TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 60
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....inly aggrieved by deletion of addition of Rs. 1,09,84,998/- on account of claim of deduction u/s.810IC which was disallowed by the Assessing Officer. 3. The facts in brief are that the assessee-firm is engaged in the business of manufacturing of plastic packaging materials since 1998 at its unit located in Baddi, Himachal Pradesh. Since its manufacturing facility was located in Baddi Industrial area which was notified by the Ministry of Commerce & Industry, vide notification dated 7th January, 2003, therefore, assessee was eligible for making a claim u/s 80IC for its manufacturing activity. It was also registered with the Central Excise Department and has been filed CENVAT return and also return under the VAT Tax Act, before Himachal Pradesh Authorities. In the assessment order, it has been noted by the Assessing Officer that team of Income tax official has visited the assessee's premises and godowns where the business activities of the assessee was being carried out. On inspection the said team observed that no manufacturing activity is done by the assessee firm. Statement of employee, Shri Girish Chander and Shri Masood Ali Beg, Production/Quality Manager was recorded on oath re....
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....e assertion of the Id. AR that Sh. Girish Chander had joined the Baddi factory after the end of financial year 2008-09, relevant to AY 2009-10, which is under consideration and therefore, he was not privy to the business activities being carried out prior to his appointment. In the light of the above discussion and after careful consideration of all the facts of the case and evidences on record. I am of the opinion that the appellant cannot be denied deduction u/s. 80IC of the Act. The addition on this ground amounting to Rs. 1.09.84.998/- is hereby deleted." 5. Before us, the learned Department Representative referred to the order of the Assessing Officer and submitted that the statement of the employees makes it very clear that the assessee was doing job work for packaging of products in small and large boxes for which it was paid job work charges from M/s. Gillette India and hence such packaging does not amount to manufacturing, and therefore, claim of deduction u/s.80IC has rightly been denied. 6. On the other hand, ld. counsel for the assessee submitted that this precise issue had come up for consideration in the Assessment Year 2005-06, wherein detailed inquiry was made by ....
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....the order of ld. CIT(A) for the Assessment Year 2005-06, we find that the machine which were added in Assessment Year 2005-06 for the purpose of manufacturing of packaging material and doing the job work were as under: Machinery 1. Box Strapping Machine 2. Cutting Machine 3. Drilling Machine 4. Forming Machine 5. Pad Printing Machine 6. Sharing Machine 7. Taping Machine 8. Welding Machine The Assessing Officer had denied the deduction in that year on the ground that the new machineries purchased by the assessee were less than 50% as required u/s.80IC. However, rebutting the said observation of the Assessing Officer, the assessee had filed the entire details based on which the remand report was submitted by the Assessing Officer which reads as under:- In this connection, it is submitted that in proceedings u/s. 250(4), the assessee has produced books of accounts and vouchers which were examined on test check basis. The books of accounts were found to be commensurate with figures of Profit & Loss accounts enclosed with the return of income for assessment year 2005-06. The assessee was also asked to lead evidence in favour of the submission made before yo....
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....d. " 10. Thus, the initial claim of 80IC has been allowed after due inquiry and examination of facts on record and such allowability of deduction has attained finality, because as stated by the learned counsel no appeal has been filed by the Revenue against the said order dated 17.11.2009. Whence it has been accepted that assessee firm has been carrying out manufacturing activities and its claim of deduction u/s.80IC has been allowed, then in the subsequent year such a claim cannot be disallowed. 12. Coming to the observation and the facts as noted in the impugned assessment order, we find that the Assessing Officer has heavily relied upon the statements of two of the employees of the assessee firm wherein they have stated that they are doing the job work of packaging of loose products in boxes for which they are being paid job charges from M/s. Gillette India Ltd. and apart from that they have also said that raw material are also available by M/s. Gillette India Ltd. which the assessee firm is packing them. Based on these statements, Assessing Officer has come to the conclusion that assessee is not involved in the manufacturing of packaging; therefore, assessee is not eligible ....
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....e bill for execution of packaging Also, off late there have been such operations, where the materials were provided by the customer or their approved vendors and we only did the technical operation of handling their material and converting it into a sellable proposition." 13. Besides this, the assessee has also given the details of the raw material purchased, product flow chart and the entire process of packing of articles. From the further perusal of the record, it is seen that assessee has shown turnover from various activities in the following manner:- S. No. Particulars Amount (in Rs.) Amount (in Rs.) (a) Manufacture of packaging material 1,36,58,621/- (b) (i) Packaging of goods on job work basis 63,43,995 (b)(ii) Sale of packing material with job work 18,31,202 81,75,197 (c) Manufacture of dies/moulds 6,53,000 Total 2,24,86,818 Apart from that, it is undisputed fact that assessee firm has been categorized under the Central Excise Tariff Act as a manufacturer, because it manufactures dyes and moulds for making and designing the packaging materials. It has also granted approval from District....