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TMI Blog2019 (3) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction of a different commercial article which is the basic requirement under Section 80IA of the Act. The purpose of the said provision is to encourage industrialisation and investment in an industry. The purchase of plant and machinery, and consumption of electricity are not mandatory requirement as was thought by the learned Assessing Authority in the present case. The learned Tribunal after describing the said manufacture / production process of the herbal product was, in our opinion, perfectly justified in holding that the same amounted to manufacture of a different commercial article and that therefore, the Assessee was entitled to the deduction under Section 80IA - decided against revenue - Tax Case Appeal Nos. 1507 to 1509 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had adopted a devious method of buying back its own manufactured product at an inflated price for use as raw materials in its herbal shampoos? . 2. The said benefit was denied to the Assessee on the ground that it was not engaged in any activity of manufacture or production as required under Section 80IA of the Act. 3 . The findings of the learned Tribunal, the final fact finding Authority under the Act in this regard, while allowing the said deduction of the Assessee, are quoted below for ready reference:- 11. We have considered the rival submissions carefully in the light of the material on record. We find that the CIT (Appeals) has admitted that the Assessee was in the business of manufacturing, because the entire p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nial of deduction under Section 80IA. It is also seen that some of the processes are got done from outsiders. Even then deduction cannot be denied in view of the decision of the Tribunal dated 26th October 2005 in the case of DCIT v. Elgi Ultra Industries Limited., in Income Tax Act, 1961 No. 1631, 1789 7 1790/Mds/2003, wherein vide para 6 of the order, it was held as under:- After considering the rival submissions carefully and relevant material on record as well as orders of the lower authorities, we find that the conclusions arrived at by the id. CIT (Appeals) are correct. It is clear from his order that the Assessee had established a brand name Elgi Ultra and the same had been developed by the Assessee company and continuous res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponsible for the proper functioning of the machinery, and guarantee after sale service for a stipulated period. The Assessee claimed special deduction under Section 80-I of the Income tax Act, 1991.' Thus, we are of the opinion that CIT (Appeals) has correctly allowed the deduction under Section 80-IA and therefore we confirm the findings arrived at by the id.CIT (Appeals). 13. In the case before us, fumigated herbs were given for grinding and sieving purposes through job work and on that account deduction cannot be denied. As far as the allegation that no such factory was in existence does not hold ground because the Assessee has obtained permanent registration certificate issued by the Department of Industries and also bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requiring our further consideration under Section 260-A of the Act. 7. The manufacture of a herbal product Bandruff by a manual process with the use of some chemicals and small machinery can also amount to manufacture or production of a different commercial article which is the basic requirement under Section 80IA of the Act. The purpose of the said provision is to encourage industrialisation and investment in an industry. The purchase of plant and machinery, and consumption of electricity are not mandatory requirement as was thought by the learned Assessing Authority in the present case. The learned Tribunal after describing the said manufacture / production process of the herbal product was, in our opinion, perfectly justified in h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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