9911796707
TMI Blog2012 (8) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing of lubricating oil and antistatic conning oil had declared sales of Rs.4,26,61,578/- which included a sum of Rs.86,73,380/- on account of labour charges for manufacturing done on job work basis on behalf of the sister concern, namely, M/s Witmans Industries. The details obtained by the AO from the assessee showed that the sister concern had supplied material worth Rs.43,94,845/- for the manufacturing work. The AO observed that the assessee was doing labour job work for the sister concern and ultimate product was being produced by the sister concern. He also referred to the provisions of section 80IB as per which, for allowability of claim of deduction under section 80IB, it was necessary that the assessee manufactures or produces a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction in relation to the manufacturing done on behalf of the sister concern. The assessee manufactured the goods for sister concern using its own plant and machinery and, merely, because raw material had been supplied by the sister concern it cannot be said that the assessee was not manufacturing as there was no requirement that manufacturing should be done only using own raw material. The assessee also referred the decision of the Mumbai Bench of the Tribunal in the case of Warren Laboratories Ltd (2005) 3 SOT 638 in which it has been held that manufacture of goods done on job work basis is also eligible for deduction u/s 80IB. The assessee further pointed out that in earlier assessment years 2005-06 and 2006-07, the AO had accepted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fier are fatty acids, glycols, vegetables oils, caustic sodas and other additives. The chemical properties of Emulsifier were different from raw materials used for manufacturing the product. Thus, emulsifier was a new and distinct product which was different from the raw material used and therefore the process of production had to be considered as manufacturing in view of the judgment of the Hon'ble Supreme Court in the case of DCIT V/s Pio Food Packers (1980)46 STC 63. The assessee also submitted that the decision of the Tribunal cited by the AO in the case of M/s B.T.Patil and Sons Belgaum (supra) was not applicable as it related to the claim of deduction u/s 80IA in which the Explanation had been added by the Finance Act, 2009 as per whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business of manufacturing of lubricating oil and antistatic conning oil. The assessee had also produced emulsifier for sister concern M/s Witmans Industries Ltd on job work basis for which the raw material had been supplied by the sister concern. The issue is whether the deduction u/s 80IB can be allowed in relation to the profit earned by the assessee from job work activity done on behalf of the sister concern. The deduction u/s 80IB is allowable to an assessee manufacturing or producing article not article being article mentioned in the eleventh schedule. The issue is whether the job work activity can be considered as manufacturing activity and the profit from the same can be allowed as deduction u/s 80IB. The assessee had made a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the intermediate process employed by the sister concern and therefore it is not manufacturing of a new product. In our view, deduction u/s 80IB cannot be disallowed only on the ground that the product by the assessee has been used as a raw material by the sister concern. In case the product is a distinct commercial product different from the raw materials used by the assessee, the claim has to be disallowed. The Ld. DR submitted that the assessee had not given full details before the AO to show that the emulsifier is a different and distinct commercial product recognized in the market. The Ld. AR of the assessee had no objection for this limited aspect to be verified by the AO. We, therefore, set aside the order of the CIT(A) and restor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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