TaxTMI 
TaxTMI 
2010 (4) TMI 810
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....hether conversion of printed aluminium sheets into pilferage proof caps, is a process which can be called a manufacturing activity. The learned Commissioner of Income-tax (Appeals) had held in favour of the assessee that this constituted a manufacturing activity and therefore, the assessees qualified for deduction under section 80-IB of the Income-tax Act, 1961 (in short, the Act). According to the Revenue, the learned Commissioner of Income-tax (Appeals)'s decision was contrary to the ruling of the hon'ble Apex Court in the case of Sacs Eagles Chicory v. CIT [2002] 255 ITR 178 and that of the hon'ble jurisdictional High Court in the case of CIT v. Taj Fire Works Industries [2007] 288 ITR 92 (Mad). 3. As is clear from the ground itself, th....
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...., threads were formed for proper fixation on the bottle mouth and edges of the caps were frilled ; (iv) The knurled pilfer proof cap were fixed with wads; and (v) The pilfer proof caps were packed into various quantities and were dispatched. 6. The learned Commissioner of Income-tax (Appeals) held in favour of the assessee. 7. Now before us, the learned Departmental representative strongly assailed the order of the learned Commissioner of Income-tax (Appeals). According to him, the work done by the assessee would not qualify to be called "manufacture" and hence deduction under section 80-IB of the Act could not be given to it. Reliance was again placed on the decision of the hon'ble Apex Court in the case of Sacs Eagles Chicory (supra) ....
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....ies (supra) and that of the hon'ble Apex Court in the case of Sacs Eagles Chicory (supra) are misplaced. In the former case, the question before the hon'ble jurisdictional High Court was whether production of fire works on job work basis, where the assessee was producing crackers from raw material supplied by another concern, would satisfy the test of an industrial undertaking. The hon'ble jurisdictional High Court held that it was an organised activity of production and the assessee was entitled for deduction under sections 80HHC and 80-I of the Act. We are afraid that this decision would not help the Revenue in any manner for the reason that only up to the printing of aluminium sheets, an outside agency was engaged, whereafter all the pro....
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.... it was bound to deduct for payments made, deduction was only 2.20 per cent and hence it had to make suo motu disallowance. The Assessing Officer was of the opinion that disallowance needed to be made only proportionately, i.e., in other words, proportionate to the tax actually deducted at source. Therefore, he scaled down the disallowance to Rs. 33,390. The assessee objected to this before the learned Commissioner of Income-tax (Appeals) who was of the opinion that the issue was purely academic since the assessee was eligible for deduction under section 80-IB of the Act for 100 per cent of the profits. Therefore, according to him, there was no logic in the action taken by the Assessing Officer for making such a type of adjustment. He, ther....