2013 (6) TMI 731 - AT - Income Tax

Manufacturing activities qualified for tax benefits under section 80 IC. Tribunal dismissed Revenue's appeal.

ACIT, Circle 24 (1), New Delhi Versus Khanna Brothers

ACIT, Circle 24 (1), New Delhi Versus Khanna Brothers - TMI Issues:1. Whether the assessee is engaged in manufacturing activity and eligible for deduction u/s 80 IC of the Act.2. Whether the activity of the assessee constitutes fabrication or manufacturing.3. Applicability of case laws in determining the nature of the assessee's activity.Issue 1:The primary issue in this case is whether the assessee is engaged in manufacturing activity and therefore eligible for deduction under section 80 IC of the Income Tax Act. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) had differing opinions on this matter. The AO relied on specific judgments to support the denial of the claim, while the CIT(A) examined various evidence provided by the assessee to support the claim of manufacturing activity.Issue 2:Another key issue is determining whether the activity of the assessee constitutes fabrication or manufacturing. The Ld.D.R. argued that the assessee was engaged in fabrication work and construction of superstructures, contending that this did not qualify as manufacturing or production of an article or thing. The Ld.Counsel for the assessee, on the other hand, emphasized the definition of 'manufacture' under the Act and provided case law to support the contention that the assessee's activities indeed amounted to manufacturing.Issue 3:The third issue involves the applicability of specific case laws in determining the nature of the assessee's activity. The CIT(A) referred to judgments such as CIT vs. Northern Aromatics Ltd. and CIT vs. Beehive Engineering Co. to support the decision that the assessee's activities should be considered as manufacturing. The Tribunal also considered case laws like CIT vs. Alcam Engineering P.Ltd. and CIT vs. Impel Forge & Allied Industries Ltd. to uphold the CIT(A)'s order.In the detailed analysis, it is evident that the Tribunal upheld the CIT(A)'s order, emphasizing that the assessee's activities constituted manufacturing based on the evidence provided. The Tribunal considered the nature of the work undertaken by the assessee, including fabrication, welding, drilling, and assembly of steel structures, as well as the registration with various regulatory authorities and payment of excise duty. The Tribunal also dismissed the arguments raised by the Revenue regarding the nature of the factory being constructed and the number of employees, stating that these were not grounds on which the AO had denied the claim. The decision was in line with relevant case laws and findings of fact, leading to the dismissal of the Revenue's appeals.