Appeal granted for manufacturing activities at Sitarganj, entitling assessee to deduction under section 80IC.

The Tribunal allowed the appeal, determining that the activities at Sitarganj amounted to manufacturing, making the assessee eligible for the deduction under section 80IC. Despite the belated return filing, the Tribunal held that the deduction was permissible, interpreting section 139(4) as an extension of section 139(1). Substantial evidence supported the claim that manufacturing activities were conducted at Sitarganj, leading to the conclusion that the assessee had indeed carried out the necessary activities and was entitled to the deduction.

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Issues Involved:
1. Whether the activity carried out by the assessee at Sitarganj constituted manufacturing or production of any article or thing as contemplated under section 80IC.
2. Whether the assessee was entitled to deduction under section 80IC despite filing the return belatedly under section 139(4).
3. Whether any activity was actually carried out by the assessee at Sitarganj.

Issue-wise Detailed Analysis:

1. Whether the activity carried out by the assessee at Sitarganj constituted manufacturing or production of any article or thing as contemplated under section 80IC:

The assessee firm, engaged in assembling and undertaking civil contracts, claimed a deduction under section 80IC for manufacturing various items at its Sitarganj unit. The AO contended that the assessee was merely assembling materials and not manufacturing any new article or substance as required under section 80IC. The CIT(A) upheld this view, noting that the activities at Sitarganj involved only cutting, welding, and galvanizing, which did not amount to manufacturing a new and distinct commodity. However, the Tribunal considered the detailed processes involved, such as procurement, fabrication, galvanizing, and installation, and concluded that these activities produced commercially different products with distinct uses. Citing the Supreme Court's decision in CIT vs. Oracle Software India Ltd. and other relevant judgments, the Tribunal held that the assessee's activities amounted to manufacturing, making it eligible for the deduction under section 80IC.

2. Whether the assessee was entitled to deduction under section 80IC despite filing the return belatedly under section 139(4):

The assessee filed the return belatedly under section 139(4) and argued that this should be considered an extension of section 139(1). The AO and CIT(A) denied the deduction, citing section 80AC, which mandates filing the return within the time specified under section 139(1). The Tribunal, however, referred to various judicial pronouncements, including CIT vs. Ms. Jagriti Aggarwal and CIT vs. Rajesh Kumar Jalan, which interpreted section 139(4) as a proviso to section 139(1). The Tribunal emphasized that incentive provisions should be liberally construed to advance economic activities and held that the assessee was entitled to the deduction under section 80IC despite the belated filing.

3. Whether any activity was actually carried out by the assessee at Sitarganj:

The CIT(A) questioned the actual activities at Sitarganj, citing issues like the nature of employees, lack of substantial machinery, and the timing of the factory license. The Tribunal, however, found that the license was effective from 31.08.2009, and substantial evidence, including invoices, tender documents, and third-party inspection reports, supported the claim that manufacturing activities were carried out at Sitarganj. The Tribunal dismissed the objections regarding the employees and ESI/PF compliance, noting that these were not criteria for denying the deduction under section 80IC. The Tribunal concluded that the assessee had indeed carried out the manufacturing activities at Sitarganj and was eligible for the deduction.

Conclusion:

The Tribunal allowed the assessee's appeal, holding that the activities at Sitarganj constituted manufacturing, the deduction under section 80IC was permissible despite the belated return, and the actual activities at Sitarganj were substantiated by substantial evidence.

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