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TMI Blog2019 (11) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... ing was not set up or it constitutes reconstruction of the existing business rather the drawing and designs constitutes the heart of the manufacturing process. CIT(A) has not dealt with the manufacturing processes/details and it is also not apparent from his order as to how he has come to a conclusion that (i) the surface coating systems is nothing but providing spray painting equipments at the site of the assessee with additional accessories; (ii) it is only minor modification of the existing product; (iii) surface coating systems constitutes as a reconstruction of the existing business. On careful perusal of the CIT(Appeals) s order and the findings arrived therein, he has not dealt with specifically as to why he has not accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these appeals, the only grievance of the assessee is that the Ld. CIT(Appeals) rejected the assessee s claim for deduction u/s.80-IA of the Income Tax Act, 1961 (hereinafter referred to as the Act ) in respect of profits derived from its new industrial undertaking of manufacturing surface coating systems. 3. The facts demonstrate that for the assessee, in the first round of litigation, the Tribunal had remanded the issue of deduction u/s.80-IA of the Act to the Assessing Officer for fresh adjudication. The relevant directions of the Tribunal are in Para 3.13 of its order. The case of the Department in the first round of litigation was that the assessee has not set up a new industrial undertaking and that the activity under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ₹ 40,42,621/- for the assessment year 1997-98 and the reasons for not granting of deduction u/s.80-IA of the Act by the Assessing Officer are as follows: (i) The assessee has failed to prove investment of fresh capital in the industrial undertaking; (ii) Assessee has nowhere claimed that it has set up a new industrial undertaking for manufacture of surface coating system; (iii) The assessee does not own plant and machinery but gets the equipment manufactured from others and does not itself directly manufacture the surface coating systems. (iv) The assessee has not given details of which type of' actual manufacturing work was being done by its own employees in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that according to his opinion the assessee has conducted only minor modifications of the existing product and therefore, the assessee is not eligible for claiming deduction u/s.80-IA of the Act. 6. We have perused the case records and analyzed the facts and circumstances in this case. We find that the Assessing Officer rejected the claim of deduction u/s.80-IA of the Act to the assessee on the ground that according to his analysis, most of the manufacturing works are outsourced by the assessee and that therefore, the criteria for claiming deduction u/s.80-IA of the Act has not been fulfilled by the assessee. The Ld. CIT(Appeals) on the other hand, though rejected the claim of deduction u/s.80-IA of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssembled to create a distinctly new product which is the hallmark of any manufacturing activity. The typical nature of the end product which has to be integrated with the manufacturing set up of the buyer and the procurement, fabrication, manufacturing and assembly activities take place at different places within and outside the assessee s premises. Therefore, the location of the manufacturing action had to be therefore primarily outside the four walls of the assessee s establishment but by that fact the sanctity of the business of manufacturing is not lost. Thus, merely because some components are bought out or the parts are got fabricated under the direct supervision and control of the assessee on the basis of own drawing and designs cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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