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2012 (11) TMI 194 - AT - Income TaxDeduction u/s. 80IC - rejection of claim - whether geographically assessee is located with the notified area contemplated in sub-clause (ii) of sec. 80IC(2)(a) or (2) (b)- CIT(A) deleted the addition - Held that:- AO while observing that more than 93% of manufacturing activities is carried out at Kannouj and at Bhimtal, a very negligible activity has been carried out has failed to appreciate the true nature of the controversy. If distilled oil is similar to that of fragrance, fragrant compound, attar and floral water then AO may be justified to say that major activities have been carried out at Kannouj but that is not the case. The end product manufactured by the assessee and sold is altogether different from distilled oil. Distilled oil is one of the raw material for producing fragrant, fragrant compound or attar. The main stress of the Assessing Officer is that it should boost economy of the State but in the present case, assessee had made purchases out of Uttrakhand State. Its major activities were carried out in UP. We find that this reference is altogether irrelevant. Assessing Officer was required to look into whether assessee has an industrial undertaking. It is situated within notified area as contemplated in section 80IC(2)(a)(ii) of the Act. Whether it is manufacturing any article or thing. Negligible expenses shown by the assessee - AO observed that by incurring a sum of Rs.7013 only, turnover of more than Rs. 3 crores cannot be achieved - Held that:- The assessee in the audited P & L account has shown fuel charges at Rs.1,56,320, freight Rs.52,663, manufacturing expenses Rs.15,132, water and electricity expenses Rs.7715 and packing material of Rs.50,853. Apart from these expenses, assessee has shown purchase of raw material at Rs.2.39 crores. Thus, it can be fairly concluded that AO has made this comparison in isolation. Assessee has placed on record the material exhibiting transportation of the raw material, purchase bills and Vat certificate. It is registered with the Central Excise Department w.e.f. Ist of September, 2006. Thus the assessee has demonstrated that it is engaged in the manufacturing of article and things fulfilling all the essential conditions for availing deduction under sec. 80IC - in favour of assessee.
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