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TMI Blog2015 (12) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... os. 397/Del/2010 and 2210/Del/2012 for the Assessment Years ('AYs') 2006-07 and 2008-09 respectively. ITA Nos. 490 of 2015 is directed against the impugned order dated 13th February 2015 passed by the ITAT in ITA No. 227/Del/2013 for the AY 2010-11. 6. The common question that is sought to be urged in three appeals concerns the correctness of the order of the ITAT, upholding the order of the Commissioner of Income Tax (Appeals) ['CIT (A)'] holding that the Assessee was eligible to the deduction under Section 80IC of the Act and deleting the disallowance ordered by the Assessing Officer (AO) for the AYs in question. 7. The facts leading to the filing of these appeals are that the Assessee, Khanna Brothers, is a partnership firm. The Assessee filed its return for the AY 2006-07 on 31st October 2006 declaring a total income of Rs. 24,17,034. The Assessee claimed deduction of Rs. 22,58,647.72 in the computation of income on account of net profit from the Agartala Branch (Tripura) of the Assessee. The Assessee submitted the profit and loss (P&L) account for the Agartala Branch for the period 1st April 2005 to 31st March 2006, the balance sheet as on 31st March 2006 and the auditor's r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stered with the Central Excise Authorities for manufacturing of excisable goods. It was stated that the land/shed had been taken from Tripura Industrial Development Corporation Limited in a notified industrial area. For the purpose of sales tax registration, the 'business' was indicated as 'manufacturing'. The unit was also registered under the Factories Act as a steel manufacturer. It was claimed that the fabrication work was in fact done in the premises of the Assessee at Agartala. 10. The AO observed that that the tax auditor had not given any description of finished goods as "no such article or thing manufactured or produced by the Assessee could be ascertained." The AO referred to the decision of the Supreme Court in Commissioner of Income Tax v. N.C. Budhraja & Co. (1993) 204 ITR 412 (SC) and held that the fabrication work done by the Assessee and erected at the factory site of the contractee cannot be called manufacture. A reference was made to the decision of the Supreme Court in M/s. Builders Association of India v. Union of India (1994) 209 ITR 877 (SC) where it was held that construction of a dam, building, bridge or road and the like cannot be brought w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious mechanical processes and transformed into a 'something else'. Accordingly, it was held that the Assessee was entitled to deduction under Section 80IC of the Act. 16. Against the above orders of the CIT (A) for the AYs 2006-07 and 2008-09, the Revenue filed appeals before the ITAT. By the impugned order dated 14th June 2013, the ITAT confirmed the order of the CIT (A) and dismissed the Revenue's appeals. 17. For AY 2010-11, a separate set of orders were passed by the AO and the CIT (A). The Revenue preferred another appeal before the ITAT, i.e., ITA No. 227/Del/2013. By the impugned order dated 13th February 2015 the ITAT followed its earlier order and thereafter affirmed the order of the CIT (A). 18. The first issue that is required to be addressed is whether the Assessee undertook any manufacturing activities in the units at Agartala during the AYs in question. As noticed hereinbefore, the Assessee undertook the work of fabrication of steel for use by DPCL. Apart from fabrication, the work involved shot/sand blasting, painting and erection of the steel structures. The detailed fabrication drawings were provided by DPCL. 19. In Commissioner of Income Tax v. Beehive Enginee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed with grass and shrubs with a deserted look and had an old rusted shed. In the other unit some scrap materials like, angles, bars etc. were lying around in a scattered manner on the ground. The survey team had noted that unused corroded winch machines were lying in one corner of the compound. The question raised was whether it was possible to produce/manufacture goods worth Rs. 8 crore in an FY with only three regular employees and few machines. 22. The CIT (A) has, in his order for AY 2008-09, taken note of the explanation offered by the Assessee that in one unit no work was being carried out for several years. As far as the second unit was concerned, the last order was completed sometime in July 2009 and thereafter no work was done. It was pointed out by the Assessee that this explained why the survey team in March 2010 did not find any manufacturing activity underway in the said unit. Further under Section 80IC of the Act, there was no requirement that the Assessee had to directly employ a certain number of workers. In fact the manufacturing and fabrication work was done with the help of contract labour and documents had been furnished to show that labour work charges agg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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