M/S. PLASTO PACK INDUSTRIES,NEW DELHI vs. ACIT, NEW DELHI

PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the assessee against the impugned order dated 19.03.2015, passed by Ld. Commissioner of Income Tax (Appeals)-XIII, New Delhi for the quantum of assessment passed u/s.143(3) for the Assessment Year 2010-11. In the grounds of appeal

13. New Delhi is against law and facts on the file in as much as he was not justified in upholding the addition of the Assessing Officer in disallowing a sum of Rs.22,18,091/- claimed u/s.80IC of the Income Tax Act, 1961 on the ground that the appellant firm is not at all producing or manufacturing any article or thing eligible for claiming deduction u/s.80IC of the Income Tax Act, 1961.”

2. At the outset, ld. counsel for the assessee submitted that the same reasoning the disallowance u/s.80IC was made by the Assessing Officer in the earlier years, which issue had come up for consideration before this Tribunal in the Assessment Years 2006-07 to 2009-10, wherein the assessee’s claim for deduction u/s.80IC has been allowed after detailed discussion. Thus, the issue involved is squarely covered in favour of the assessee.

3. On the other hand, learned DR has strongly relied upon the order of the ld. CIT(A).

before Himachal Pradesh Authorities. In the assessment order, it has been noted by the Assessing Officer that team of Income tax official has visited the assessee’s premises and godowns where the business activities of the assessee was being carried out. On inspection the said team observed that no manufacturing activity is done by the assessee firm. Statement of employee, Shri Girish Chander and Shri Masood Ali Beg, Production/Quality Manager was recorded on oath relevant extract of which has been incorporated in the impugned assessment order. From the said statement, he observed that the assessee is only engaged in packaging for M/s. Gillette India Ltd. and it is only doing a job work. Thus, he held that assessee is not engaged in any manufacturing activity, and therefore, deduction u/s.80IC is not applicable. In response to show cause notice, the assessee has explained the entire process of manufacturing and the agreement between the assessee and the M/s. Gillette India Ltd. and how such packaging involves mechanical process. However, the Assessing Officer rejected the assessee’s contention that it is not any kind of manufacturing activity.”

4.1 In the earlier years, ld. CIT(A) had noted that this issue was inquired in detailed by the ld. CIT(A) in the Assessment Year 2005-06, wherein the detailed inquiry was made through AO and remand report was sought for and after detailed discussion and on the basis of remand report assessee’s claim for deduction u/s.80IC was allowed. Following the same precedence and discussion, the ld. CIT(A) in all the years had allowed the assessee’s claim. However, in this year, the ld. CIT(A) has simply held that the assessee is not producing any new product and hence it cannot be said that manufacturing of article or thing is done to avail the benefit of Section 80IC.

4.2 First of all, we find that such an observation of the ld. CIT(A) is wholly untenable because once in the earlier years right from the Assessment Years 2005-06 to 2009-10 it has been accepted that assessee is involved in manufacturing and same products are manufactured in this year also, i.e., plastic packaging materials, then without any change in facts the claim of deduction u/s.80IC cannot be disallowed that article manufactured by the assessee does not amount to manufacturing. We find that the Tribunal had dealt and discussed this issue after observing and holding as under: - 8. We have heard the rival submissions, perused the relevant materials and findings given in the impugned orders as well as material referred to at the time of hearing, the assessee firm had undertaken a substantial expansion in the Assessment Year 2005- 06 and in that year the issue for claim of deduction u/s.80IC had come up for consideration. From the perusal of the order of ld. CIT(A) for the Assessment Year 2005-06, we find that the machine which were added in Assessment Year 2005-06 for the purpose of manufacturing of packaging material and doing the job work were as under: Machinery 1. Box Strapping Machine 2. Cutting Machine 3. Drilling Machine 4. Forming Machine 5. Pad Printing Machine 6. Sharing Machine

whose purchase bills have been filed now and examined. Thus, from the aforesaid facts the assessee has filed evidences regarding the substantial expansion of plant and machinery which can be considered at the appellate stage in view of the evidences filed during the appeal and examined u/s 250(4) of the IT Act. Submitted for further consideration in appellate proceedings".

operation for which we have numerous working machines We also upgrade and recondition such machines and sell.

List of different types of RAW MATERIALS used for making Tools, Dies, Moulds & Machines are like aluminium, epoxy's, wooden blocks and sheets, MDF sheets, different type of rubber sheets (natural and synthetic), marking pins, etc. All types of electrical, electronic, pneumatics, hydraulics and other types of instruments, articles, parts, accessories and consumables required for the above machines, including heaters, motors, cables, air blowing and lighting accessories. Each die needs different activities to be done and no specific process can be defined.

We have also entered into a one stop operation of such activities on behalf of our customers whereby we pack their products or carryout their activity of installation as per their requirement to complement our above productions. In this case, where most of the customers have taken a single bill for complete production and also separate bills for providing material and separate bill for execution of packaging Also, off late there have been such operations, where the materials were provided by the customer or their approved vendors and we only did the technical operation of handling their material and converting it into a sellable proposition.”

S. No. Particulars Amount Amount (in Rs.) (in Rs.) (a) Manufacture of packaging material 1,36,58,621/- (b) (i) Packaging of goods on job work 63,43,995 basis

(b)(ii) Sale of packing material with job 18,31,202 81,75,197 work (c) Manufacture of dies/moulds 6,53,000 Total 2,24,86,818

Apart from that, it is undisputed fact that assessee firm has been categorized under the Central Excise Tariff Act as a manufacturer, because it manufactures dyes and moulds for making and designing the packaging materials. It has also granted approval from District Industries Center, Solan. All those details of approval, certificates and notification issued in the case of the assessee have been placed in the paper book. The entire facts and material which has been placed before the Assessing Officer has not been rebutted and Assessing Officer has tried to draw inference that mere packaging does not amount to manufacturing. If assessee is making packaging material as per the requirement of the product with the aid and help of various kinds of machines as incorporated above and it is also registered as manufacturer under the various laws, then such a general inference based on statement of employees cannot be given much credence. Thus, we do not find any substantial merits in the grounds raised by the Revenue that assessee is not engaged in the manufacturing of packaging material, therefore, the finding of ld. CIT(A) is uphold and the grounds raised by the Revenue is dismissed.