2016 (6) TMI 124

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....ogether and disposing of the same by this common order. 2. Shri P. Radhakrishnan, ld. Departmental Representative submitted that the assessee claimed deduction u/s 80IB. The Assessing Officer found that the fixed assets schedule shows the opening written down value of the plant and machinery at Rs. 8,85,699/- and addition to the plant and machinery was shown at Rs. 13,89,140/-. According to the ld. DR, the addition said to be made for the assessment year 2006-07 is nothing but storage tank brought for storing chemicals and also finished products before packing. According to the ld. DR, the storage tank cannot be considered as plant and machinery for the purpose of assessee's business. Even assuming that storage tank has to be considered ....

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....less than 20 workers for claiming deduction u/s 80IB of the Act. 3. Referring to the assessment order, the ld. DR submitted that the Assessing Officer examined the number of persons employed by the assessee for various months and came to a finding that he assessee has employed less than 20 employees, therefore, the assessee is not eligible for deduction u/s 80IB of the Act. Referring to the order of the CIT(A), the ld. DR submitted that the CIT(A) found that the assessee has employed two sets of workers. One set of employees are own and permanent workers and the other set of employees are through laboour contractors. The CIT(A) found that the permanent employees are six in number and the workers employed through labour contractors is 15 ....

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....refore, the Assessing Officer is not justified in saying that the assessee has employed only less than 10 employees. The CIT(A), after considering the number of persons employed by the assessee and the plant and machinery purchased during the year under consideration, found that the assessee has complied with all the pre-conditions required for claiming deduction u/s 80IB of the Act and allowed the claim of the assessee. 6. We have considered the rival submissions on either side and also perused the material available on record. The pre-condition for claiming deduction u/s 80IB is (i) manufacturing activity, (ii) employed more than 10 workers, and (iii) usage of brand new machinery for the new industrial undertaking. Admittedly, the asse....

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.... compared with the addition of plant and machinery made during the financial year 2005-06. The Assessing Officer came to the conclusion that the new machinery claimed to be purchased by the assessee is only a storage tank. The CIT(A), without referring to the nature of the plant and machinery said to be purchased, found that the machinery purchased upto 31.3.2005 are new machineries. The fact that the storage tank is a machinery or not was not considered by the CIT(A). From the materials available on record, it appears that the assessee-company is engaged in the business of producing varnish, thinner and wood polish. It also needs to be considered whether producing, varnish, thinner and wood polish would amount to manufacturing activity or ....