Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (2) TMI 1498 - AT - Income TaxDeduction u/s 80IC - profits relating to outsourced process - sale of products got manufactured from others through job work - Manufacturing of SS Flats - assessee was in the business of manufacturing stainless steel flats - gross total income declared by the assessee for the year included profit and gains from its industrial undertaking at Kala Amb,Himachal Pradesh - HELD THAT:- After considering the facts of each case, the courts ruled that it is not essential for the assessee to carry out the entire manufacturing activity itself, for the purpose of claiming deduction on the profits earned thereon and even if a part of the activity is outsourced or for that matter even if the whole manufacturing activity is outsourced, but carried on under the supervision and control of the assessee, it would still tantamount to manufacturing being carried out by the assessee itself, making it eligible to claim deduction of profits earned thereon. Entire manufacturing activity of SS flats was under the supervision and control of the assessee itself and took place either in its own premises or was outsourced as per its own specification - it can be said without any hesitation that it was the assessee who was indulging in the manufacturing of SS flats - it is not the case of the Revenue that the assessee was buying SS flats from an outside party and then selling it. Therefore, for the aforesaid reasons, we hold that the assessee undertook the manufacturing of SS flats and was entitled to claim deduction on entire profits earned from the same. Assessee was only required to “manufacture” SS Flats to be eligible to claim deduction u/s 80IC,which since we have already held so above,the assessee was entitled to claim deduction of entire profits earned on the same u/s 80IC of the Act. For the said reason also we are not in agreement with the contention of the Ld. DR that the profits should be apportioned to different activities involved in manufacturing of a product and deduction u/s 80IC thereafter be restricted to profits on manufacturing carried out by the assessee only While allowing deduction on part of the profits earned by the assessee, the Revenue admits that the assessee is involved in manufacturing activity. Also admittedly the assessee has been allowed deduction of entire profits in earlier years in identical set of facts. DR has not controverted this fact contended by assessee. Therefore also there is no reason to restrict the deduction to the extent of manufacturing activity carried out by the assessee in the impugned year. DR applied the provisions of section 80 IA(10) - For the applicability of section 80IA(10) it has to be demonstrated that there was an arrangement between the two parties which resulted in the inflation of profits in the case of the assessee. In the absence of both the conditions specified under section 80IA(10) we hold that the said provision of has been incorrectly applied by the Ld. CIT(Appeals) to the facts of the case and the addition made by applying the same is therefore grossly incorrect. Manufacturing of SS Flats was carried out by the assessee and thus it was entitled to claim deduction of entire profits earned on the same u/s 80IC
|