TaxTMI 
TaxTMI 
2016 (12) TMI 1764
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....y of the assessee does not fall within the parameters of the definition of word 'manufacture'. 5. In this ground the revenue has challenged the allowance of deduction under section 80IC of the Act by the CIT(A),to the assessee on the manufacturing activity undertaken by it. 6. Brief facts relating to the issue are that the assessee is engaged in the business of manufacturing and selling of Coolant, PVC compound, and Expansion Bottle Kits. The manufacturing facility of the assessee is located at Parwanoo and the assessee was entitled to benefits under section 80IA of the Income Tax Act, 1961, from assessment year 1996-97 onwards in respect of profits from the business of manufacturing Coolant, PVC compound and Sealants. In the year 2003 the assessee undertook substantial expansion of its manufacturing facilities making it eligible to claim deduction under section 80IC of the Act. This is the 9th year of claim of the assessee. During assessment proceedings the AO discussed the manufacturing activities in respect of the various products made by the assessee and disallowed the entire deduction under section 80IC claimed by the assessee by holding that the assessee was not....
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....f the Act on account of income earned from carrying on its manufacturing activities and also from job work. This the fifth year of claim of deduction under section 80IC of the Act. The first year of claim of the assessee vis-a vis deduction under section 80IC of the Act was assessment year, 2005-06, The Assessing Officer had allowed the claim of the assessee by holding the assessee to be eligible for exemption under section 80IC of the Act in relation to the income earned from carrying on its manufacturing activities. However, the claim of the assessee vis-a-vis on account of under section 80IC of the Act on job work was disallowed by the Assessing Officer, against which the assessee went in appeal before the Tribunal. The appeal of the assessee in ITA No.883/Chd/2006 relating to assessment year 2005-06 was allowed by the Tribunal vide order dated 17.9.2009 under which the manufacturing process undertaken by the assessee was considered in paras 11 and 12 and vide para 13 it was held that the activity in relation to DGX amounts to manufacturing and therefore, the resultant income earned by the assessee was eligible for deduction under section 80IC of the Act. The Tribunal also vide ....
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.... allowance of deduction under section 80IC on income from job work earned by the assessee. 15. Brief facts relating to the issue are that the AO denied the assessee deduction under section 80 IC on the job work income earned, by holding that it did not involve any manufacturing activity as no new article or thing was produced and as was held in the previous years also. The AO also observed that since Revenue had preferred appeal before the Hon'ble Punjab and Haryana High Court on this issue for the assessment year 2007-08 and assessment year 2008-09, to keep consistency on this issue, addition was made in the impugned year also. The relevant findings of the AO are there at para 3.2 to 3.11 of the Assessment Order. Ld. CIT(A) allowed the claim of the assessee following the decision of the ITAT for assessment year 2011-12 which in turn had based its decision on its earlier decisions for assessment year 2007-2008 and assessment year 2008 2009. 16. Aggrieved by the same the revenue filed the present appeal before us. 17. Before us Ld. AR contended that this issue had been decided in favour of the assessee in earlier years by the Hon'ble ITAT in assessee's own case. 18. Ld.D....
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....ome such as scrap sale, insurance claim, foreign exchange fluctuation and credit balance when these incomes were not derived in true sense from the business of the eligible undertaking. 24. In this ground the revenue has challenged the allowance of deduction under section 80IC on scrap sale, insurance claim, foreign exchange fluctuations and credit balance written back. Brief facts relating to the issue are that the assessee claimed deduction u/s 80IC on other income which included scrap sale, insurance claim, foreign exchange fluctuations and credit balance written back. The Assessing Officer denied the same holding that they could not said to be derived from industrial undertaking of the assessee. The AO held that similar additions had been made in the previous year also and since revenue had preferred appeal before the Hon'ble Punjab and Haryana High Court on this issue for the assessment year 2007-2008 and assessment year 2008 2009, to keep consistency, the addition was made in this year also. Ld. CIT(A) allowed the assessee's claim for deduction under section 80IC on scrap sales and insurance claim, following the decision of the ITAT in the assessee's own case for assessmen....
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....tly attributable to the activities of the business unit. Further The Tribunal in ITA No. 532/Chd/2012 relating to assessment year 2008-09 vide order dated 30.07.2012 in the appeal filed by the revenue allowed the claim of deduction under section 80IC of the Act both on manufacturing, job work charges, insurance claim and scrap sale." 28. Following the same we hold that the assessee's claim having been allowed from year to year there is no merit in the present ground raised by the revenue vis a vis claim of deduction under section 80IC on scrap sales and insurance claim received by the assessee. 29. With regards to claim of deduction under section 80IC on credit balance written off we find that identical claim was allowed by the ITAT in the assessee's own case in assessment year 2007-2008 wherein at para 13 of the order the ITAT held as follows: "13. Coming to the facts before us and following the ratio laid down by the Ahmedabad Bench of the Tribunal in Arvind Fashions Ltd. Vs. ACIT (supra) we hold that the interest income received by the assessee is not eligible for deduction under section 80IC of the Act. However, the amount received on scrap sale, the credit balan....
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....or the assessee, we are of the view that the difference on account of exchange rate fluctuation is liable to be allowed under s. 80-IB. The exchange rate fluctuation arises out of and is directly related to the sale transaction involving the export of goods of the industrial undertaking. The exchange rate fluctuation between the rupee equivalent of the value of the goods exported and the actual receipts which are realized arises on account of the sale transaction. The difference arises purely as a result of a fluctuation in the rate of exchange between the date of export and the date of receipt of proceeds, since there is no variation in the sale price under the contract. The view which we have taken is also consistent with the view taken by a Division Bench of this Court on 15th Dec., 2009 in the case of Syntel Ltd. (IT Appeal Nos.1974, 1976 and 1978 of 2009). In the circumstances, we would affirm the judgment of the Tribunal insofar as the question of exchange rate fluctuation is concerned." 12. From the above, it is clear that the Hon'ble High Court has categorically held that the exchange rate fluctuation arises out of and is directly related to the sale transactio....