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TMI Blog2012 (10) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... . The CIT(A) confirmed the order of the AO on the ground that the AO has rightly rejected the claim of the assessee u/s 80-IA of the Act. 3. Aggrieved, the assessee has filed the present appeals before the Tribunal. The learned counsel for the assessee submitted that the claim of deduction for the years under consideration comes under section 80-IB of the Act and therefore according the section 80-IB the assessee's case may be decided. 4. On the other hand, the learned DR fairly accepted that this case can be considered under section 80-IB of the Act. 5. Brief facts of the case are that the assessee is a company engaged in the business of Information Technology Enabled Services. The assessee had filed a return of income for the year under consideration admitting total income at Nil after claiming the deduction u/s 80-IA/80-IB of the Act. The return of income filed was processed u/s 143(1) and subsequently scrutiny assessment was made u/s 143(3) of the Act and disallowed the deduction claimed u/s 80-IA/80-IB of the Act. On appeal, the learned CIT(A) confirmed the order passed by the AO. The matter was carried in appeal before the Tribunal. The Tribunal directed the AO to re-exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and or hardcopy to the suppliers/authors. On examining the activity of the assessee company, it formats manuscripts into PDF and computer files which is used for printing. The formatted PDF files/CDs contain the manuscripts in typeset form. The programme contained in the CDs could not be said to have been manufactured by the assessee company. Logically therefore the formatted matter in the CD of the author cannot be stated to be amounting to manufacture for production of an article or thing. He denied the claim of deduction made by the assessee and added the amounts to the total income of the assessee. 6. The assessee carried the matter before the CIT(A). Before the learned CIT(A) the assessee has re-iterated the same submissions which he had made before the Assessing Officer. The learned CIT(A) after considering the submissions of the assessee has observed that in the assessee's case, "....the raw material and the so-called final product is one and the same, i.e. contents of the subject. The assessee receives the manuscripts which are either typed or hand written ones. On receipt, the assessee converts them into digital form by typing or scanning in to the computer. Thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not bringing anything new. Receiving a manuscript in theform of papers or book and converting the same into a hard disc or electronic media is not amounting to manufacturing an article or thing. The learned DR argued that the case laws relied on by the learned counsel for the assessee have no application to the facts of the present case. 9. We have heard both the sides, perused the records and gone through the orders of the authorities below. The only issue for our consideration is whether the activities carried on by the assessee come within the purview of sub-clause (3) of section 80- IB of the Act or not. As per section 80-IB(3) to claim deduction "assessee should manufacture or produce any article or thing". In the light of the above section the assessee has to prove that it is manufacturing or producing an article or thing. In the present case, the assessee receives from its customers manuscripts which are either typed or handwritten ones. After receiving the same, the assessee converts the same into typed form by typing or scanning into the computer. Thereafter the same is edited and formatted into desired pages and also certain drawings are also scanned and redr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be said that the assessee is a 'manufacturer'. Thus the above case law relied upon by the learned counsel for the assessee has no application to the present case. 13. In the decision of the Hon'ble Delhi High Court relied on by the learned counsel for the assessee, namely, CIT v. M/s. HLS India Ltd. (335 ITR 292) (Del), the facts are that production of log by way of wireline logging was the concerned activity. Wireline logging assists the mineral oil concerns primarily to ascertain as to whether there is any gas or oil in the well, and if there is such presence, then its availability at what depth and the quantity of such reserves, and whether such gas or oil can be extracted. In those facts and circumstances, the Hon'ble Delhi High Court has held that if an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word "manufacture" applies. Even from another perspective, which forms the second limb of the assessee's argument, the case tilts in favour of the assessee. The above decision of the Hon'ble Delhi High Court, wherein the facts are different, has no application to the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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