TaxTMI 
TaxTMI 
2010 (8) TMI 355
X X X X Extracts X X X X
X X X X Extracts X X X X
....and erred in holding that the assessee was not done any manufacturing activity at Parwano. 2. The ld. CIT(A) has grossly erred in upholding the disallowance made on account of sales tax penalty. The Ld. CIT(A) failed to appreciate that the payments were not made for any infringement of law." 3. Ground No. 1, regarding the disallowance of deduction under section 80-IC. 4. Brief facts emerging from the record relevant to the issue are that the assessee is a company and is in the business of manufacturing and sale of leather products. The assessee entered into an agreement with M/s. Madura Garments to use brand names such as Louis Phillipe, Van Heusen, Allan Solly and Peter England for production of leather belts for which the assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nly packing activities and cannot be called as manufacturing activity. 7. Before us, the learned AR of the assessee submitted that as far as the objection of the Assessing Officer that for deduction under section 80-IB, the manufacturing activities should have been commenced before 31-3-2004 is concerned, the assessee claimed deduction under section 80-IC and not under section 80-IB. The CIT(A) has already decided this issue by holding that the assessee claimed the deduction under section 80-IC and not under section 80-IB. She has further submitted that as far as the production of evidence of purchase and sale is concerned, the assessee filed bill vide letter dated 6-12-2008 during the course of assessment proceedings. She has referred i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Certificate of Registration under Rule (6) of the Himachal Pradesh General Sales Tax Rules, dated 7-7-2005, at pages 10 and 11 of the paper book. Thus, the learned AR of the assessee has vehemently contended that the assessee was very much carrying out the manufacturing activities of "Leather waist belts from the undertaking". She has referred the provisions of section 80-IC and submitted that as per the provisions of section 80-IC, the profit and gain derived by the assessee or an undertaking or enterprise from any business referred in sub-section (2) and not by any industrial undertaking as required under the other provisions of that Chapter. The raw material purchased by the assessee is consisting of the leather strips and buckles. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....prove before the lower authorities that the assessee has carried out any manufacturing activity and the assessee was not having any undertaking and required machinery for the work which requires precession and making the whole in the leather strips. He has relied upon the order of the CIT(A). 11. We have considered the rival contentions and carefully examined the relevant record. The assessee's undertaking is duly registered with the Registrar of Industries, Himachal Pradesh and Registration Certificate of Department of Industries for manufacturing of "Leather waist belts" is also available with the assessee. The assessee was also registered under the General Sales Tax Rules with the Sales Tax Department of Himachal Pradesh. From the rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee. There is no doubt that without carrying out the activities which is undertaken by the assessee in its undertaking, the leather strips and the buckles cannot be used as "Leather waist belts". Therefore, the articles which is finally comes out after undergoing the process of edge cutting, hole punching, hot pressing embossing and fixing of buckle in the undertaking of the assessee is a commercial commodity which is fit for the use and complete "Leather waist belts". In the case of Oracle Software India Ltd. (supra), the Hon'ble Supreme Court has observed in paragraph 10 as under: "10. In our view, if one examines the above process in the light of the details given hereinabove, commercial duplication cannot be compared to hom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 80-IA(12) read with section 33B of the Income-tax Act." Similarly, in the case of Emptee Poly-Yarn (P.) Ltd. (supra), the hon'ble Supreme Court has followed the decision in the case of Oracle Software India Ltd. (supra), and held in paragraph 8 as under : "Applying the above test to the facts of this case, it is clear that POY simpliciter is not fit for being used in the manufacture of a fabric. It becomes usable only after it undergoes the operation/process which is called thermo mechanical process which converts POY into texturised yarn, which, in turn, is used for the manufacture of fabric. One more point needs to be mentioned. Under the Income-tax Act, as amended in 2009, the text given by this court in Oracle Software's c....