TMI Blog2011 (6) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... , MR. JUSTICE M.L. MEHTA, JJ. For Appellant: Ms.Rashmi Chopra with Mr.Chandramani Bhardwaj, Advocates For Respondent :Dr.Rakesh Gupta with Mr.Ashwani Taneja, Ms.Poonam Ahuja, Ms.Rani Kiyala and Mr.Johnson Bara, Advocates M.L. MEHTA, J. 1. Both these appeals arise out of the orders of the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal ) dated 30th April, 2010 pertaining to the assessment year 2004-2005. 2. During the relevant assessment year, the assessee has shown gross-receipts, which apart from goods sales of ₹ 1,55,26,740/- also included scrap sales of ₹ 79,45,411/-, labour charges of ₹ 20,82,637/- and job work charges of ₹ 11,86,895/- and claimed to be a part of the profit for the purposes of deduction under Section 80 IB of the Income Tax Act, 1961 (for short the Act ). The Assessing Officer held that as per the provisions of Section 80IB, which emphasize profit and gains derived from such industrial undertaking , the assessee‟s industrial undertaking set up for the purpose of manufacture of steel, forging, transmission gears and parts and accessories of motor vehicles, cannot be permitted deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,96,172/-. The assessee preferred appeal against the order of the CIT(A), which came to be allowed by the impugned order by the Tribunal, who held that job works/labour charges income received by the assessee, by utilizing its plant and machinery installed in the undertaking, gave rise to income which had a direct nexus with the assessee‟s industrial undertaking, and thus entitled to claim of deduction under Section 80IB of the Act. The Revenue is in appeal against this part of the impugned order in ITA No.167/2011. 5. ITA 167/2011 was admitted on the following substantial questions of law: (i) Whether income received from job work/labour charged on work done based on material supplied by the customers qualifies for deduction under Section 80IB of the Income Tax Act, 1961. (ii) Whether income received from job work/labour charges on work done on material supplied by the customers is profits derived from industrial undertaking to be eligible for deduction u/S 80IB of the Income Tax Act, 1961. 6. ITA 351/2011 stands admitted on the following substantial question of law: (i) Whether on the facts and in the circumstances of the case, the ITAT erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry by itself. It was noted, and rightly so, that each of the above process could be done in separate industrial undertaking, whereas assessee had undertaken all these processes in its units. The issue was also that the assessee was doing these works on job basis for other undertakings, by getting the raw material from them. When the assessee was entitled to claim exemption in respect of income derived from such processes doing for itself, we do not see any reason as to why he would not be entitled to so merely because the raw material component was being supplied by other customers and for whom the assessee was doing the job. In fact, deduction under Section 80-IB is given on the profits derived from the manufacturing process, being undertaken by the assessee which qualify for deduction. 10. The heat treatment is one of the processes through which the forgings are given the desired temperature and then cooled in different manner which results in changing the mechanical properties desired by the customers. We are given to understand that there are various industrial undertakings which are specialized only in the heat treatment processes. Learned counsel for the assessee inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter, the activities of the assessee in relation to raw or untreated crankshafts being subjected to heat treatment, etc., is definitely a manufacturing activity entitling it to claim investment allowance under S.32A. 11. In the case of India Cine Agencies v. CIT, 308 ITR 98 (SC), the conversion of jumbo rolls of photographic films into small flats and rolls in desired sizes amounts to manufacture or production eligible for deduction under Sections 80HH and 80I. In another case titled CIT v. Oracle Software India Ltd., 320 ITR 546 (SC), it was observed that if an operation/process renders commodity or article fit for use for which it was otherwise not fit, the operation/process falls within the meaning of the word manufacture in the instant case, the assessee undertakes an operation which renders a blank CD fit for use for which it was otherwise not fit by the duplication process undertaken by the assessee, the recordable media which is unfit for any specific use gets converted into the programme which is embedded in the master media and, thus, blank CD gets converted into recorded CD by an intricate process Said supplicating process changes the basic character of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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