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TMI Blog2022 (8) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... y M/s Nangalwala Chemical Industries of Alwar, under the direct supervision of one of the partners. The assessee applies own technology, standard process, own raw material, own quality control/check, and the goods are manufactured as per the specification given by customers. Based on these facts and circumstances, we note that assessee is entitled to get deduction under section 80-IB of the Act. Hence, we direct the assessing officer to allow deduction under section 80IB - Appeal filed by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment Year 2004- 05. As such, the year under consideration is the first year of business activity of the assessee. The assessing officer observed from the return of income, the assessee has claimed depreciation on fixed assets. Ongoing through the case records of the assessee, it was noted by assessing officer that assesses is not utilizing the power in its unit, therefore, during the assessment proceedings, a show-cause letter was issued on 03.11.2006 stating as to why the claim made u/s 80-IB of the Act should not be disallowed under the Provisions of section 80- IB(2)(IV) of the Act and why same should not be taxed? 4. In response to the above show-cause notice, the assessee has filed a written submission before assessing officer along with necessary details on 20.11.2006, wherein it has stated that, as the electricity connection has not been released by the Electricity Department, it has used generator for generating the power, which was hired from M/s Nangalwala Impex (Pvt) Ltd, in the period from 15.02.2004 to 31.03.2004. In this regard, assessee has submitted the confirmation letter of M/s Nangalwala Impex Pvt. Ltd, which is the sister concern of the assessee. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ld. CIT(A) the assessee is in appeal before us. 8. Shri A. Gopalakrishnan, Learned Counsel for the assessee begins by pointing out that assessee received orders from customers to supply the goods to them and the assessee executed these orders by way of manufacturing done by M/s Nangalwala Chemical Industries of Alwar, under the direct supervision of one of the partners. Mr. Naresh Agarwal is the main technical person of company`s client's unit. The assessee used its own Technical know-how, own process for manufacturing, own raw material and under the direct supervision of one of the partners therefore deduction under section 80IB can not be denied just because part good was manufactured at other place. This happened because electricity connection was not provided by Electricity Department on time. When the electricity connection was available to the assessee on 30.03.2004, the assessee never used outside premises for manufacturing purposes. The ld Counsel also submitted that in the event it is held that the manufacturing activity has taken place at Naganwala Impex Private Limited Alwar under the supervision of the Partner, even then the assessee shall be considered to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the audited balance sheet disclosing the purchases and sale and installation of plant and machinery before all the authorities and the same has not been found to be false at any stage. Further the books of accounts had been produced before the AO during the course of assessment proceedings and has been duly verified. The observations made by ld CIT(A) are general in nature. The assessee had submitted Permanent Certificate of Registration as an SSI unit obtained from DIG, Daman specifying the date of commencement of production as 02.03.2004, vide Paper Book Page 24 to 39.The Assessee's manufacturing activity consisted of (i) canvassing of orders, (ii) preparation of specifications of the material to be supplied to Formula Cables and electrical on the basis of orders, (iii) placing orders for the manufacture of rubber cables with Nangalwala chemicals Ind. (iv) to ensure that the manufacturing process is carried on by Nangalwala chemicals, under the direct supervision of the Partner Mr. Naresh Agarwal, the Partner and (v) to have a check over the quality control of Cables manufactured and assuring that the end products conform to specification as per customers order giving pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing process is carried on by Turner Hoare under the direct supervision of the assessee-company and (v) to have a check over the quality control and last but not the least to be responsible for the proper functioning of the machinery and guarantee after sale service for a stipulated period. Out of so many activities, except for one activity, namely, getting the machinery manufactured through Turner Hoare, all other activities are admittedly undertaken by the assessee-company. In the circumstances, we find no difficulty in agreeing with the Tribunal that the assessee is engaged in the business of manufacture sugar and tea machinery and is accordingly qualified for relief under section 80-I. In the above view of the matter, we answer the 3rd and the 4th question is also in the affirmative and in favour of the assessee. 8. There would be no order as to costs." 12. On the identical facts, our view is fortified by the judgment of the Hon'ble Bombay high Court in the case of Anglo French Drug Co. (Eastern) Ltd reported in [1991] 57 TAXMAN 008 (BOM) wherein pursuant to Circular No. 347 issued by CBDT the Hon`ble Bombay High Court has clearly held that manufacturing at third party pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assesseecompany was the real manufacturer and the assessee had merely employed the agency of some one else through whom the goods were caused to be manufactured. It is also not necessary that the assessee must pay the wages of the workers employed in the manufacturing process. We have considered the factual data in this case in the light of the judgment or our High Court in Neo Pharma (P.) Ltd.'s (supra) and we are of the view that the Tribunal was right in the view which it took. In the result, we answer both the questions in the affirmative and in favour of the assessee." 13. From the above judgment of the Hon`ble Bombay High Court in the case of Anglo French Drug Co. (Eastern) Ltd(supra), it is abundantly clear that it is not necessary that the manufacturing company must manufacture the goods by its own plant and machinery at its own factory. If in substance the manufacturing company has employed another company for getting the goods manufactured by it under its own supervision or control, the assessee can be considered as a company engaged in manufacture of goods and, thus, an industrial company. Therefore, we note that in the assessee`s case under consideration, ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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