Gujarat H.C : Delete the disallowance of deduction under section 80-IB of the Income-tax Act, made by the Assessing Officer

High Court Of Gujarat

CIT vs. Sai Infosystem India (P.) Ltd.

Section : 80-IB

Assessment Years : 2004-05 To 2007

M. R. Shah And K.J. Thaker, JJ.

Tax Appeal Nos. 536 To 539 Of 2014

June 24, 2014

JUDGMENT

M.R. Shah, J. – As common question of law and facts arise in these group of appeals and are arising out of the impugned common judgment and order passed by the Income-tax Appellate Tribunal (hereinafter referred to as “the Tribunal”) raising the similar issues but with respect to different assessment years of the same assessee, all these appeals are decided and disposed of by this common order.

1.1 Tax Appeal No. 536 of 2014 has been preferred by the Revenue against the impugned judgment and order passed by the Tribunal in I.T.A. No. 2508/Ahd/2009, dated August 23, 2013, for the assessment year 2004-05.

1.2 Tax Appeal No. 537 of 2014 has been preferred by the Revenue against the impugned judgment and order passed by the Tribunal in I.T.A. No. 2509/Ahd/2009, dated August 23, 2013, for the assessment year 2005-06.

1.3 Tax Appeal No. 538 of 2014 has been preferred by the Revenue against the impugned judgment and order passed by the Tribunal in I.T.A. No. 2510/Ahd/2009, dated August 23, 2013, for the assessment year 2006-07.

1.4 Tax Appeal No. 539 of 2014 has been preferred by the Revenue against the impugned judgment and order passed by the Tribunal in I.T.A. No. 2511/Ahd/2009, dated August 23, 2013, for the assessment year 2007-08.

2. In all these appeals, the following common question of law is proposed by the Revenue ;

“Whether the Tribunal is right in law and on facts to delete the disallowance of deduction under section 80-IB of the Income-tax Act, made by the Assessing Officer ?”

3. We have heard Shri Nitin Mehta, learned advocate appearing on behalf of the Revenue, and perused the order of assessment passed by the Assessing Officer ; the order passed by the Commissioner of Income-tax (Appeals) and the impugned common judgment and order passed by the Tribunal.

3.1 It appears from the impugned common judgment and order passed by the Tribunal that, according to the Revenue, the activities of the assessee cannot be said to be manufacturing activity so as to enable the assessee to claim the benefit/deduction under section 80-IB of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). On the other hand, it was the case of the assessee that the assessee is a buyer who buys basic computer items such as monitor, key board, mouse, etc., and is into the activity of assembling and, therefore, the question is, whether the activity carried out by the assessee can be said to be a manufacturing assembling. It is not in dispute that an identical question came to be considered by the Division Bench of this court in Tax Appeal No. 1287 of 2010 as well as Tax Appeal No. 12 of 2010 and in the case of one CIT v. Sunilbhai S. Kakad [2014] 365 ITR 427 (Guj.), who also happen to be a partner in the assessee-firm and with respect to the similar activity it is held by the Division Bench of this court that the activity carried out by the assessee can be said to be manufacturing activity and not simple assembling as held by the Assessing Officer. It is held that the said activity is held to be manufacturing activity and the assessee is entitled to deduction under section 80-IB of the Act and the Tribunal while passing the impugned common judgment and the order has heavily relied upon the decision of the Division Bench of this court in the aforesaid two tax appeals.

3.2 We have considered the decision of the Division Bench of this court in the aforesaid two tax appeals and we are in complete agreement with the view taken by the Division Bench in Tax Appeal No. 1287 of 2010 by which similar activity is held to be manufacturing activity and for which the assessee is entitled to deduction under section 80-IB of the Act.

3.3 Now, so far as the submission of Shri Nitin Mehta, learned advocate appearing on behalf of the Revenue that as the assessee did not employ more than ten persons and, therefore, the conditions for getting the deduction under section 80-IB was not satisfied is concerned, it is required to be noted that as such there is specific finding given by the Commissioner of Income-tax (Appeals) that as such the unit had employed at least ten persons. The aforesaid being the question of fact, it cannot be said that the assessee was not entitled to the benefit of deduction under section 80-IB of the Act.

4. In view of the above and for the reasons stated in the order passed by the Division Bench of this court in Tax Appeal No. 1287 of 2010, the questions raised in the present tax appeals are held against the Revenue and in favour of the assessee and, consequently, all the tax appeals deserve to be dismissed and are, accordingly, dismissed.

[Citation : 365 ITR 433]

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