TMI Blog2013 (6) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... as simplicitor removed the confusionn as in the latest notification, larger area has been shown as a industrial estates which includes khasra number 262 MI Selokni. The area according to the new notification includes the areas which were already notified plus Central Hope down. The learned counsel for the assessee has placed on record report of the Patwari, wherein he has submitted that khasra No. 262 MI is part of khasra No. 262. AO was considering khasra No. 262 and 262 MI as independent khasra number. The copy of the site plan available in the revenue record, exhibiting the geographical location of each killa number and khasra number was also filed before the GIT(Appeals) along with patwari's report and this document has been placed before us also. Therefore, convinced that there is no confusion about the location of assessee's units. They are situated within the notified area. The basic conditions for allowability of deduction under sec. 80-IB are also similar. Thus AO except pointing out these two objections has not pointed out any other objection in assessment year 2004-05 also. Therefore, no error in granting deduction under sec, 80-IB/80-IC. In favour of assessee. Dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2010, 23.04.2012 and 02.07.2012 passed for assessment years 2004-05, 2006-07 to 2009-10 respectively. Since common issues are involved in all the appeals, therefore, we heard them together and deem it appropriate to dispose of them by this common order. 2. The first common ground involved in all these appeals relates to allowability of deduction under sec. 80-IB/80-IC to the assessee in all these years. The facts on all vital points are common, therefore, for the facility of reference, we are referring the facts mainly from assessment years 2004-05 and 2006-07. 3. The brief facts of the case are that assessee filed its return of income in assessment year 2004-05 on 1st of November, 2004 declaring an income of Rs. 238,82,550. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Income-tax Act, 1961 was issued on 04.08.2006. This notice was duly served upon the assessee and in response to the notice Shri Sanjay Jaswani, Assistant Vice-President (Finance) appeared on behalf of the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer that assessee has claimed a deduction of Rs. 34,50,925 under sec. 80-IB of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification is bearing No. 177 dated 28.6.2004. The scope of the industrial area was enhanced in the subsequent notification issued by the CBDT on 26.4.2006 vide Notification No. 115. The CBDT has notified Central Hope Town and Camp Road in the list of areas notified as forming part of the industrial estates. Selakni Industrial Area does fall under the revenue estate of Hope Town, which is a bigger revenue estates. Learned First Appellate Authority has relied upon the report of Patwari i.e. State Revenue Official of Uttrakhand. 6. With the assistance of learned representatives, we have gone through the record carefully. In order to avail deduction under section 80-IC, an assessee has to fulfil the conditions contemplated in the section. Therefore, before considering the respective contentions as well as the relevant material, it is imperative upon us to take note of the relevant statutory provisions. The relevant part of section 80-IC, thus reads as under: "Special provisions in respect of certain undertakings or enterprises in certain special category States. 80-IC. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits and gains for five assessment years commencing with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains". 7. Sub-section (2) of section 80-IC of the Act provides that provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80-IA shall, so far as may be, applied to the eligible undertaking or enterprises under this section. Thus, we deem it fit to note down sub-section (5) and sub-sections (7) to (12) of section 80-IA also. They read as under: "Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying on the eligible business to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom. (11) The Central Government may, after making such inquiry as it may think fit, direct, by notification in the Official Gazette, that the exemption conferred by this section shall not apply to any class of industrial undertaking or enterprise with effect from such date as it may specify in the notification. (12) Where any undertaking of an Indian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of amalgamation or demerger (a) no deduction shall be admissible under this section to the amalgamating or the demerged co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of the assessee, therefore, we do not deem it necessary to make elaborate discussion. At the time of hearing, it has been pointed out that there is no violation to any other conditions contained in sub-rules (5) to (12) of section 80-IA of the Act (extracted supra). 9. The primary issue required to be determined, is when assessee came into existence and whether geographically it is located with the notified area contemplated in sub-clause (ii) of sec. 80-IC(2)(a) or (2)(b). 10. From perusal of the record, we find that learned Assessing Officer has not objected about period of starting of manufacture. The assessee has also submitted that Unit 1 was started in December 2003 and Unit No. 2 was started in 2004. The objections of the Assessing Officer are that assembling do not constitute manufacturing and assessee's units are not located in notified area. Let us examine these two factors. 11. The next step which is essential for examining the case of an assessee about the admissibility of deduction under sec. 80-IC is whether it manufactures or produces any article or things. According to the Assessing Officer, expression "manufacture" has been defined in section 2(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine". Thus by process of manufacture something is produced and brought into existence which is different from that, out of which it is made in the sense that the thing produced is by itself a commercial commodity capable of being sold or supplied. The material from which the thing or product is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties. (See Dy. CST (Law), Board of Revenue (Taxes) Coco Fibres [1992] Supp. 1 SCC 290). 4. Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour arid manipulation. Naturally, manufacture is the end result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one class to another. There may be several stages of processing, a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. Whenever a commodity undergoes a change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I as well as investment allowance under sec. 32AB. The controversy arose whether conversion of jumbo rolls into small sizes amounts to manufacture or production, eligible for deduction under sec. 32AB or deduction under sections 80-HH and 80-I of the Income-tax Act, 1961/ Hon'ble Supreme Court has held that this activity amounts to manufacture or production. Thus, we think it is not necessary to recapitulate and recite all the decision on the construction expression "manufacture". But suffice to say that core of all the decisions of the Hon'ble Supreme Court or Hon'ble High Court is to the effect that broadly manufacture is a transformation of an article, which is commercially different from the one which is converted. It is a change of one object to another for the purpose of marketability. It brings something into existence, which is different from that, which originally existed. The new product is a different commodity physically as well as commercially. The Hon'ble Court also explained broader test to determine whether manufacture is there or not, it is propounded that when a change or series of changes are brought out by application of processes which take the commodity to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Patwari, wherein he has submitted that khasra No. 262 MI is part of khasra No. 262. Learned Assessing Officer was considering khasra No. 262 and 262 MI as independent khasra number. The copy of the site plan available in the revenue record, exhibiting the geographical location of each killa number and khasra number was also filed before the Learned GIT(Appeals) along with patwari's report and this document has been placed before us also. Therefore, we are convinced that there is no confusion about the location of assessee's units. They are situated within the notified area. 16.A Learned Assessing Officer has not raised any other objection. The basic conditions for allowability of deduction under sec. 80-IB are also similar. Learned Assessing Officer except pointing out these two objections has not pointed out any other objection in assessment year 2004-05 also. Therefore, after taking into consideration the orders of the Learned CIT(Appeals) in all the assessment years, we do not find any error in them on the issue of granting deduction under sec, 80-IB/80-IC of the Income-tax Act, 1961. We reject all these grounds of appeal in all the years. 17. Now, we take the remaining g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, details of parties to whom advances were given and how these advances were directly linked with the business of the assessee, learned CIT(Appeals) has allowed the deduction. 19. Learned DR relied upon the order of the Assessing Officer. On the other hand, learned counsel for the assessee relied upon the order of the Learned CIT(Appeals). 20. On due consideration of the facts and circumstances, we find that learned Assessing Officer neither discussed the nature of amounts claimed by the assessee nor discussed how they are not connected with the business of the assessee. In a finding running into few lines, he simply observed that the assessee failed to explain how conditions of sec. 36(l)(vii) read with sec. 36(2) are fulfilled. On the other hand, Learned CIT(Appeals) has observed that in assessment year 2006-07, the total claim made by the assessee has two components, one of the components is bad debt written off. With regard to this issue, we are of the view that and after 01.04.1989, assessee is not supposed to give demonstrative evidence that debt has gone bad. It is sufficient if the amounts are written off in the books. A reference can be made to the decision of Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the addition made on account of disallowance of excess depreciation claimed on computers. In brief, the issue is whether the depreciation on the computer peripheral like UPS, data drive etc. was to be allowed @ 35% or 60%. Learned Assessing Officer has granted the depreciation @ 35% including additional depreciation under sec. 32(l)(iia) of the Act. 26. On appeal, Learned CIT(Appeals) has allowed the depreciation @ 60%. The issue in dispute is squarely covered in favour of the assessee by the decision of Hon'ble Delhi High Court rendered in the case of CIT v. BSES Rajdhani Power Ltd. rendered in ITA No. 1266 of 2010. Hon'ble Delhi High Court has further considered this issue in CIT v. CITI City Maruti Finance Ltd., in ITA Nos. 1712 and 1714 of 2010. The ITAT has also considered this aspect in the case of ITO v. Samiran Majumdar [2006] 98 ITD 119 (Kol.). The learned counsel for the assessee in his written submissions has placed on record a larger number of judgments as well as the citation on this issue. Taking into consideration the order of the Learned CIT(Appeals) and the submissions made by the respe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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