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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI RAM LAL NEGI
O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 19.12.2012 is against the order of the CIT (A)-26, Mumbai dated 27.9.2012 for the assessment year 2011-2012.
In this appeal, assessee raised five grounds in toto. Ground nos. 1, 3, 4, 5 are general in nature. Considering the general nature, the said grounds are dismissed as such. The only ground left for our adjudication is Ground no.2 and the same is as follows:- “2. On the facts and circumstances of the case and in law, the Ld CIT (A) erred in upholding the action of the AO in denying deduction u/s section 80IB in respect of income from interest, job work charges and sundry balances written off aggregating to Rs. 27,12,300/- claimed by the appellant.” 3. Briefly stated relevant facts of the case are that the assessee is engaged in the business of „manufacturer of polymer granules from polymer waste‟. Assessee filed the return of income declaring the total income of Rs. 3,36,63,132/-. Assessee has been claimed deduction u/s 80IB of the Act for many years in the past. During the assessment proceedings for this AY, AO found that the assessee received interest receipts, job work receipts and sundry balances written off to the P & L Account and claimed deduction u/s 80IB of the Act in respect of the said receipts. AO denied the benefit of deduction u/s 80IB of the Act and refused the relatable profits. Aggrieved, assessee carried the matter in appeal before the first appellate authority.
During the proceedings before the first appellate authority, after considering the submissions of the assessee on the AO‟s denial of deduction on the said three receipts, CIT (A) dismissed the same and upheld the decision of the AO as per the discussion given in para 4.2 of the impugned order. Again aggrieved with the said decision of the CIT (A), assessee is in further appeal before the Tribunal.
During the proceedings before us, Ld Counsel for the assessee elaborated the above facts relating to deduction u/s 80IB of the Act and submitted that the assessee is entitled to deduction especially in respect of job work charges and sundry balances written off. Regarding the allowability of deduction on the interest earned from the Fixed Deposits (FDs) from the banks, Ld Counsel for the assessee fairly mentioned that the issue is now decided against the assessee by the Tribunal for the AY 2008- 2009 vide dated 1.2.2013. Para 4 of the said Tribunal‟s is relevant in this regard.
On hearing both the parties on this issue and on perusal of the said decision of the Tribunal in assessee‟s own case for the AY 2008-2009 (supra) dated 1.2.2013, we are of the opinion that the issue relating to the allowability of deduction on the interest should be decided in favour of the Revenue and against the assessee . Regarding the allowability of deduction in respect of job work charges, Ld Counsel for the assessee brought our attention to para 5 of the said Tribunal‟s order (supra) and submitted that on the similar issue, the Tribunal held in favour of the assessee and affirmed the allowability of deduction on the job work charges u/s 80D. While deciding the issue in favour of the assessee, Tribunal relied on the judgment of the Hon‟ble Delhi High Court in the case of Sadhu Forging Ltd (2011) 336 ITR 444 and others. For the sake of completeness of this order, the said prara 5 is extracted as under:- “5. Assessee has shown small miscellaneous income on account of miscellaneous sales at Rs. 2,819/-. The Hon‟ble Delhi High Court in the case of Sadhu Forging Ltd (2011) 336 ITR 444 has held that sale of scrap / labour charges and job work charges are allowable as deduction u/s 80IB of the Act. Similar view has been expressed in the case of CIT vs. Impel Forge & Allied Industries Ltd (2010) 326 ITR 27 (P & H). In this case, the Hon‟ble Punjab & Haryana High Court has held that the assessee was engaged in manufacturing and trading of tractor and auto parts and also doing job works of similar nature. The assessee was at liberty to do manufacture for itself or for others, which makes no difference for the purposes of section 80IB of the Act. Accordingly, deduction on account of job work charges was allowed by the Punjab & Haryana High Court under section 80IB. Again in the case of CIT vs. Metalman Auto P. Ltd (2011) 336 ITR 434 (P & H) has allowed deduction u/s 80IB on job work charges and on sale of scrap. Accordingly, I direct the Assessing Officer to allow deduction u/s 80IB on sale of scrap as well as on account of job work charges at Rs. 1,09,800/-.”
We have also gone through the other order of the Tribunal in the case of Add. CIT vs. M/s. Narendra Plyplast in (AY 2008-2009) dated 19.12.2014, wherein one of us (AM) is a party to the said order, and find, as per the discussion given in para 6 of the said order, job charges are held eligible for deduction u/s 80IB of the Act. The income from job charges held as income derived from industrial undertaking as per the provisions of section 80IB vide the said para 6 of the cited Tribunal‟s order (supra). Referring to the another order of the Tribunal in the assessee‟s own case for the AY 2008-2009 in ITA No.6225/M/2009 (AY 2005- 06), dated 23.7.2010, Ld Counsel for the assessee mentioned that the issue was decided against the assessee in respect of the job charges and the same is due to the fact that there was none to represent the assessee on the scheduled date. The Tribunal for that year passed the order exparte therefore, the said ratio for the AY 2005-06 should not be ignored.
On perusal of the said order of the Tribunal and also the cited judgment of the Hon‟ble Delhi High Court in the case of Sadhu Forging Ltd (supra), we find that it is now a settled law that the job charges earned by the assessee job works executed using the plant and machinery and building of the assessee amounts to manufacturing. Therefore, relying on the decision of the Tribunal in the case of M/s. Narendra Plyplast (supra) as well as the cited judgment of the Delhi High Court, we decide the issue in favour of the assessee.
Finally, regarding the balances written off, it was demonstrated before that the balances in question were offered as income of the assessee and they relates to the sales and other manufacturing activities. We have also perused the order of the Tribunal in the assessee‟s own case for the AY 2008-2009 (supra), wherein para 6 of the said Tribunal‟s order is relevant in this regard. Vide the said para 6, the Tribunal discussed the issue and find that the said balances written off stands covered by the