ACIT 2(1)(1), MUMBAI vs. BHARAT PETROLEUM CORPORATION LTD, MUMBAI

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ITA 17/MUM/2015Status: DisposedITAT Mumbai22 July 2016AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was covered by the Hon'ble Bombay High Court's decision in the assessee's own case, which held that bottling of LPG constitutes manufacture or production. Therefore, the CIT(A)'s decision allowing the deduction was affirmed.

What were the facts?

The assessee, Bharat Petroleum Corporation Ltd., claimed deduction under Section 80IB for its LPG bottling plants. The Assessing Officer denied this claim, stating that bottling gas into cylinders is not a manufacturing activity. The CIT(A) allowed the deduction, relying on previous High Court and Tribunal decisions.

What were the issues?

Whether the activity of bottling LPG into cylinders constitutes manufacturing or production for the purpose of claiming deduction under Section 80IB of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80IB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI

Before: SHRI G.S. PANNU & SHRI AMARJIT SINGH

For Appellant: Shri J.D. Mistry
For Respondent: Shri A.K. Kardam
Hearing: 18/07/2016Pronounced: 22/07/2016

The captioned appeal by the Revenue is directed against the order of CIT(A)-4, Mumbai dated 10.10.2014, pertaining to the Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing Officer dated 30.01.2014 under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

In this appeal, Revenue has raised the following Grounds of appeal:

2 M/s. Bharat Petroleum Corporation “2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee company is eligible for deduction u/s 80IB of the IT Act, in respect of its LPG Bottling Plants by relying on the decision in the case of Hindustan Petroleum Corporation Ltd. in of 2012 order dated 07.03.2013 ignoring the fact that Department has not accepted the said decision and filing of SLP against the said decision has been authorized.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that bottling of gas into gas cylinders is a production activity for the purpose of claiming deduction u/s 80IB, ignoring the fact that no new product comes into existence in this process.”

3.

In brief, the relevant facts are that the respondent-assessee is a public sector undertaking under the administrative control of Ministry of Petroleum and Natural Gas, engaged in the business of refining of crude oil and marketing of petroleum products. For the Assessment Year 2010-11, it filed a return of income declaring income of Rs.3144,97,27,771/- which was subject to a scrutiny assessment whereby the total income was assessed at Rs.3204,06,28,290/-. One of the areas of difference between the assessee and the Revenue related to the claim of deduction u/s 80IB of the Act amounting to Rs.28,27,888/- with respect to the profits of LPG bottling plant. Pertinently, the Assessing Officer denied the claim on the ground that the activity of filling gas into cylinders did not constitute manufacturing and that the LPG bottling plants were a part of refining activity.

4.

Before the CIT(A), assessee pointed out that the Hon'ble Bombay High Court in assessee’s own case for Assessment Year 1992-93 (ITA No. 612 of 2001) and Assessment Year 1993-94 (ITA No. 613 of 2001) dated

3 M/s. Bharat Petroleum Corporation 3.5.2013 has allowed the claim of deduction u/s 80IB of the Act holding that bottling of LPG is manufacture or production. Assessee also pointed out that in subsequent assessment years of 1994-95, 1995-96, 1996-97, 1997-98, 1998-99 and 1999-2000 the Tribunal has also allowed assessee’s claim for deduction u/s 80IB of the Act. Following the aforesaid precedents, CIT(A) has allowed the claim of assessee.

5.

Before us, it was a common point between the parties that the judgment of the Hon'ble Bombay High Court in assessee’s own case for Assessment Years 1992-93 & 1993-94 dated 3.5.2013 (supra) fully covers the controversy and the same continues to hold the field. As a consequence, we find no reason to interfere with the decision of CIT(A), which is hereby affirmed. Thus, on this aspect, appeal of the Revenue fails.

6.

Resultantly, appeal of the Revenue is dismissed.

Order pronounced in the open court on 22nd July, 2016.

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