TMI Blog2021 (12) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... ision, taking note of the present day outsourcing of various activities, we need to give a meaningful expression to assessee engaged in the manufacturing process , to hold that so long as the effective involvement of the assessee is there in the form of quality control or supply of material and dyes for the manufacture of parts of the grinders or machinery, even in the case of assembling done through job work, the assessee would be entitled to have the benefit under Section 80IA of the Act. In the circumstances, guided by the decision of RAMALINGAM [ 1994 (11) TMI 14 - MADRAS HIGH COURT] we hereby rejecting the Revenue's appeal, thereby, confirming the order of the Tribunal. Addition of bad debts written off - conditions laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'D' Bench, in I.T.A. No.1220/Mds/2008 relating to the Assessment Year 2005-06. 3.On 30.11.2009, the aforesaid appeal was admitted on the following substantial questions of law:- 1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee is eligible for relief under section 80IA of the Act, even though the assessee was not engaged in the process of manufacture, but only assembling the parts procured from others? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in allowing the bad debts written off in the books of accounts, even though the conditions laid down under section 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re or processing of goods under the Wealth Tax Act. This Court pointed out that, ............... There should be no misapprehension that engaged in manufacturing postulates the assessees direct involvement in the manufacture and that it may not be necessary that the assessee himself should be personally engaged, but it is enough that he employs his own labourers. It is suggested that the processing leading to the manufacture should be in some sort of permanent establishment with a number of employees engaged in regular work . 10. This Court further pointed out to the decision reported in 59 ITR 699 CIT v. MANMOHAN DAS as well as [1957] SCR 157 DHARANGADHARA CHEMICAL WORKS LTD v. STATE OF SAURASHTRA and held that, We thus ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant materials available in the case. The question that fumigation was done by another party is immaterial or irrevalent for the purpose of considering whether the assessee is engaged in the manufacturing activity. The question is whether the activity including the one relating to fumigation given to another party to make the goods to be exported as a marketable commodity, amounted to processing of goods, has to be considered on the basis of the facts available. Thus, the Apex Court pointed out that question as to whether the assessee was carrying on process of goods has to be looked at by taking into consideration the different activities carried on by the assessee, which resulted in making the goods fit for export and how far the cumul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. The above Tax Case (Appeals) are dismissed. No costs. Following the aforesaid decision, the first substantial question of law is answered in favour of the assessee and against the Revenue. 5.As regards the second substantial question of law, the provisions of section 36(1)(vii) of the Income Tax Act, 1961 provide for allowance of an amount representing bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year. 6.In the present case, for the previous assessment year 2000-01, the assessee had taken over debts of ₹ 25,68,81,743 for a sum of ₹ 22,10,00,000/- relating to several parties and they have accounted the interest received on these loans amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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