference is invited to Form 10CCB which does not say revised 10CCB certificate issued by CA. Similarly, the xerox copy of the Audit Report exhibited on the paper-book at page 24 contains neither the signature of the CA nor the date of signing the said Form No.10CCB. The ld. CIT(A), without observing all these inconsistencies, survey team s report and the material impounded during the course of survey, held that the record clearly establishes that the assessee was manufacturing goods in its premises and the finding of the Assessing Officer was incorrect. (c) Even the average working of the Assessing Officer has been discarded. (d) Overwhelming reliance has been placed on the payment of excise duty by the assessee. Excise duty is payable at the point of clearance of goods, i.e. dispatch of goods. The HPT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary to bear in mind the above mentioned concern expressed by their Lordships of the Supreme Court. The assessee firm has established a new unit to manufacture slitted packing reels necessary for the said unit. The assessee has erected plant and machinery. The assessee is carrying on a number of manufacturing or conversion processes either directly or through job workers. It is not necessary that the assessee itself should carry out all the stages of manufacturing process. Outsourcing of certain processes is permissible in law as held by various courts. The arguments of the Revenue that the activities of the assessee do not amount to manufacturing activities as assessee is only slitting or cutting of paper rolls into smaller reels. In fact the assessee is getting the sheets printed/laminated upto the required mark and thereafter gets into small reels and re-pack it for final dispatch. The activity of slitting itself involves different processes by which the character of the material is transformed into a different nature. The fact that the assessee is outsourcing certain processing activities does not disqualify the assessee to be placed in the status of a manufacturer. In CIT V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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