Print Vision Pvt. Ltd.,, Ahmedabad vs Assessee
- CitationITA No.924/Ahd/2011
Ratio decidendi
The rule this decision rests on
The Tribunal's reasoning rests on the following principles: Whether an assessee's activity qualifies as manufacture or production for the purposes of the deduction under section 80IB does not turn on whether the work is undertaken on the assessee's own account or on a job-work basis; where machinery and manpower are employed on a regular basis in either case, the activity is to be treated as manufacture or production. A claim for deduction under section 80IB cannot be disallowed by the Assessing Officer merely by characterising the activity as job work where the assessee has furnished material, including evidence of excise duty paid, showing that its activity is manufacture or production, and where the Assessing Officer's finding is contrary to that material. Income that is not "derived from" the eligible business, such as interest, cash discount and similar other income, is not eligible for deduction under section 80IB, and the proportionate deduction attributable to such income is disallowable; this follows the decision of the Supreme Court in Liberty India v. CIT, as applied by the Tribunal. A cross-objection filed by an assessee in support of an order of the first appellate authority, where the assessee has no grievance against that order, is infructuous and is liable to be dismissed.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
ी एन0एस0 सैनी, लेखा सद य एवं ी कुल भारत, या%यक सद य के सम& BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER आयकर अपील सं./ ITA No.924/Ahd/2011 %नधा)रण वष)/Assessment Year: 2005-06
ACIT (OSD), Print Vision P. Ltd, Circle-5, Vs Print Vision House, Ahmedabad. Opp. Central Bank of India, Ambawadi Market, Ahmedabad. PAN : AAACP 9194 M
C.O. No.106/Ahd/2011 (In ITA No.924/Ahd/2011) Assessment Year: 2005-06
Print Vision P. Ltd, ACIT (OSD), Print Vision House, Vs Circle-5, Opp. Central Bank of India, Ahmedabad. Ambawadi Market, Ahmedabad. PAN : AAACP 9194 M
अपीलाथ,/ (Appellant) -.यथ,/ (Respondent)
Revenue by : Shri Nimesh Yadv, Sr. D.R. Assessee(s) by: None
सन ु वाई क तार ख/ Dateof Hearing : 10/04/2015 घोषणा क तार ख / Date of Pronouncement: 29/04/2015
आदे श/O R D E R
PER SHRI N.S. SAINI, ACCOUNTANT MEMBER:
This is an appeal filed by the Revenue and Cross Objection filed by the assessee against the order of the Commissioner of Income-Tax (Appeals)-XI, Ahmedabad dated 24.01.2011.
ITA No.924/Ahd/2011 & CO No.106/Ahd/2011 Print Vision P Ltd For AY 2005-06 2
2. The sole grievance of the Revenue in this appeal is that the CIT(A) erred in restricting the addition made on account of disallowance of deduction under section 80IB from Rs.15,87,972/- to Rs.85,950/-
3. The brief facts of the case are that the A.O. observed that the assessee has claimed deduction under section 80IB of Rs.15,87,972/- which is 30% on the profit of Rs.52,93,239/-. He observed that to be eligible for the claim of deduction under section 80IB of the Act, one of the vital conditions prescribed under the Income Tax Act is that the company should be manufacturing or producing any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India. On verification of the case records, it was found that the assessee is not engaged in any type of manufacturing activities. The assessee is engaged in job work of paper and forms sheet printing as well as income is derived through job work for various parties and the said activities does not fall in the category of manufacturing. He, therefore, held that the assessee is not responsible for deduction under section 80IB of the Act and disallowed the claim of Rs.15,87,972/- made by the assessee company. He also observed that the assessee has credited other income consisting of FDI interest, interest on income tax refund, cash discount, sale of scan process etc. aggregating to Rs.2,86,498/- which is not eligible for deduction under section 80IB. Hence, to the extent of 30% of this income the deduction under section 80IB amounting to Rs.85,950/- was not allowable. He observed that since the entire claim is disallowed, no separate disallowance was being made on this issue.
4. On appeal, the CIT(A) restricted the allowance under section 80IB of the Act to Rs.85,950/- and allowed the claim of the assessee for Rs.15,87,972/-.
ITA No.924/Ahd/2011 & CO No.106/Ahd/2011 Print Vision P Ltd For AY 2005-06 3
5. The Departmental Representative supported the order of A.O. whereas none appeared on behalf of the respondent assessee and neither any adjournment application was filed.
6. We have heard the Departmental Representative and perused the orders of the lower authorities and materials available on record. In the instant case, the claim of deduction under section 80IB was disallowed by the A.O. on the ground that the assessee was engaged in job work for others and, therefore, it cannot be treated as the assessee was engaged in manufacturing or production. On appeal, the CIT(A) allowed the claim of the assessee by observing as under :-
"2.2 I have considered the submissions made by the A.R. of the appellant and the observations of the assessing officer in the assessment order. As seen from the assessment order, the appellant's explanation that its activity was manufacturing/production was simply brushed aside by the A.O. by observing that the activity was one of job-work. As seen from the appellant's contentions, A.O's finding is contrary to the facts. Excise department's action supports the contention that appellant's activity is one of manufacture/production. Evidence in support of payment of excise duty of Rs.1,19,398/- on 31.03.2008 has been furnished by the appellant. Further as contended by the appellant this is the tenth year of claiming deduction u/s. 80IB and in the earlier years, no disallowance was made. Therefore, I hold that disallowance of deduction u/s. 80IB is not in accordance with facts and law.
2.2.1 However, I am in agreement with the A.O. that other income enumerated at para 4.1 of the assessment order (reproduced above) totaling to Rs.2,86,498/- is not eligible for deduction u/s. 80IB. Said income can not be held to be 'derived from' business. Law is well settled on the issue in view of the Apex Court's decision in case of Liberty India vs. CIT (317 ITR 218).
2.2.2 In view of this, disallowance of deduction u/s 80IB on other income of Rs.2,86,498/- is upheld. Balance ITA No.924/Ahd/2011 & CO No.106/Ahd/2011 Print Vision P Ltd For AY 2005-06 4
disallowance is deleted. This ground of appeal is allowed partly."
7. The Departmental Representative simply relied on the order of A.O. and could not point out any specific mistake in the order of CIT(A). In our considered view, there is no difference when the assessee manufactures or produces article or thing in its own account or when it manufactures or produces on job work basis for manufacturing charges or job work charges. In both the circumstances, machine and manpower are employed on regular basis. Thus, we do not find any error in the order of the CIT(A) and accordingly the same is confirmed and the ground of appeal of the Revenue is dismissed.
8. In the result, appeal of the Revenue is dismissed.
9. In the Cross Objection filed by the assessee, the assessee has raised the following grounds :
"(a) The Ld. Commissioner of Income Tax (A) has well considered the grounds of appeal on the basis of facts of the case and supporting evidences produced before him.
(b) The Ld. Commissioner of Income Tax (A) has also interpreted the legal provisions correctly in light of the various judicial pronouncements."
10. Reading of the above grounds of Cross Objection shows that the assessee has filed the Cross Objection in support of the order of CIT(A). As there is no grievance of the assessee against the order of the CIT(A), therefore, the Cross Objection filed by the assessee is infructuous and hence dismissed.
11. In the result, appeal of the Revenue and Cross Objection of the assessee both are dismissed.
ITA No.924/Ahd/2011 & CO No.106/Ahd/2011 Print Vision P Ltd For AY 2005-06 5
Order pronounced in the Court on Wednesday, the 29th of April, 2015 at Ahmedabad.
Sd/- Sd/- (KUL BHARAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 29/04/2015
PBN/*
आदे श क0 -%त1ल2प अ3े2षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त(अपील) / The CIT(A)-XI, Ahmedabad
5. $वभागीय 'त'न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड- फाईल / Guard file.
ु ार/ BY ORDER, आदे शानस
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free