TaxTMI 
TaxTMI 
2017 (11) TMI 107
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....the fact that manufacturing was commenced on or before 31.03.2004 being one of the criteria for the deduction u/s. 80IB(4) of the I.T. Act. 2. On the facts of the circumstances of the case, and in law, the ld. CIT(A) erred in not appreciating the fact that the assessee failed to produced documentary evidences to substantiate its claim regarding the number of workers employed. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in admi t t ing the addi t ional evidence in violat ion of Rule 46A wi thout al lowing an opportunity to examine the evidences in remand proceedings. 4. On the facts and circumstances of the case, the Ld CIT(A) is not justif ied in deleting the addi t ion on the basis of addi t ional evidences in spi te of the fact that ample opportunities were accorded to the assessee during the assessment proceedings for furnishing documentary evidences. 5. The appel lant prays that the order of the Ld CIT(A) on the above grounds be set aside and that of the A.O be restored. 6. The appellant craves leave to amend or alter any ground or add a new ground. 2. Briefly stated, the facts of the case are that the assessee had filed his r....
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....ced Machine used 1 S.S. Sheet Cutting S.S. Cut Piece Shearing Machine 2 S.S. Cut Piece Marking & Cutting Cut Piece with cut corners Hand scissor 3 Cut piece with cut corners Drilling of Holes Cut piece with cut corners and holes Electric Drill Machine 4 Cut piece with cut corners & holes Bending S.S. fabricated part namely Casserole container Hand press 4. That in the course of explaining the aforesaid manufacturing process, the assessee submitted before the A.O bills of M/s. Roshni Electricals for purchase of plant and machinery being drilling machine, Grinding/Buffing Machine, Hand press, Shearing Machine, Hand Scissor and accessories, as well as bills of M/s. Vikas Electricals for purchase of Welding machine with accessories, set of workers tools and machine instruments. The A.O however not being inspired by the contention of the assessee as well as the documentary evidence furnished by him in support thereof, therein drew adverse inferences as regards the same as under:- "a. As far as purchase of machinery is concerned, the assessee had only purchased the machinery amounting to Rs. 6380/- from Roshni Electrical on 15-03-2004 and machinery amounting....
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....on that is a new and dif ferent article, having a dist inct name, character or use must emerge. Where the commodi ty retains a cont inuing substant ial ident i ty through the processing stage it cannot be said that it has been manufactured. Here in the case of the assessee, the SS sheets are fabricated as SS parts. The commodity retains a continuing substantial identity therefore, it cannot be said that a new commodity. is emerged. On perusal of the sale of bill raised by the assessee, it is seen that the items sold are SS fabricated parts only and items purchased are SS sheets. It is not clear that through which process the SS sheets have undergone and SS fabricated parts are made. It is not establ ished, whether there is really any transformation or alteration is involved. In view of these facts the process employed by the assessee is not treated as a manufacturing process for which deduction u/s 80IB(4) of the I.T. Act is allowable. c. As regards consumption of electricity is concerned it is an unbel ievable fact that goods worth Rs. 97.51 lacs were manufactured during the F.Y. 2006-07 for which electricity amounting to Rs. 10,603/- for the period of 12 months was only consum....
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....manufactured from his factory. f. The assessee did not submit evidence of having started production by 31/03/2004. The assessee has only submitted a sale bil l dated 31/03/2004 amounting to Rs. 51,000/- to its sister concern namely M/s Spectrum Scientific Pvt. Ltd without submitting any evidence of transportation of goods from its factory at Silvassa to the premises of its sister concern. Besides, this bill for sale to sister concern M/s Spectrum Scientific Pvt. Ltd contains the description of goods as fabricated sheet metal and the assessee himself claims to be purchasing SS sheets and the conversion of SS sheet to fabricated sheet metal does not constitute to be a process of manufacturing goods. The assessee has not submitted any evidence of having started production of goods except a copy of bill for purchase of plant and machinery from M/s Roshni Electrical and Vikas Electricals dated 15-03-2004. The said bill for machinery being purchased f rom M/s Roshni Electrical and Vikas Electricals dated 15-03-2004 is not proved to be genuine as discussed in Para 6.a above. Assessee has not proved to have employed workers during the period 2003-04 for manufacturing activity as the ass....
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.... of power including the electricity bills for the month of March 2004 to May 2004, as well as a copy of the transporters bill raised by M/s. G.N. Transport, dated 31.03.2004. The CIT(A) called for the objections of the A.O as regards the admissibility of the aforesaid documents, along with his comments on the merits of the case. 6. The CIT(A) thereafter referring to the two fold criteria laid down for entitling the assessee towards claim of deduction u/s. 80IB(4), therein observed that the same required satisfaction of two conditions, viz. (i) there should be manufacture of production of any article or thing ;and (ii) the undertaking should employ 10 or more workers in a manufacturing process carried on with the aid of power, or employ 20 or more worker in a manufacturing process carried on without the aid of power. Thus in the backdrop of the aforesaid statutory requirement which were required to be satisfied for enabling an assessee to raise its claim towards deduction u/s. 80IB(4), the CIT(A) after deliberating on definition of the term 'Manufacture', in the backdrop of the judgment of the Hon'ble High Court of Kerala in the case of Tata Tea Ltd. Vs. ACIT (ITA NO. 87 of 2009, d....
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....s in the case of CIT Vs. Zainab Trading Pvt. Ltd. (2011)(333 ITR 144) (Mad), wherein on a similar footing the Hon'ble High Court had concluded that the conversion of corrugated sheets into boxes constituted manufacturing of a product. 8. The CIT(A) further deliberating on the satisfaction of the second condition contemplated u/s. 80IB(4), as per which in the case of an undertaking which is carrying on manufacturing process with the aid of power, is required to employ 10 or more workers, therein observed that as the assessee had filed a wage register of 11 workers employed, as well as placed on record the monthly muster book, as well as fortified the said factual position by referring to the field report dated 17.12.2007 given by the Income-tax inspector after visiting the premises of the assessee in the course of the proceedings for A.Y 2006-07, wherein the latter had observed that though it was a holiday, still most of the workers, numbering about 12, were available at the premises. The CIT(A) thus concluded that the assessee could safely be held to have employed more than 10 workers at his unit, and thus duly satisfied the second limb contemplated u/s. 80IB(4). 9. The CIT(A) th....
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....icals appearing in the books of account of the assessee and a copy of the confirmation dated 01.04.2004, issued by the assessee to M/s. Vikas Electricals (Page132-134 of APB), which revealed that a payment of Rs. 5,000/- had been paid by the assessee vide Cheque No. 145255, dated 13.03.2004, drawn on the Bank of Rajasthan. The ld. D.R. therein taking us to the copy of the bank account placed at Page 135 of APB, therein submitted that contrary to the aforesaid claim of the assessee, the amount of Rs. 5000/- was found to have been paid to M/s. Vikas Electricals on 13.03.2004, not by way of any Cheque, but by way of cash withdrawn against Cheque No. 145303. The ld. D.R. thus tried to impress upon us that the aforesaid state of affairs clearly revealed that genuineness of the purchase of machinery by the assessee was clearly disproved on the basis of the aforesaid documents. It was further averred by the ld. D.R. that in the period relatable to A.Y. 2004-05, no claim towards deduction u/s. 80IB(4) was raised by the assessee. Per contra, it was submitted by the Authorized Representative (for short A.R.) for the assessee that the CIT(A) during the course of the appellate proceedings had ....
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....onsideration had duly been accepted and assessed under the Central Sales Tax Act, 1956, and in order to fortify his said contention, therein took us through Page 160 of APB. It was submitted by the ld. A.R that now when the claim of the assessee u/s. 80IB(4) had been allowed in the preceding years, therefore in the absence of there being any change in facts, there was no reason to take a different view and therein hold that the assessee stood disentitled towards the claim of deduction under the said statutory provision. The ld. A.R. in support of his aforesaid contention therein submitted that in light of the rule of consistency, a different view on the basis of same facts in respect of the entitlement of the assessee towards claim of deduction u/s. 80IB(4), was not permissible in the eyes of law, therein took support of the following judicial pronouncement:- 1. CIT Vs. Paul Brothers (1995)216 ITR 548 (Bom) 2. CIT Vs. Western Out floor Interactive P. Ltd. (2012)349 ITR 309 (Bom) 3. Radhasoami Satsang Vs. CIT (1992)193 ITR 321(SC) 4. DCIT Vs. Jindal Photofilms Ltd. (2008) 113 ITD 0624 (TM). The ld. A.R further submitted, that as had been appreciated at length by the CIT(A),....
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....en the assessee had been held as eligible and therein entitled towards claim of deduction under the aforesaid statutory provision for the preceding years, viz. A.Y. 2005-06 and A.Y. 2006-07, therefore unless the said relief granted in the said preceding years in which such claim was made and accepted is withdrawn or set aside, the A.O cannot be allowed, to hold a different view and disentitle the assessee from claim of the deduction under the same statutory provision during the year under consideration. We thus in light of our aforesaid observations finding no reason to take a different view, therefore uphold the order of the CIT(A) that the assessee stood duly entitled for claim of deduction of Rs. 31,28,017/- u/s. 80IB(4). The appeal of the revenue is thus dismissed. ITA No. 1689/Mum/2014 A.Y. 2008-09 12. We now take up the appeal of the revenue, marked as ITA No. 1689/Mum/2014. The assessee assailing the order of the CIT(A), dated 18.12.2013 for A.Y. 2008-09 had raised the following grounds of appeal before us:- "1. On the facts and in the circumstances of the case, and in law, the ld. CIT(A) erred in allowing claim of deduction u/s. 80IB(4) of Rs. 38,39,300/- without appre....