2012 (4) TMI 593 - HC - Income Tax

Summary

Issues involved: Appeal against the order of the Income Tax Appellate Tribunal for Assessment Year 2005-2006 regarding the applicability of section 80IB of the Income Tax Act, 1961.

Question of Law:
1. Whether the Tribunal was justified in quashing the order passed u/s. 263 of the Income Tax Act?
2. Whether the assessment made by the Assessing Officer was erroneous and prejudicial to the interests of the revenue?
3. Whether galvanization and CR strips activity amount to manufacturing as per Section 80IB of the Income Tax Act?
4. Whether the activity carried out by the Assessee can be considered as a type of process and not manufacturing?

Summary of Judgment:
The assessee declared a nil total income for Assessment Year 2005-2006 and claimed benefits under section 80IB of the Income Tax Act for manufacturing galvanized steel tapes and cold Rolled (CR) strips. The Assessing Officer allowed the claim, but the Commissioner of Income Tax set aside the order under section 263. The Tribunal evaluated the manufacturing process and considered the input-output materials. It noted the distinct uses of final products in different industries and concluded that a new product emerges during manufacturing. The Tribunal held that the Commissioner should not have exercised jurisdiction under section 263, based on the material on record and Supreme Court precedents. The appeal was dismissed as it did not raise any substantial question of law, with no order as to costs.