TMI Blog2010 (2) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... by the manufacturing activity of the assessee and the profit earned from the non-manufacturing activity is not entitled for the deduction under section 80-IB, then the assessee wants to find out new alternative to avail deduction under section 80-IB for which the Tribunal cannot be party, assessee not allowed to reallocate the expenses and thereby recompute the profit of the manufacturing activity and non-manufacturing activity, appeal of the assessee dismissed. - IT Appeal No. 500 (Hyd.) of 2009, - - - Dated:- 11-2-2010 - G.C. Gupta, Chandra Poojari, JJ. C. Subramaniyam for the Appellant H. Phani Raju for the Respondent ORDER Chandra Poojari, Accountant Member:- 1. This appeal preferred by the assessee is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee. He thus held that the assessee is not a small scale industrial undertaking and hence, is not eligible for claiming deduction under section 80-IB of the Act. Without prejudice to the above, he further observed that the assessee would be entitled to claim such deduction if it is engaged in industrial activity as envisaged in sub-section (2) of section 80-IB. From verification of details furnished by the assessee, he found that the assessee has declared loss from its manufacturing division and the profits earned by undertaking contract works was netted with the loss of manufacturing division. He thus noted that the assessee has claimed such deduction in respect profit actually earned from the contracting division. Since the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HDPE pipes and the execution of contract laying of pipes is incidental to the manufacturing activity of the assessee. According to assessee counsel, manufacturing of pipes and laying of the pipes are inter-related. As such the profit derived from contract is having direct nexus with the industrial undertaking and eligible for under section 80-IB deduction. For this purpose he relied on the order of the Hyderabad Bench in the case of Asstt. CITv. Bio Tech Medicals (P.) Ltd. (19 DTR 157) wherein held that when the assessee being an industrial undertaking carried on the job work by utilizing the very same machinery and labour, job work charges have a direct nexus with the manufacturing activity of the assessee, hence, it is derived from the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While preparing this, it can be noted from there that certain common expenses like salaries and wages administrative and financial expenses have not been bifurcated between these two. In view of the above, he submitted that the methodology adopted by the Assessing Officer and approved by the CIT(A) is not correct, the same needs to be reworked for which the Hon'ble Bench is requested to give necessary directions in this regard. He also filed a revised statement showing the bifurcation of expenses between the manufacturing activity and non-manufacturing activity. 6. On the other hand the Departmental Representative submitted that the assessee is having no profits from manufacturing activity and also the allocation expenses between the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying the pipes was a works contract, it was no different from any other works contract which were done on the spot. The laying of pipes does not leads to generation or manufacture of any new article or product. There was no production of any new article or articles. We place reliance on the judgment of Hon'ble Supreme Court in the case of CIT v. N.C. Bhudharaja and Co. [1993] 204 ITR 412. Also we place reliance on the judgment in the case of CITv. Sterling Foods [1995] 213 ITR 851 (Bom.) wherein held that unless the new commodity or article emerges as a result of processing it cannot be said that manufacturing or production of articles. In our, opinion the laying of pipes cannot be considered as an integral part of the activity of industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before us the assessee is not able to point out the specific mistake crept in the statement filed before the Assessing Officer and without pointing out the specific error; the assessee wants to revise the statement reallocating the expenses. In our opinion, this is after-thought. The authorities when they give a finding that there is no profit earned by the manufacturing activity of the assessee and the profit earned from the non-manufacturing activity is not entitled for the deduction under section 80-IB, then the assessee wants to find out new alternative to avail deduction under section 80-IB for which the Tribunal cannot be party. Accordingly, we are of the opinion at this stage, we cannot allow the assessee to reallocate the expenses a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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