TaxTMI 
TaxTMI 
2019 (2) TMI 519
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....mises of assessee by the Investigation Wing, Dehradun on 02.12.2013 wherein it was found that the activities of company were in the nature of assembling and not manufacturing. It was pointed out that the assessee company was claimed deduction u/s 80IC of the Act from Assessment Year 2008-09, but no manufacturing activities covered under the provision of Section 80IC of the Act were being carried out by the company. On spot verification, the AO found that about 13 to 15 laborers were there who were making Wooden Crate for which they were using readymade wooden planks, thermocol, fevicol and nails etc. The AO has reproduced some pictures of such manufacturing activities of product in the assessment orders at page 3 to 5. The assessee through submissions filed by his C.A. contended that the assessee's business is involved of manufacturing of wooden crates specially customized and designed for Asahi Glass. It was also submitted that the assessee has been granted registration by the District Industries Centre as manufacturer. Similarly the assessee is registered under the Factories Act for which factory is doing manufacturing activity. The assessee has also granted exemption from the....
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....come Tax vs. Jamal Photo Industries (I) Private Limited 285 ITR 209 [2006] (Madras) 8. Commissioner of Income Tax vs. Darshak Limited 247 ITR 489 [2001] (Karnataka). 6. After considering the facts and submissions of the assessee, Ld. CIT(A) has given his finding in para 14 to 24 which is reproduced as under :- "14. I have duly considered the facts of the case and the submissions of the assessee. In the first place it is quite clear that the survey conducted by the Investigation Wing and the inspection conducted by the AO, confirmed the findings of the inspection of the assessee's premises conducted by the Income Tax Inspector 0n 18.11.2011 i.e. that there was a labor intensive unit manufacturing wooden crates with the aid of small tools such as wood cutters, nailors, staplers, foam, fevicol etc. The only point of divergence is whether such activities amounted to manufacturing or not that would render the activity eligible for the deduction u/s 80IC. Thus, the crucial aspect for determination is the issue of whether the process employed by the asessee amount to manufacture or not. 15. The term manufacture has been defined by section 2(29)BA of the I.T. ....
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....bmitted that on his visit to the premises he on y found readymade wooden planks being fixed together to form wooden crates and this was assembling not manufacturing. In this context, it is observed that the asessee has submitted that the AO visited the premises after the logs had been cut and made into planks. However, even if that was not the case, it is still clear that wooden crates are different from the planks per se and the planks are only one of the many products that go into manufacturing the wooden crates. Since, the wooden crates stand apart as a distinct commodity from the items that go into makinc them, the making of the wooden crates amounts to manufacture within the meaning of the Supreme Court judgment in the case of Aspinwall & Co. Ltd (supra). Moreover, the judgment makes it clear that simply because the process may be manual and labor intensive would not take it out of the ambit of manufacturing. 18. Furthermore, the Hon'ble Madras High Court has held in the case of CIT Vs. Jamal Photo Industries (I) Pvt. Ltd. "There cannot be any dispute that the expression "manufacture" involves the concept of changes effected to a basic raw matenal resulting i....
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.... of such products. The AO has not brought any fact on record to show that wooden crates fall under the 13th Schedule and are not eligible for the deduction j/s 80IC. 23. Thus, the stand taken by the AO that no manufacturing activities covered under the provision of section 80IC are being carried out by the company, is incorrect as the assessee is not only engaged in the process of manufacture but is also producing a commodity not covered by the 13th Schedule. 24. In the circumstances, the disallowance made is without basis and is accordingly deleted." 7. Being aggrieved the revenue has filed this appeal before this Tribunal. The Ld. Sr. DR submitted that the survey proceedings conducted u/s 133A revealed that the assessee was making wooden crates by assembling wooden planks with the help of nails by using his wooden cutters. There was no machinery install in the premises of the assessee. No other manufacturing activity has been seen at the premises of the companies except preparing the wooden crates by employing 13 to 15 laborers, hence making of wooden crates amounts to assembling and not manufacturing activities, therefore, the assessee is not entitled to cla....
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....ounsel has placed reliance on the decision of ITAT Delhi Bench in the case of Mobile Communication (India) P. Ltd. vs. DCIT, [2010], 125 ITD 309 (Delhi Trib.) and quoted from the said decision from para 9 page 10 that it is a well settled legal position as laid down by the Court of appeal in England in Moouat vs. Betts Motors Ltd. 1958 (3) All ER 402, that two Departments of the Government cannot in law adopt contrary or inconsistent stands or raise inconsistent contentions or act at a cross purposes. To use the famous words of Lord Denning in that case, the right hand of the Government cannot pretend to be unaware of the left hand is doing". The same principle of law has also been followed by apex court in the case of M.G. Abro, Addl. Collector of Customs vs. Shanti Lal & Co. AIR 1966 SC 197, wherein it was laid down that the customs authorities cannot in law take a stand or adopt a view which is contrary authorities. Therefore it was contended that when four departments of Government has considered the assessee is a manufacturing unit than no contrary view can be taken by other department which is inconsistent with the stands taken by other four department. The Ld. Counsel furthe....
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....x court in the case of India Cine Agencies vs. DCIT, 2010 taxmann. 253 SC held that even cutting of Jombo volumes rolls into small marketable sizes amounts to manufacturing. Similarly the Hon'ble Apex Court in CIT vs. MT Polo Yan Pvt. Ltd. Civil Appeal arising out of SLP (C. No. 26482/2008) Civil appeal no. 786792 of 2010 dated 21.01.2010 held that twisting of yarn amounts to manufacturing. The Ld. Counsel further heavily relied in the case of CIT vs. Oracle Software India Ltd. 2010 (1) SCALE 425 wherein the apex court has observed as under :- "The term "manufacture" implies a change, but, every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. However, this test of manufacture needs to be seen in the context of the above process. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/ process falls within the meaning of the word "manufacture"." Therefore, it was contended that the Ld. CIT(A) has rightly allowed the appeal of the assessee and consequently deduction u/s 80IC of the Act. 12. We have heard the rival subm....
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....crates by the assessee. Similarly the Hon'ble Supreme Court in the case of Orcle Software India Ltd. (2010) 187 taxmann. 275 SC held that if an operation / process renders a commodity for article fit for use for which it is otherwise not fit for operation / process falls within the meaning of word 'manufacture'. In the case of assessee wooden crates are different from the planks per se and the planks are only one of the many products that go into the manufacturing the wooden crates. Since, the wooden crates stand apart as a distinct commodity from the items that go into making them, the making of the wooden crates amounts to manufacture within the meaning of the Supreme Court decision in the case of Aspinwal & Co. Ltd. (supra). The Ld. Counsel has placed reliance on the decision of Mobile Communication India Pvt. Ltd. (supra) wherein it was observed that it is the well settled legal position as laid down by the Court of appeal in England in Moouat vs. Betts Motors Ltd. 1958 (3) All ER 402, that two Departments of the Government cannot in law adopt contrary or inconsistent stands or raise inconsistent contentions or act at a cross purposes. Therefore when the 4 departments of the....