TaxTMI 
TaxTMI 
2011 (6) TMI 9
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....rtaining to the assessment year 2004-2005. 2. During the relevant assessment year, the assessee has shown gross-receipts, which apart from goods sales of Rs. 1,55,26,740/- also included scrap sales of Rs. 79,45,411/-, labour charges of Rs. 20,82,637/- and job work charges of Rs. 11,86,895/- and claimed to be a part of the profit for the purposes of deduction under Section 80 IB of the Income Tax Act, 1961 (for short "the Act"). The Assessing Officer held that as per the provisions of Section 80IB, which emphasize "profit and gains derived from such industrial undertaking", the assessee‟s industrial undertaking set up for the purpose of manufacture of steel, forging, transmission gears and parts and accessories of motor vehic....
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....ented profits and gains derived from industrial undertaking. This was based on the premise that there was an immediate and proximate connection with the manufacturing process of industrial undertaking. The Revenue is in appeal against this part of the impugned order in ITA No.351/2011. 4. With regard to the claim of deduction on job work and labour charges, CIT(A) disallowed the appeal of the assessee and held that the job charges not derived from the exports are to be categorized as independent income and has to be deducted from gross profits to calculate profits derived from the exports. He, however, held that the assessee was eligible for deduction under Section 37 on Rs. 6,53,906/- which would work out to Rs. 1,96,172/- on acc....
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....IB of the Income Tax Act, 1961? 7. With the consent of the counsel for the parties, we have heard the matter finally. To answer the questions in both the appeals, we need to consider, firstly, as to whether the scrap, generated at various stages of manufacturing process, was part of manufacturing activity of the industrial unit and thus represented profits and gains derived from the industrial undertaking on this account were entitled to deduction under Section 80IB. Secondly, as to whether the receipts by the assessee on account of job work and labour charges are attributable to business carried on by it of the industrial undertaking. 8. Section 80IB of the Act provides for deduction in respect of profits and gains from....
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.... giving heat treatment and machining. Die making was stated to be the primary process and is a separate industry by itself. It was noted, and rightly so, that each of the above process could be done in separate industrial undertaking, whereas assessee had undertaken all these processes in its units. The issue was also that the assessee was doing these works on job basis for other undertakings, by getting the raw material from them. When the assessee was entitled to claim exemption in respect of income derived from such processes doing for itself, we do not see any reason as to why he would not be entitled to so merely because the raw material component was being supplied by other customers and for whom the assessee was doing the job. In fac....
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....ng them marketable. Without the heat treatment, the material is not fit for automobile industry. The learned counsel relied upon CIT v. Tamil Nadu Treatment & Fetting Services (P) Ltd., 238 ITR 540 (Mad) wherein activity carried out by the assessee consisted of receiving from its clients untreated crankshafts, forgings, castings, etc. and subjecting them to heat treatment in order to toughen them to the requisite standards, so that they could be sold in the market. The activity was held to be manufacturing and entitled to claim deductions. Similarly in the case of CIT v. Tamil Nadu Heat Treatment & fetting Services (P) Ltd., 238 ITR 529 (Mad), it was held that the process of heat treatment to crankshaft, etc. were absolutely essential for r....
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.... undertakes an operation which renders a blank CD fit for use for which it was otherwise not fit - by the duplication process undertaken by the assessee, the recordable media which is unfit for any specific use gets converted into the programme which is embedded in the master media and, thus, blank CD gets converted into recorded CD by an intricate process - Said supplicating process changes the basic character of a blank CD, dedicating it to a specific use - therefore, processing of blank CDs constitutes manufacture in terms of S.80-IA(12)(b) r/w explanation to S.33 B - Marketed copies of CDs being goods, the process by which they become goods certainly falls within the ambit of S.80-IA(12)(b) r/w explanation to S.33B. 12. Thus, ....