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TMI Blog2022 (11) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Appeal No. 623/2007, by which the High Court has allowed the said appeal preferred by the Revenue, the assessee has preferred the present appeal. 2. The facts leading to the present appeal in nutshell are as under: That the appellant - assessee is having a manufacturing unit at Pune in which the appellant - assessee is manufacturing 'polyurethane foam,' which is ultimately used as automobile seat. The assessee filed its return of income for the assessment year 2003-04 and claimed deduction under Section 80-IB of the Income Tax Act (for short, 'IT Act'). The assessing officer disallowed the deduction under Section 80-IB of the IT Act by observing that the nature of the business of the assessee is "manufacturer of polyurethane fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Appellate Tribunal (for short, 'ITAT'). The ITAT set aside the assessment order as well as the order passed by the CIT(A) and allowed the appeal filed by the assessee by observing that polyurethane foam was neither produced as a final product nor is an intermediate product nor is a by-product by the assessee and the same was used as automobile seat and therefore does not fall within entry 25 to Eleventh Schedule of the IT Act and therefore the assessee shall be entitled to claim deduction under Section 80-IB of the IT Act. The order passed by the ITAT has been set aside by the High Court, by the impugned judgment and order specifically observing that what is manufactured by the assessee is polyurethane foam in different sizes/designs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l product manufactured and sold by the assessee ought not to have an article classifiable in the Eleventh Schedule. It is submitted that the final product manufactured by the assessee is not polyurethane foam, but automobile seat in which polyurethane foam is used. It is submitted that the learned ITAT returned a categorical finding of fact that the final product manufactured by the assessee is automobile seat in which polyurethane foam is used. It is submitted that if that be so, the manufactured item shall not come within any of the entry of Eleventh Schedule and therefore the assessee shall be entitled to deduction under Section 80-IB of the IT Act. 3.3 It is submitted that in fact the assessee received orders for supply of automobile s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also without giving any reason as to how the above finding of fact was perverse. It is submitted that at no stage the department has denied that the final product sold by the assessee is the car seat. 3.6 It is further submitted that it is a settled position of law that the moment a commercially distinct commodity, known in trade parlance by a different name and having a different use, comes into being, it ceases to be classifiable as the raw material/ingredient from which it is made. 3.7 It is further submitted by Shri Preetesh Kapur, learned counsel appearing on behalf of the assessee that entry 25 of Eleventh Schedule specifically talks about "latex foam sponge and polyurethane foam" and it does not talk about the "latex foam sponge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sold is the polyurethane foam which is manufactured by using two chemicals Polyol and Isocyanate. 4.1 It is submitted that the High Court has specifically observed and held that except manufacture of polyurethane foam which is manufactured by injecting two chemicals, there is no further process undertaken by the assessee. It is submitted that as rightly observed by the High Court the assessee produces the polyurethane foam seats which are used for making end product to be fixed in different vehicles. It is submitted that the assessee as such is not manufacturing the end product, namely, automobile seats to be fixed in the vehicles. For the aforesaid, Shri Balbir Singh, learned ASG has taken us to the findings recorded by the CIT(A) and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically observed and held that what is manufactured and sold by the assessee is polyurethane foam which is manufactured by injecting two chemicals, namely, Polyol and Isocyanate and the polyurethane foam which is manufactured by the assessee is used as ingredient for manufacture of automobile seats. The assessee is manufacturing polyurethane foam and supplying the same in different sizes/designs to the assembly operator, which ultimately is being used for car seats. The assessee is not undertaking any further process for end product, namely, car seats. The polyurethane foam which is supplied in different designs/sizes is being used as ingredient by others, namely, assembly operators for the car seats. Merely because the assessee is using the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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