C I T vs. M/S IMPEL FORGE AND ALLIED INDUS. LTD.

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ITA/543/2008HC Punjab & HaryanaPHHC01080546200805 December 2008Author: MR. JUSTICE L.N. MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal did not raise any substantial question of law. The Court reasoned that Section 80IB of the Act requires income to be derived from business referred to in its sub-sections. The Revenue did not dispute that the assessee's business fell within these sub-sections. The Court observed that it makes no difference for the purposes of Section 80IB whether the assessee manufactures for itself or for others. The Tribunal's view was supported by the bare language of the statute and was also in line with the Delhi High Court's decision in CIT v. Northern Aeromatics Limited, (2005) 196 CTR (Delhi) 479. Therefore, the appeal was dismissed.

What were the facts?

The Revenue (Commissioner of Income Tax I, Ludhiana) appealed under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT's order, dated 18.10.2007, pertained to assessment year 2001-02 and concerned M/s Impel Forge and Allied Industries Limited, Ludhiana (the assessee). The assessee, engaged in manufacturing and trading of tractor and auto parts, and also performing job work, claimed deduction under Section 80IB of the Act. The Assessing Officer had partly allowed this claim. The CIT(A) upheld the assessee's plea, and the ITAT affirmed this decision. The amount in dispute is not explicitly stated.

What were the issues?

1. Whether, on the facts and in law, the ITAT was justified in holding that deduction under Section 80IB is permissible on income derived from processing activities, as processing activities do not constitute manufacture of a product? The Revenue's contention was that while the assessee might be entitled to deduction under Section 80IB for income from its own manufacturing, such deduction was not admissible for job work performed for others. The Revenue did not argue that the assessee's business itself did not fall under the relevant sub-sections of Section 80IB. The Assessee's arguments are not explicitly recorded, but their plea was upheld by the CIT(A) and the Tribunal.

Which sections of the Income-tax Act were involved?

Section 80IB,Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 5.12.2008 The Commissioner of Income tax I, Ludhiana -----appellant Vs. M/s Impel forge and Allied Industries Limited, Ludhiana --Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE L.N.MITTAL Present: Mr. Rajesh Sethi, Sr. Standing Counsel for the revenue. Adarsh Kumar Goel,J.

1.

The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (in short, ‘the Act’) against the order of the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’, Chandigarh passed in ITA No.316/CHANDI/2005 dated 18.10.2007, for the assessment year 2001-02, proposing to raise following substantial question of law:- “Whether on the facts and in law, the Hon’ble Income Tax Appellate Tribunal was justified in holding that deduction under section 80IB is permissible on income derived from processing activities as processing activities do not constitute manufacture of a product?”

2.

The assessee is engaged in manufacturing and trading of tractor and auto parts and also doing job work of similar nature. It claimed deduction under section 80IB of the Act and income from job work, which was partly allowed by the Assessing Officer. On appeal, the CIT(A) upheld the plea of the assessee, which has been affirmed by the Tribunal.

3.

We have heard learned counsel for the revenue.

4.

Only contention raised on behalf of the revenue is that the assessee may be entitled to deduction under section 80IB of the Act in respect of income derived from its own manufacturing but the said deduction was not admissible for the job work done for others.

5.

Reference to section 80IB of the Act shows that only requirement for its applicability is deriving of income from business referred to in sub sections 3 to 11, 11A and 11B of the Act, apart from other conditions with which we are not concerned. It is not the case of the revenue that the business of the assessee does not fall under sub sections 3 to 11, 11A or 11B of the Act. The assessee is at liberty to do manufacture for itself or for others, which makes no difference for purposes of Section 80IB of the Act. The Tribunal has also relied upon similar view taken by Delhi High Court in CIT v. Northern Aeromatics Limited, (2005) 196 CTR (Delhi) 479. 6. Since the view taken by the Tribunal is clearly supported by bare language of the Statute, we are unable to hold that any substantial question of law arises.

7.

Accordingly, the appeal is dismissed. (Adarsh Kumar Goel) Judge December 5, 2008 (L.N.Mittal) ‘gs’ Judge 3

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