2018 (12) TMI 1568

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.... 2001-02. 2. The appeal has been admitted on 03.11.2008 on the following substantial questions of law:- "1. Whether on the facts and circumstances of the case the installation of the equipment is a part of manufacturing activity carried on by the Appellant and thus the appellant is entitled to relief u/s.80IB of the Act? 2. Whether on the facts and circumstances of the case the Appellate Tribunal is right in law in holding that installation of a equipment is not a part of manufacturing activity and thus the appellant is not entitled to relief u/s.80 IB of the Act" 3. The assessee filed return of income for the year under consideration, 2001-02 on 31.10.2001 admitting a total income of Rs. 10,89,650/-. The return was ....

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....e would amount to "Manufacture". 6. The assessee's contention was that the supply and erection of weighing system after fabricating also amounts to "Manufacture" since the installation carried out by the assessee is essentially and inextricably being part of manufacture. Therefore, they justify their claim for deduction u/s.80IB of the Act. The Assessing Officer did not agree with the assessee and held that erection or assembling at the site of the customer does not create a new product. The product being already manufactured is installed at the site of the customer and such activity will not amount to manufacture. Therefore, the Assessing authority held that charges relatable to such installation work will not qualify for deduction ....

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.... we propose to examine the correctness of the order passed by the CIT(A) as to whether the Appellate Authority was right in allowing the appeal filed by the assessee. 11. The Revenue's submission before us is that there is a difference between completeness of project and usability of the project and what the assessee now seeks to do is to bring about the usability aspect of the product into the term "manufacture", which is impermissible. It is further submitted that the CIT(A) was carried away by the time when the project became operational, which is an incorrect way of interpretation since the contract for the purpose of supply, installation and maintenance undoubtedly will not fall within the ambit of the term "manufacture". Howeve....

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....x contract involving technical design and installation for a project and that is why, the contract has a component called design so the design has to be done for a customer to suit his parameters. Obviously, the product made by the appellant is not a product which available "off the shelf". The product which is subject matter of consideration has been designed exclusively for the customers, which are Government of India Enterprises and the design is to suit the customers' need and unless it is operational the product does not come into being. This is the correct manner the contract has to be interpreted and has rightly been interpreted by the CIT(A). The CIT(A) rightly concluded that the activity of the assessee in designing, enginee....