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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND SHRI I.C. SUDHIR SHRI I.C. SUDHIRSHRI I.C. SUDHIR SHRI I.C. SUDHIR
PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP These appeals by the assessee for the assessment year 2008-09 & 2009-10 are directed against the order of learned CIT(A)-XXI, New Delhi dated 18th October, 2012.
The only ground raised in these two appeals by the assessee is against the denial of deduction u/s 80IC of the Income-tax Act, 1961. The Assessing Officer had disallowed the deduction on the only ground that the receipt is mainly from job work charges which cannot be considered to be manufacturing activity.
At the time of hearing before us, it was pointed out by the learned counsel that the issue is squarely covered by the decision of ITAT in assessee’s own case for assessment year 2006-07 wherein the deduction u/s 80IC was disallowed on the identical ground. We find
2 ITA-6060 & 6061/Del/2012 that in assessment year 2006-07, vide order dated 27th March, 2015, the ITAT decided the issue in favour of the assessee with the following finding :-
“7.4 We find force in the submission of the ld AR that explanation after section 80IA(13) is not applicable to section 80IC. This explanation which related to applicability of section 80IA to a works contract, was inserted by Finance Act, 2007 w.e.f. 01.04.2000 and has been amended by Finance Act (No.2), 2009. While provisions of section 80IA(5) and 80IA(7) to (12) are applicable to section 80IC, the said explanation has not been made applicable to section 80IC. The legislature’s intention on applicability of section 80IC to job work charges is thus clear. We find that in the audit report as per the statute read with section 80IA(7) (Form No.10CCB) w.r.t. the unit/undertaking namely M/s Mahaan Healthcare, the Chartered Accountants has clearly mentioned that he has examined the balance sheet, profit and loss account of the industrial undertaking which were in agreement with the books of account maintained. As such separate books of account of the undertaking have been maintained by the assessee company. Unit wise balance sheet and profit account were filed vide letter dated 15.12.2004 of the assessee. There is no requirement under law for maintaining separate books of account for manufacturing and non-manufacturing activities of an undertaking. Where assessee company carries on both manufacturing and non-manufacturing activity in its undertaking the Assessing Officer ought to have allowed deduction under section 80IC of the Act on some logical, rational and scientific basis as all the applicable conditions for allowability of deduction under section 80IC of the Act have been met by the said unit of the assessee company.
7.5 In view of the above, we find that ld.CIT(A) has rightly held that the assessee job work charges have to be treated as manufacturing activity, and it is not envisaged u/s 80-IC to maintain separate books of account for manufacturing on his own account and for job work. While an explanation has been added after section 80-IA(13) which states that nothing contained in this section, i.e., section 80-IA shall apply in relation to business which is in the nature of work contract etc. section 80-IC(7) only talks about the application of sub-section (5) and sub-section (7) to (12) of 80-IA. Thus, it appears that there is no denial of 3 ITA-6060 & 6061/Del/2012 deduction u/s 80-IC in case of manufacturing activities in the nature of job works, work contract etc. In the background of the aforesaid detailed discussions and precedents relied upon by the ld.CIT(A) in his order as well as by the assessee, as aforesaid, we are of the view that no interference is called for in the well reasoned order passed by the ld.CIT(A). Hence, we uphold the same by rejecting the grounds no.1, 2 & 3 filed by the Revenue in its appeal.”
Since the issue decided by the ITAT in assessee’s own case in the earlier year and facts are admittedly identical, we, respectfully following the above decision of ITAT in assessee’s own case, direct the Assessing Officer to allow deduction u/s 80IC to the assessee.
In the result, both the appeals of the assessee are allowed. Decision pronounced in the open Court on 28.06.2016.