High Court Of Bombay
CIT -1 vs. Hindustan Petroleum Corporation Ltd.
Section : 80HH, 80-I, 80-IA
J.P. Devadhar And M.S. Sanklecha, JJ.
IT Appeal (L) Nos. 2131, 2133 To 2135 Of 2012
March 7, 2013
JUDGMENT
Per Court – In all these appeals by the revenue following questions of law have been framed for our consideration.
“(a) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in relying on Cylinders Rules 2004 referred to in the decisions of jurisdictional High Court in the case of HPCL v. MSDCEL in W. P. No.9455 of 2011 and Gujarat High Court in the case of Bharat Petroleum Corporation Ltd. v. State of Gujarat and others as well as notification under Section 80-IB(4) issued on 4/8/1999 in view of the fact that the same are not applicable in the case of assessee for the assessment year under consideration?
(b) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in holding that bottling of the gas into gas cylinders as a production activity for the purpose of S.80HH, 80-I/80-IA ignoring the fact that no new product comes into existence in this process?”
2. The basic dispute in these appeals is whether the activity of bottling LPG Gas amounts to production or manufacturing activity for the purpose of deduction under Sections 80HHC, 80-I and 80-IA of the Income-tax Act, 1961. The Tribunal by the impugned order held that subject activity amounts to production/manufacturing for the purpose of Sections 80HHC, 80I and 80-IA of the Income-tax Act, 1961 by relying upon the decision of this Court in Writ Petition No.9455 of 2011 dated 19/1/2012 in the matter of Hindustan Petroleum Corpn. Ltd. v. Maharashtra State Electricity Distribution Co. Ltd. and others and “the consequent order passed by the Electricity Ombudsman datecT26/372″012. Besides a reliance was also placed upon the decision of the Gujarat High Court dated 6/5/2010 in the matter of Bharat Petroleum Coprn. Ltd. v. State of Gujarat wherein it was held that bottling of LPG Gas amounts to manufacturing activity.
3. The grievance of the revenue is that the aforesaid activity would not amount to manufacturing/production activity and for that purpose reliance is placed on the judgment of the Gujarat High Court dated 20/1/1993 in the matter of State of Gujarat v. Kosan Gas Co. (Sales Tax T) Matter where activity of bottling the gas was not considered as manufacturing activity under the Z Gujarat Sales Tax Act,1969.
4. Since the Tribunal in the impugned order has relied upon the decision of this Court and the consequent order of the Electricity Ombudsman to hold that the activity of bottling LPG Gas is a very specialized process and the same is considered to be an activity of manufacture. The Tribunal in the impugned order had observed to the effect that the word used in Sections 80HH, 80I/80IA of the Act is manufacturing or production. The term production is wider than the word manufacture. Therefore, every activity which bring into existence a new product would constitute production. The impugned order records a finding of fact that the process of bottling the LPG Gas into cylinder makes the same marketable on execution of the process. It therefore follows that a new product comes into existence .The fact that the decision of this Court in Hindustan Petroleum Corpn. Ltd. (supra) and the Gujarat High Court dated 6/5/2010 are rendered keeping in view of the fact that Gas Cylinder Rules 1984 which were not in force during the relevant assessment year would not in any way detract from the finding of fact arrived at by the Tribunal. In these circumstances, as the Tribunal has rendered a finding of fact and placed reliance upon the decision of this Court and also the Gujarat High Court dated 6/5/2010, we see no reason to entertain the proposed questions of law.
5. Accordingly, the appeals are dismissed with no order as to costs.
[Citation : 361 ITR 190]
