Gauhati H.C : the respondent-assessee can be said to be engaged in any production of manufacturing activity within the meaning of section 80-IC of the Income-tax Act, 1961

High Court Of Gauhati

CIT vs. I. Tech Electronics

Assessment Year : 2004-05

Section : 80-IC

Adarsh Kumar Goel, CJ. And U.B. Saha, J.

IT Appeal No. 23 Of 2011

February 7, 2012

JUDGMENT

Adarsh Kumar Goel, CJ. – This appeal has been preferred by the Revenue under section 260A of the Income-tax Act, 1961, against the order dated March 19, 2010, passed by the Income-tax Appellate Tribunal, Guwahati Bench, in I. T. A. No. 214 (Gau)/2007 for the assessment year 2004-05 claiming the following substantial questions of law :

“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in setting aside the order of the Commissioner passed under section 263 of the Income-tax Act, 1961 ?

(2) Whether, on the facts and in the circumstances of the case, the respondent-assessee can be said to be engaged in any production of manufacturing activity within the meaning of section 80-IC of the Income-tax Act, 1961 ?

(3) Whether, on the facts and in the circumstances of the case, the respondent-assessee is entitled to deduction under section 80-IC of the Income-tax Act, 1961 ?”

2. The assessee claimed deduction under section 80-IC in respect of income derived from assembly of colour TV which was claimed to be “manufacturing activity” falling under section 80-IC(3) of the Act. The Assessing Officer allowed the said claim but the Commissioner, exercising jurisdiction under section 263 of the Act, set aside the said order and directing the Assessing Officer to disallow the claim of the assessee. It was held that assembling component and turning them into TV/computer/DVD did not amount to manufacture as no new article different from the raw material came into being. Aggrieved thereby, the assessee carried the matter to the Tribunal by submitting that jurisdiction under section 263 of the Act could not be exercised on an issue on which two views are possible and also by submitting that assembling of colour TV from different components and parts amounted to manufacture. Reliance was placed on the decision of the Tribunal in another identical case in Rajib Ranjan Pujari v. ITO-I.T.A. No. 189 (Gau) 2008. Reference was also made to the reasons given by the Assessing Officer as follows :

“6. The assessee-firm, M/s. I. Tech Electronics, located at EPIP, Aminnann. Guwahati, started assembling of colour TV with effect from October 23, 2003. Being an SSI unit, it obtained DIC registration certificate on August 1, 2003. The assessee claimed 100 per cent. deduction of its profits and gains derived from the industrial unit under section 80-IC of the Income-tax Act for the assessment year 2004-05 being the initial assessment year. The assessee was asked, vide this office letter dated August 28, 2006, to justify the claim of deduction. In response, the assessee’s authorised representative submitted that M/s. I. Tech Electronics begins its manufacturing activity with effect from October 23, 2003, i.e., during the period beginning on the 24th day of December, 1997, and ending before the 1st day of April, 2007, in an industrial area at village Numalijolah under Silasundarighopa mouza of North Guwahati circle in the District of Kamrup, Assam. The location of the manufacturing unit falls under Khasra No. 275 and 306 as notified, vide Notification No. 32 of 1999, dated July 8, 1999 of Central Excise. The authorised representative further submitted that M/s. I., Tech Electronics was covered under section 80-IC(2)(iii) of the Income-tax Act and the amount of deduction in this case was accordingly 100 per cent. of profits and gains derived by the unit for ten assessment years commencing with the initial assessment year 2004-05. I have gone through the submission of the assessee’s authorised representative very carefully and also seen that the industrial unit of the assessee is situated at export promotion industrial park (EPIP), Amingaon-Village Numalijolah, Mouza Silasundarighopa, District Kamrup, Assam, as notified by the Board in its Notification No. 116, dated March 26, 2004. Spot enquiry has also been made by the Inspector of Income-tax attached to this office to verify the existence/genuineness of the industrial unit. His report is placed on records. As the assembling of colour TV from various component parts is a process of manufacture or production, I am of the opinion that the assessee-firm is engaged in manufacturing activity and entitled to deduction as specified in sub-section (3) of section 80-IC of the Income-tax Act.”

3. The Tribunal upheld the plea of the assessee following its earlier order in Rajb Ranjan Pujari (supra) and also holding that exercise of revisional jurisdiction by the Commissioner was not called for.

4. We have heard learned counsel for the parties.

5. Learned counsel for the Revenue submits that the assessee was merely purchasing different components from SALORA International Limited and after assembling the TV/DVD, the same were sold back to the same party. The same was the position with regard to Kitchen Appliances India Limited from whom the assessee was purchasing different components and selling assembled products. These activities did not amount to “manufacturing”.

6. Notice was issued and the assessee is represented by learned counsel, who supports the view taken by the Tribunal. He also relies upon the judgments of the Punjab and Haryana High Court in CIT v. Mahesh Chandra Sharma [2009] 308 ITR 222/178 Taxman 22 and of the Delhi High Court in CIT v. Jackson Engineers Ltd. [2010] 36 DTR 168 ; [2012] 341 ITR 518 holding that when a new and different article emerges having distinctive name, character and use, the process could be held to be manufacturing. In Mahesh Chandra Sharma (supra), reliance was placed, inter alia, on the judgments of the hon’ble Supreme Court in Gramophone Co. of (India) Ltd. v. Collector of Customs [1999] 114 ELT 770 (SC) and Union of India v. Delhi Cloth & General Mills Co. Ltd. [1973] ECR 56 (SC).

7. The Tribunal has upheld the view that producing of TV sets by purchasing items like cabinet, chassis, IC picture tube could be held to be manufacturing. It has not been shown that the view of the Tribunal in the case of Rajib Ranjan Pujari (supra) has been challenged by the Revenue. Moreover, the view taken by the Punjab and Haryana High Court and the Delhi High Court also supports the case of the assessee. No contrary view has been shown.

In view of the above, the order of the Tribunal cannot be held to be erroneous. No substantial question of law arises.

The appeal is dismissed.

[Citation : 341 ITR 533]

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