TMI Blog2015 (12) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation Ltd., the bills of construction of the factory sheds and the details of payment of electricity charged to Tripura State Electricity Corporation Ltd. The appellant has produced the bills purchase of the machinery installed at the premises, comprising drilling machines, welding machines, motors, gas cutting machines.: air compressor, etc. It produced details and bills of purchase of raw material comprising nuts, bolts, rods M.S. angles, channels, HR sheets metal etc. As rightly pointed out by the Assessee there was no requirement under Section 80 IC that the Assessee had to employ 10 or more workers directly. In the circumstances there appears to have been no justification for the AO to disallow the deduction under Section 80IC of the Act for the AYs in question. - Decided in favour of assessee - ITA 972/2015, ITA 967/2015, ITA 490/2015 - - - Dated:- 17-12-2015 - S. Muralidhar And Rajiv Shakdher, JJ. For the Appellant : Mr. Kamal Sawhney, Senior Standing counsel with Mr. Raghvendra K. Singh, Mr. Shikhar Garg and Mr. Sharad Agarwal, Advocates For the Respondent : Dr. Rakesh Gupta with Ms. Poonam Ahuja and Mr. Rohit Kumar Gupta, Advocates ORDER CM N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order dated 30th December 2008 noted that the AY 2006-07 was the first year in which claim for deduction under Section 80IC of the Act had been made by the Assessee. In response to a query as to how it could claim to be a manufacturing unit, the Assessee submitted the purchase order dated 30th December 2004 issued to it by M/s. Dharmpal Prem Chand Limited ('DPCL). The subject of the purchase order was fabrication, supply, shot blasting, painting and erection of steel structures for picking line and HR coil storage building (G-H H-1 Boys) of our steel project at Agartala. It was further stated in the purchase order as under: With reference to your offer and subsequent discussions with you on the above subject, we are pleased to place the order on you for fabrication, supply, shot blasting, painting and erection of 660 MT +/- 2% of Steel structures including roofing and wall cladding for Pickling Line and HR Coil Storage buildings of our steel project at Agartala. The details of the building covered under your scope shall be as follows : Total tonnage of 660 MT +/- 2% of fabricated steel structures shall be sand/shot blasted and given two coats of epoxy primer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n manufacture of articles and was, therefore, eligible for deduction under Section 80IC of the Act. 13. The Assessee s return for AY 2008-09 was picked up for scrutiny and notice under Section 143 (2) was issued on 6th August 2009. A reference was made in the AO s order dated 31st December 2010 to the fact that on 9th March 2010 a survey operation under Section 133 of the Act was conducted at the Faridabad, Chandigarh and Agartala branches of the Assessee. By this time, the Chandigarh and Faridabad branches had been closed. During the course of the survey, the Assessee voluntarily offered undisclosed stock of the value of ₹ 1,01,17,491 for taxation. 14. In the order dated 31st December 2010 for AY 2008-09, the AO concluded that during the course of survey operation, additional evidences have been gathered which prove that the Assessee was not a manufacturer of certain goods or articles which saleable independently in the open market, but it was mere a contractor for M/s. Dharampal Prem Chand Limited who was establishing a Tobacco factory unit in Agartala. The AO accordingly reached the same conclusion regarding ineligibility of the Assessee to claim deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that two things are clear, viz., (i) that for a company to be an industrial company within the meaning of the above said provision it is enough if the company is carrying on manufacturing of goods, and (ii) that the application of the Explanation would arise only in a case where the company is not mainly an industrial company; in such a case, if the income of that company from manufacture of goods exceeds 51 per cent, it would be treated as industrial company. The decision in N.C. Budharaja (supra) was distinguished since in that case the question was whether the construction of a dam in Orissa would be taken to be manufacturing of an article or thing. The view taken by the Orissa High Court that the activity of constructing a dam was an industrial activity was, in those circumstances, reversed by the Supreme Court. The said decision is, therefore, distinguishable in its application to a situation where there is a finding of fact that a manufacturing activity is being carried out by an Assessee. 20. As far as the present case is concerned, the fabrication of steel as undertaken by the Assessee, which involves several of the processes does fall within the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT and the CIT (A) failed to take note of the survey report. 24. The Court finds that the Assessee furnished the requisite documents to demonstrate that it carried on the aforementioned manufacturing activity at its Agartala unit. The Assessee produced during the assessment proceedings as well the appellate proceedings copies of the excise returns filed by it before the Central Excise authority at Agartala, the bills of machinery and of raw material purchased, details of freight and cartage for purchase of raw material, and details of job work paid. Documents to show that the Assessee paid ₹ 1.66 crores for the fabrication work carried out with the help of contract labour were produced. Further, the documents of registration with the VAT, CST, Service Tax, and Central Excise Authorities were furnished. The Assessee also produced details of the rent paid to the Tripura Industrial Development Corporation Ltd., the bills of construction of the factory sheds and the details of payment of electricity charged to Tripura State Electricity Corporation Ltd. The appellant has produced the bills purchase of the machinery installed at the premises, comprising drilling machines, wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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