High Court Of Madras
CIT-I, Pondicherry Vs. Zainab Trading (P.) Ltd.
Assessment Years 2002-03 To 2006-07
Section : 80-IB
F. M. Ibrahim Kalifulla And N. Kirubakaran, JJ.
Tax Case (Appeal) Nos. 1204 To 1207 Of 2010
February  7, 2011
JUDGMENT
F.M. Ibrahim Kalifulla, J. – The revenue has come forward with these appeals and seeks to raise the following question of law as substantial question of law :
“Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee is entitled to deduction under section 80-IB of the Act, treating the production of corrugated boxes from kraft sheets as manufacture for the purpose of section 80-IB of the Act, is valid?”
2. To appreciate the stand of the appellant, it is necessary to refer to the brief facts of the case. The respondent/assessee company claims that it is engaged in the activity of manufacturing of paper corrugated boxes and on that basis claimed deduction under section 80-IB of the Income-tax Act, on the profits derived in its business. According to the respondent/assessee, it procures paper corrugated sheets of different sizes, which is its raw material, put them into the designed machines for chiseling them at the required places in order to fold those sheets and pin them at the folded points and after pinning at the folded points and after the sheet got transformed in the shape of a box, the box is again kept in a flat position for easy transportation. That flat positioned paper corrugated boxes are the final products of the respondent/assessee.
3. According to the appellant, since the corrugated sheet in the process of being folded into a box, it has not lost its original characteristics of corrugated sheet, no manufacturing activity had taken place and therefore, the ingredients of section 80-IB of the Act, are not attracted.
4. The Commissioner of Income-tax (Appeals) however differed from the Assessing Authority and took the view that the corrugated sheets once are shaped into corrugated boxes, that would amount to a ‘manufacturing activity’ and therefore, the respondent/assessee was entitled for deduction under section 80-IB of the Act. The Commissioner of Income-tax (Appeals) therefore directed the Assessing Officer to ascertain the exact quantum of deduction after making proper verification to grant the relief.
5. The Tribunal also took the same view and held that the conversion of corrugated sheets into boxes would amount to ‘manufacture’ having noted the nature of activity of the respondent/assessee, which disclose that the plain corrugated sheets are put into the designing machine in order to chisel them into different shapes and pin them at the folded points to convert the plain sheets into corrugated boxes.
6. We are also convinced that such an activity of transforming the plain corrugated sheets into a different product of boxes, though to gain space for transportation, such boxes are kept in a folded position, one cannot say that the boxes continue to retain its original characteristics of corrugated sheets. Therefore, there is no scope to take a different view than what has been stated by the Commissioner of Income-tax (Appeals), as confirmed by the Tribunal. Such determination came to be made by both the authorities based on the facts placed before them and with reference to which, we do not find any serious legal lacuna, there is no scope to interfere with the same, inasmuch as there is no question of law, much less substantial question of law involved.
7. These appeals therefore fail and the same are dismissed. No costs. Consequently, M.P. No. 1 of 2010 is also dismissed.
[Citation : 333 ITR 144]
