TaxTMI 
TaxTMI 
2015 (11) TMI 1134
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....ved at in the impugned order. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee, an individual, is a proprietor of M/s. Organochem Products (HP) at Parwanoo in the state of Himachal Pradesh. The concern of the assessee is engaged in manufacturing and sale of nutritional food supplements, agro products and veterinary feed supplements, etc. The assessee claimed Rs. 2,55,90,230/- as deduction u/s 80IC of the Act, in respect of profit earned from manufacturing activities. The ld. Assessing Officer disallowed the claimed deduction on following grounds:- (a) That there is no manufacturing activity carried out by the assessee as the assessee is merely mixing up the ingredients/raw material. (b) The enterprise is formed by splitting up or reconstruction of an existing business and thus, has not fulfilled the conditions provided for claiming deduction u/s 80IC of the Act. In view of the above, the ld. Assessing Officer disallowed the claimed deduction u/s 80IC of the Act by observing that the assessee is merely mixes various ingredients, required for final products, with the help of machineries ....
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....ly, shrinkwrapped in the shrink tunnel, put in master cartons. Cartons are then strapped with nylon tapes and Bopp tapes. " 4) "Herbomineral powder for pets" "The mixture is mixed thoroughly for 20 mins in a ribbon blender" "The blended mixture is then sieved for eliminating any foreign particles and collected in a storage vessel. " "The pouches are ,filled in plastic jars which are labeled manually, shrinkwrapped in the shrink tunnel, put in shipper cartons which are finally strapped with nylon tapes and bopp tapes manually " 5) "Biofit Bio-95 adjuvant" "The mixture is mixed thoroughly for 30 mins with a homogenizer so that the material gets dissolve completely so as to get a uniform blend" "The blended material is then filled in plastic bottles with a liquid filling machine. The bottles are capped manually and labeled manually" "The bottles are then passed through shrink tunnel and packed in cartons. The Cartons are then strapped manually with nylon tapes and Bopp tapes. " 6) "Biofit cattle feed concentrate (Biofit CFC) " "These materials are charged in a ribbon blender and mixed thoroughly for about 30 mins to get uniform premix" "Excipients like....
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....ingle ingredient can give this comprehensive broad spectrum of results which the final product is intended to give. 6. The manufacturing process involves use of labour, machinery and power. 7. The machineries used in manufacturing process are namely Ribbon Blenders, S.S. Reaction Vessels, Electronic balance, Shrink Tunnel, Sieving Plates, Homogenizers, Heating Equipments, Heat Sealing Machines, Carton Strapping Machines. 8. The factory employs around 8 to 10 semi-skilled workers who carry out manufacturing activities. The production is supervised by proprietor himself assisted by Manager Mr. Virender Singh. The list of employees with designation for Oct.2009 (as a sample) 9. The production is carried out with the aid of power and copies of electricity bills for the period April 2009 to March 2010 The manufacturing steps involved in nutshell are as under a) The raw materials are analyzed for physical properties b) The appropriately weighed materials are charger! in Ribbon Blender or Reaction Vessel, as applicable for specified time, both clock wise and anti clock wise direction, to get uniform blend through multiple dry blending process. In case of product Sr. N....
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....day. Except for arguing that old machinery was used, no evidence was produced either before the ld. Commissioner of Income Tax (Appeals) or before this Tribunal by the Revenue evidencing that any old machinery was used, therefore, we find no substance in the assertion of the ld. Assessing Officer/DR, thus, from this angle also, the Revenue has no case at all. 2.4. So far as, the general tests for manufacture/ production are concerned, we find that manufacturing and processing are not clearly demarcated field. The test of manufacture lies in the answer to the question whether what is processed or produced as end product is commercially known as a different product from the material out of which it was so produced. Therefore, if the product has a different name and identified by the buyers and seller as a different product and is sold as a different product from its raw material one can say that it is a manufactured product. The case of the assessee find support from the ratio laid down in the case of R.M. Chemicals Pvt. Ltd. (ITA No.111/Indore/2012) (Assessment Year 2003-04) order dated 11/05/2012 (wherein, one of us i.e., Judicial Member, is signatory to the order). The relevant....
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....e in producing air freshener would amount to manufacturing. iv. In CIT vs Business information processing services (2012) 345 ITR 548 (Raj.) held that computer data processing and sale of computer stationery amounts to manufacturing. v. The Hon'ble Punjab & Haryana High Court in CIT vs HSED Corporation Ltd. held that activity of manufacturing of voter identity card amounts to manufacture. vi. Likewise, in CIT vs Zainav Trading pvt. Ltd. 333 ITR 144 (Mad.) conversion of paper corrugated sheets into paper boxes was held to be manufacturing. vii. Likewise, the Hon'ble Apex Court in CIT vs Vinbros & Company (2012) 210 taxman 252 (SC) held that blending and bottling Indian manufacture foreign liquor would amount to manufacturing. viii. Identically, Hon'ble Apex Court, in CIT vs Emptee Poly Yarn (P.) Ltd. held that twisting of yarn amounts to manufacturing. ix. Hon'ble Madras High Court in CIT vs Balaji Hotels & Enterprises Ltd. 311 ITR 389 held that printing of paper labeles constitutes manufacturing. x. The Hon'ble Apex Court in India Cine Agencies vs DCIT 210 taxman 253 (SC) held that even cutting of jumbo film roles into small marketable sizes amounts to manufacturi....
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....R 883 (SC) held that tyre retreading is not manufacturing. c) In Appeejy Pvt. Ltd. vs CIT 77 taxman 208 (Cal.) it was held that packing of tea is not manufacturing thus not entitle to relief. d) Foundation work was not held to be characterized as production or manufacture in CIT vs N.C. Buddha Raja and Company 204 ITR 412 (SC) e) In CIT vs Hindustan metal refining works Pvt. Ltd. 128 ITR 472 (Cal.) it was held that galvanization is not covered within the meaning of manufacturing and thus not entitled to the deduction. f) Rearing of Chicks was not held to be industrial undertaking and thus not entitled to deduction in CIT vs Venkateshawara Hatcheries Pvt. Ltd 237 ITR 174 (SC), Indian Poultry vs CIT 116 Taxman 493 (SC) and CIT vs JD Farms (2010) 187 taxman 151 (Del.) g) In CIT vs Relish Foods 237 ITR 59 (SC) held that processing of Shrimps could not be said to be manufacturing or production. h) Likewise in Bhatsons Acquatic Products vs ACIT 329 ITR 67 (Ker.) held that fish processing does not amount to manufacture or production. i) Likewise in CIT vs Gitwako Pharma (I.)(P) Ltd. (2011) 10 taxman.com 261 (Del.) held that converting raw fish into tinned fish does no....
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....late Authority, resultantly, both the appeals of the Revenue are dismissed. Finally, the appeals of the Revenue are dismissed. This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 08/10/2015. ============= Document 1 PROCESS FLOW DIAGRAM FOR NATURAMORE Raw Material (Ingredients) Packing Material Received as per specifications Physical check for leakages and breakages of Raw material and Packing Material. Testing of Ingredients for pH, Specific Gravity etc. using Laboratory equipments. Critical Ingredients like Vitamins, Soya fibres, vanilla flavor, herbal extracts, etc weighed according to formula using electronic balance. This will form the PREMIX Bulk Materials i.e Maltodextrin, Soya Protein Isolate, Sugar etc. and the Premix are weighed according to the formula using electronic balance. Weighed ingredients charged in Ribbon Blender and blended thoroughly by rotating the Ribbon Blender in clockwise and anticlockwise direction for 30 minutes. This is the second stage. These ingredients charged in Ribbon ....