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TMI Blog2017 (11) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... him with the aid of power. We are thus of the considered view, that as the assessee had cumulatively satisfied both of the requisite conditions contemplated u/s. 80IB(4), therefore the CIT(A) had rightly observed that the assessee stood duly entitled towards claim of deduction under the aforesaid statutory provision. We thus further find ourselves to be in agreement with the ld. A.R. that in light of the settled position of law, now when the assessee had been held as eligible and therein entitled towards claim of deduction under the aforesaid statutory provision for the preceding years, viz. A.Y. 2005-06 and A.Y. 2006-07, therefore unless the said relief granted in the said preceding years in which such claim was made and accepted is withdrawn or set aside, the A.O cannot be allowed, to hold a different view and disentitle the assessee from claim of the deduction under the same statutory provision during the year under consideration. We thus in light of our aforesaid observations finding no reason to take a different view, therefore uphold the order of the CIT(A) that the assessee stood duly entitled for claim of deduction u/s. 80IB(4). - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the A.O after disallowing the claim of the assessee towards deduction u/s. 80IB(4) of ₹ 31,28,017/-, therein assessed the total income of the assessee at ₹ 34,14,093/-, vide his order dated. 24.12.2009. The assessee carried the matter in appeal before the CIT(A), who vide his order dated 19.03.2010 allowed the claim of the assessee towards deduction u/s. 80IB(4). The order of the CIT(A) was assailed by the revenue before the Income Tax Appellate Tribunal, which therein vide its order dated 25.01.2012 passed in ITA No. 5029/Mum/2010 restored the matter to the file of A.O. for fresh adjudication. 3. The A.O during the course of the assessment proceedings in compliance to the directions of the Tribunal called upon the assessee to furnish necessary evidence and explanation to justify its claim of deduction u/s. 80IB(4). That during the course of the set aside assessment proceedings, the A.O called upon the assessee to furnish evidence of purchase of goods, delivery challans for goods, details of machinery purchased along with delivery challans, details of workers etc., in respect of its business of fabricating and assembling engineering products as a sole proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number and CST' number mentioned on the bill is of Dadra and Nagar Haveli, but at the end of the bill it is mentioned that the registration certificate under Bombay Sale Tax, 1959 is in force on the date of sale. This is not possible since Dadra and Nagar. Haveli is Union Territory and Bombay Sale Tax, 1959 is not applicable there. This clearly shows that the bill produced by the assessee in the name of Roshni Electricals and Vikas Electricals are not' genuine, therefore, the purchase of machinery claimed to have been made from Roshni' Electricals and Vikas Electricals are not genuine. Therefore, the claim of the assessee that the goods we're manufactured by the use of machinery purchased from Roshni Electricals and Vikas Electricals during the F.Y 2003-04 and 2004-05 does not appear to be genuine. b. On perusal of the process of manufacturing explained by-the assessee, it is seen that basically the assessee purchased stainless steel sheets and the sheets were cut at its corner and the holes were drilled on the sheets and these sheets were bent at ends. Basically the assessee's activity is of assembling/fabricating SS fabricated parts from SS sheets which ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onthly consumpt ion is less than 150 uni ts which is much less than the electricity consumed in the household for domestic use. On perusal of the details of electricity sanctioned by the authorities it is seen that the wiring contractors had submitted the completion of the wiring and test report, wherein the date of connection is mentioned as 29/3/2004. The assessee had claimed to have the sold the manufactured goods. on 31/03/2004 of ₹ 51,000/- to its sister concern M/s Spectrum Scientific Pvt. Ltd., which is not possible as the electric connection was only installed on 29/3/2004 and the assessee had not submitted any evidence to have actually started the process of manufacturing in view of negligible consumption of electricity. Also on perusal of the records it is seen that the assessee has turnover of ₹ 97.51 lacs however the electrici ty expendi ture incurred during the F.Y. 2005-06 is only of ₹ 10,603/-, it is impossible to carry out manufacturing activity at this large scale activity with this lower consumption of electricity and hence it is a clear indication that no manufacturing activity was conducted for the goods worth ₹ 97.51 lakhs. d. As rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place during the F.Y. 2003-04. Besides, as per the wiring contractor's completion and test report, the date of connection is mentioned as 29/03/0.04. Under the circumstances, it is not possible to manufacture the goods amounting to ₹ 51,000/- and sale the same on 31/3/2004 to M/s Spectrum Scientific Pvt. Ltd, which is the sister concern of the assessee. It is pertinent to mention here that the assessee has not submi t ted evidence regarding transportat ion of manufactured goods from his factory to its sister concern. g. The assessee relied on Sales Tax Exemption Certificate as per which the date of I commencement of production is shown as 31/03/2004. However, the same 1 cannot be rel ied upon for claiming exemption u/s. 801B(4), as the said certificate/order was made on the basis of self-declaration filed by the assessee and order was passed after the cut-off date i.e. 31/03/2004". 5. Thus the A.O holding a conviction that the assessee had not carried any manufacturing activity at his factory at Silwasa either during the year under consideration, or in the earlier previous years, therefore concluded that it was not entitled for claim of deduction u/s. 80IB(4) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vetting into the nature of business and the processes involved in the case of the assessee, therein observed that the assessee was into manufacturing of S.S. Fabricated parts from S.S. Sheets with the use of power. It was observed by the CIT(A) that the entire manufacturing process carried out by the assessee involved various processes which were carried on the S.S. Sheets, before the same were converted into S.S. fabricated parts, as under:- i. Making and cutting SS Sheet ii. Bending of sheet through Hand press iii. Welding, grinding and drilling operation iv. Fitting of separate sheet metal parts to form double walled cabinet/fabricated panel. v. Insulating the cabinet. 7. The CIT(A) thus deliberating on the aforesaid process leading to the manufacturing of the final product, viz. S.S. Fabricated parts, therein concluded that it can safely be held that the fabricated parts were the result of transformation from S.S. Sheets which was a commercially different product distinct from the raw materials. The CIT(A) after referring to the material placed on record by the assessee, therein observed that the latter had during the year under consideration produced 'Modular Integ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was engaged in the business of manufacturing of S.S. Casserole containers by subjecting the S.S. sheets to various processes of marking and cutting SS shets, bending of sheets through hand press, welding, grinding and drilling, fitting of separate sheet metal parts to form double walled cabinet/fabricated panel and insulating the cabinet, thus could safely be held to be in the business of manufacturing of a new product. That in respect of the adverse inferences drawn by the A.O as regards the poor correlation between the percentage of power and the manufacturing activity of the assessee, it was observed by the CIT(A) that as the process of manufacturing of the assessee was not a power intensive process, therefore no feasible results could be arrived at by making such a comparison. The CIT(A) further being inspired by the affidavits filed by the proprietors of M/s. Roshni Electricals and M/s. Vikas Electricals, as well as field report of the Income-tax Inspector, which clearly pointed out that the machinery and tools existed at the premises of the assesses unit, thus concluded that the said facts further did go to substantiate beyond any scope of doubt the genuineness and ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had offered a 'loss', it was only for the said reason that no claim of deduction u/s. 80IB(4) was raised in the said year. The ld. A.R drawing our attention to the copy of the assessment order passed under Sec. 143(3) in the case of the assessee for A.Y. 2005-06 (Page 50-54 of APB), therein submitted that its claim towards deduction u/s. 80IB(4) of ₹ 18,58,737/- was allowed by the A.O only after thorough vetting in the course of the assessment framed u/s. 143(3). The ld. A.R. further submitted that the entitlement of the assessee towards claim of deduction u/s. 80IB(4) had thereafter had been tested in appeals filed by the assessee and revenue, in the case of the assessee for A.Y. 2005-06 and 2006-07, respectively, wherein the Tribunal after deliberating on the facts involved in the aforementioned years, had therein upheld the claim of the assessee towards deduction u/s. 80IB(4). The ld. A.R further rebutting the observations of the ld. D.R. in respect of the conflicting claim of the payment of ₹ 5,000/- made by the assessee to M/s. Vikas Electricals (supra), therein submitted that the factual position was misconceived as the copy of the bank account referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the S.S. sheets, therefore in the backdrop of due compliance by the assessee of the requisite conditions contemplated u/s. 80IB(4), therein averred that no adverse inferences as regards the latters entitlement towards the claim of a deduction under the said statutory provision was liable to be drawn. It was thus submitted by the ld. A.R that the CIT(A) after duly appreciating the facts of the case in light of the settled position of law, had rightly allowed the appeal of the assessee and held that the latter was duly entitled towards claim of deduction u/s. 80IB(4). 11. We have heard the Authorized Representatives for both the parties, perused the orders of the lower authorities and the material produced before us. We have given a thoughtful consideration to the facts of the case and are of the considered view that the manufacturing process involved in converting the S.S. Sheets into S.S. casserole containers, clearly establishes bringing into existence a new product having a distinctive name, character, and use. We are persuaded to subscribe to the observations of the CIT(A) that the S.S. fabricated parts which are made by the assessee from the S.S. sheets, are the result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing one of the criteria for the deduction u/s. 80IB(4).of the I.T. Act. 2. On the facts of the circumstances of the case, and in law the ld. CIT(A) erred in not appreciating the fact that the assessee failed to produced documentary evidences to substantiate its claim regarding the number of workers employed. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in admi t t ing the addi t ional evidence in violat ion of Rule 46A wi thout al lowing an opportunity to examine the evidences in remand proceeding. 4. On the facts and circumstances of the case, the Ld. CIT(A) is not justif ied in deleting the addi t ion on the basis of addi t ional evidences in spite of the fact that ample opportunities were accorded to the assessee during the assessment proceedings for furnishing documentary evidences. 5. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O be restored. 6. The appellant craves leave to amend or alter any ground or add a new ground." 13. Briefly stated, the facts of the case are that the assessee had filed his return of income for A.Y. 2008-09 declaring total income at S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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