TaxTMI 
TaxTMI 
2012 (8) TMI 803
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....ssee who was engaged in the business of manufacturing of lubricating oil and antistatic conning oil had declared sales of Rs.4,26,61,578/- which included a sum of Rs.86,73,380/- on account of labour charges for manufacturing done on job work basis on behalf of the sister concern, namely, M/s Witmans Industries. The details obtained by the AO from the assessee showed that the sister concern had supplied material worth Rs.43,94,845/- for the manufacturing work. The AO observed that the assessee was doing labour job work for the sister concern and ultimate product was being produced by the sister concern. He also referred to the provisions of section 80IB as per which, for allowability of claim of deduction under section 80IB, it was necess....
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.... the AO was not justified in denying the claim of deduction in relation to the manufacturing done on behalf of the sister concern. The assessee manufactured the goods for sister concern using its own plant and machinery and, merely, because raw material had been supplied by the sister concern it cannot be said that the assessee was not manufacturing as there was no requirement that manufacturing should be done only using own raw material. The assessee also referred the decision of the Mumbai Bench of the Tribunal in the case of Warren Laboratories Ltd (2005) 3 SOT 638 in which it has been held that manufacture of goods done on job work basis is also eligible for deduction u/s 80IB. The assessee further pointed out that in earlier assessment....
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....costs. The raw material used for production of Emulsifier are fatty acids, glycols, vegetables oils, caustic sodas and other additives. The chemical properties of Emulsifier were different from raw materials used for manufacturing the product. Thus, emulsifier was a new and distinct product which was different from the raw material used and therefore the process of production had to be considered as manufacturing in view of the judgment of the Hon'ble Supreme Court in the case of DCIT V/s Pio Food Packers (1980)46 STC 63. The assessee also submitted that the decision of the Tribunal cited by the AO in the case of M/s B.T.Patil and Sons Belgaum (supra) was not applicable as it related to the claim of deduction u/s 80IA in which the Explan....
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.... considered the rival contentions carefully. The assessee was in the business of manufacturing of lubricating oil and antistatic conning oil. The assessee had also produced emulsifier for sister concern M/s Witmans Industries Ltd on job work basis for which the raw material had been supplied by the sister concern. The issue is whether the deduction u/s 80IB can be allowed in relation to the profit earned by the assessee from job work activity done on behalf of the sister concern. The deduction u/s 80IB is allowable to an assessee manufacturing or producing article not article being article mentioned in the eleventh schedule. The issue is whether the job work activity can be considered as manufacturing activity and the profit from the same c....