M/s. Fiberfill Engineers, New Delhi V. ACIT, New Delhi

ITA 1853/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6763 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REHKA VIMAL
• Assessee Lawyers: GAUTAM JAIN ADV P KAMAL
• Section: 142(1); 80IB; 54; 6; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY: JUDICIAL MEMBER ITA NO. 1853/DEL/2015 ASSTT. YR: 2010-11 M/S FIBERFILL ENGINEERS VS. ACIT CIRCLE 38(1), C-9/9574, VASANT KUNJ, NEW DELHI. NEW DELHI-110070. (NEW CIRCLE 63(1),CIVIC CENTRE, NEW DELHI. PAN: AAAFF 6313 P ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN ADV. P. KAMAL ADV. RESPONDENT BY : SMT. REHKA VIMAL DR DATE OF HEARING : 03/02/2016. DATE OF ORDER : 25/02/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 1 4.01.2015 PASSED BY THE LD. CIT(A)-XX, NEW DELHI IN APPEAL NO. 166/20 13-14, RELATING TO A.Y. 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM, COMPRISING OF THREE PARTNERS VIZ. RISHABH KISHORE, MRS. RESHMA KISHORE & MR. A.P. DWIVEDI, HAVING 1/3 RD PROFIT SHARING RATIO EACH, IN THE RELEVANT ASSESSM ENT YEAR WAS 2 ITA 1853/DEL/2015 ENGAGED IN THE BUSINESS OF ASSEMBLING AND UNDERTAKI NG CIVIL CONTRACTS FOR AND ON BEHALF OF GOVERNMENT AND PUBLIC SECTOR UNDER TAKING ETC. IT HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 1,73,00,489/-, INTER ALIA, AFTER CLAIMING DEDUCTION U/S 80-IC OF RS. 1,06,47,2 39/-. THE AO REQUIRED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S 80IC BY FILING FOLLOWING DETAILS- A. DETAILS OF ARTICLE/THINGS MANUFACTURE B. TO PRODUCE DOCUMENTS IN SUPPORT OF MANUFACTURE C. WHETHER SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED IN RESPECT OF THE SAME TO ARRIVE AT THE ELIGIBLE PROFIT OF RS. 1,06,4 7,239/-. D. DELAY IN FILING RETURN VIS A VIS THE CLAIM U/S 80IC . 3. THE ASSESSEE, IN ITS REPLY DATED 26.2.2013 AT SL . NO. (IX) SUBMITTED AS UNDER: '(IX) REGARDING YOUR HONOUR'S QUERY ON DEDUCTION C LAIMED UNDER SECTION 80LC OF THE INCOME TAX ACT, 1961, WE WOULD LIKE TO SUBMIT AS UNDER: 1. THAT THE MANUFACTURING UNIT SET-UP BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AT SITARGANJ, DISTRICT UDHAM SINGH NAGAR, UTTRAKHAND MAINLY MANUFACTURED VARIOUS KINDS OF SIGNAGES/SIGN BOARDS/PANELS AND THEIR COMPONENTS , VARIOUS KINDS OF MS/SS/SHEET METAL FABRICATED STRUC TURES AND FRAMES, ALUMINUM STRUCTURES, CANOPY/BUILDING FA SCIA AND CLADDING COMPONENTS AND PANELS ETC. 2. THAT WE ARE SUBMITTING COPY OF LETTER SUBMITTED WITH EXCISE AUTHORITIES AND UTTARAKHAND VAT AUTHORITIES INTIMATING THEM ABOUT START OF COMMERCIAL PRODUCTIO N ALONG 3 ITA 1853/DEL/2015 WITH FIRST STOCK TRANSFER INVOICE DATED 06.10.2009 WITH COPY OF FORM 'F' OF CENTRAL SALES TAX ISSUED AGAINST THIS S TOCK TRANSFER AS EVIDENCE IN SUPPORT OF COMMERCIAL PRODUCTION HAV ING BEEN COMMENCED IN THE FINANCIAL YEAR ENDING 31.03.2010 ( ANNEXURE 16' TO 21'). 3. THAT THE ASSESSEE HAS MAINTAINED SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF ITS ABOVE MENTIONED MANUFACT URING UNIT FOR ARRIVING AT ELIGIBLE PROFIT OF RS. 1,06,47,239 /-. 4. THE DELAY IN FILING OF RETURN VIZ. A VIZ. CLAIM UNDER SECTION 80IC IS EXPLAINED IN ANNEXURE 22 ENCLOSED HEREWITH. 4. AS REGARDS ASSESSEES CLAIM U/S 80IC FOR NOT BEI NG DENIED ON ACCOUNT OF DELAY IN FILING THE RETURN, THE ASSESSEE PRIMARI LY ADVANCED THREE SUBMISSIONS: (I) THE ASSESSEE HAD FILED A BELATED RETURN OF INCOME U /S 139(4) ON 8.2.2011 AND SECTION 139(4) WAS NOTHING BUT AN EXTE NSION OF SECTION 139(1) AND, THEREFORE, COMPLIANCE WITH THE PROVISION OF SUB-SECTION (4) SHOULD BE DEEMED TO BE DUE COMPLIAN CE OF PROVISION OF SUB-SECTION (1). FOR THIS PROPOSITION, ASSESSEE RELIED ON FOLLOWING DECISIONS: A. CIT VS. MS. JAGRITI AGGARWAL 339 ITR 610, WHEREIN I T WAS, INTER ALIA, HELD THAT THE PROVISION OF SUB-SECTION (4) TO SECTION 139 WAS NOT AN INDEPENDENT PROVISION, BUT RELATES T O THE TIME CONTEMPLATED UNDER SUB-SEC. (1) OF SECTION 139. B. CIT VS. RAJESH KUMAR JALAN 286 ITR 274, WHEREIN IT WAS, INTER ALIA, HELD THAT THE ASSESSEE COULD FULFILL THE REQU IREMENT U/S 54 OF THE I.T. ACT FOR EXEMPTION OF THE CAPITAL GAIN F ROM BEING CHARGED TO INCOME-TAX ON THE SALE OF PROPERTY USED FOR RESIDENCE 4 ITA 1853/DEL/2015 BY FILING RETURN BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETI ON OF THE ASSESSMENT, WHICH EVER WAS EARLIER UNDER SUB-SECTIO N (4) OF SECTION 139. C. HIGH COURT OF BOMBAY VS. TRUSTEES OF TULSIDAS GOPAL JI CHARITABLE & CHALESHWAR TEMPLE TRUST COMMISSIONER O F INCOME TAX. 207 ITR 368. D. CIT VS. KULU VALLEY TRANSPORT CO. LTD. 77 ITR 518 ( SC), , WHEREIN IT WAS, INTER ALIA, HELD THAT SECTION 22(3) , EQUIVALENT TO SECTION 139(4) IS MERELY A PROVISO TO SECTION 22(1) EQUIVALENT TO SECTION 139(1). E. THE ASSESSEE FURTHER REFERRED TO VARIOUS DECISI ONS OF THE TRIBUNAL ON THIS COUNT, NOTED IN AOS ORDER. (II) THE SECOND REASON GIVEN BY ASSESSEE REGARDING LATE FILING OF RETURN WAS THAT IT WAS PREVENTED BY SUFFICIENT CAUS E FROM FILING ITS INCOME-TAX RETURN BEFORE 15.10.2010 AS THE ASSESSEE WAS ENGAGED IN EXECUTING CERTAIN JOB WORK CONTRACTS FOR SIGNAGES FOR THE COMMON WEALTH GAMES, WHICH WERE HELD IN NEW DELHI DURING 3 RD TO 14 TH OCTOBER 2010. IT WAS POINTED OUT THAT THE CONTRACT WAS A MAJOR ONE AND REQUIRED SUBSTANTIAL EFFORTS AND TIME FROM ALL THE PARTNERS AND EMPLOYEES OF THE ASSESSEE TO THE EXTENT THAT ALL OT HER ROUTINE MATTERS HAD TO BE HELD BACK JUST TO ENABLE THE SUCCESSFUL C OMPLETION OF CWG CONTRACT. THE ASSESSEE FURTHER POINTED OUT THAT THE CWG CONTRACT ALSO REQUIRED EXTENSIVE FOLLOW UPS ON THE PART OF THE AS SESSEE EVEN POST THE COMPLETION OF THE GAMES, WHICH IN TURN CONSUMED SUB STANTIAL TIME AND EFFORTS OF THE PARTNERS AND EMPLOYEES. 5 ITA 1853/DEL/2015 (III) THE THIRD REASON ADVANCED BY ASSESSEE ON THIS COUNT WAS THAT UNDER SIMILAR CIRCUMSTANCES, MANY COURTS INCLUDING HONBLE SUPREME COURT, HAVE HELD THAT THE TECHNICAL/ MACHINERY PROV ISIONS RELATING TO SECTIONS WHICH ARE INTENDED TO PROVIDE A BENEFIT TO THE ASSESSEE, SHOULD BE LIBERALLY CONSTRUED. FOR THIS PROPOSITION ASSESSEE HAS RELIED ON FOLLOWING CASE LAWS: - ACIT VS. DHIR GLOBAL INDUSTRIAL (P) LTD. 43 SOT 64 0, WHEREIN IT WAS, INTER ALIA, HELD THAT SECTION 10B(1) IS DIRECT ORY AND NOT MANDATORY AND, THEREFORE, A MARGINAL DELAY OF ONE A ND HALF MONTH IN FILING THE RETURN OF INCOME WAS NOT SUFFICIENT F OR THE REJECTION OF THE ASSESSEES CLAIM U/S 10B(1) AT THE THRESHOLD. - HANSA DALAKOTI V. ACIT (ITA NO. 3352/DEL/2011 DATED 25.1.2012). IN THIS CASE THE ASSESSEES CLAIM U/S 8 0IC WAS ALLOWED BECAUSE ASSESSEE HAD FILED ALL THE SUPPORTING DOCUM ENTS FOR CLAIMING DEDUCTION U/S 80IC BEFORE DUE DATE OF FILI NG OF RETURN BUT THE RETURN WAS FILED LATE. - BAJAJ TEMPO LTD. VS. CIT 196 ITR 188 (SC), WHEREIN IT HAS BEEN, INTER ALIA, HELD THAT PARTICULAR PROVISION IN A TAX ING STATUTE GRANTING INCENTIVES FOR PROMPTING GROWTH AND DEVELOPMENT SHO ULD BE CONSTRUED LIBERALLY. - POLYHOSE INDIA PVT. LTD. VS. DEPARTMENT OF INCOME T AX 30.06.1911 IN ITA NO. 122/MDS/2011). - RAMBAGH PALACE HOTEL (P) LTD. VS. DCIT 2.9.2012 87 ITD 163 (DELO.). 5. ON THE FIRST ASPECT OF DETAILS OF ARTICLE/ THING S MANUFACTURED, AS CONTEMPLATED U/S 80IC, THE AO AFTER CONSIDERING THE MANDATE OF SECTION 6 ITA 1853/DEL/2015 80IC OBSERVED THAT ASSESSEE HAD NOT EXPLAINED ABOUT THE ARTICLE OR THINGS MANUFACTURED AND MANUFACTURING PROCESS. HE POINTED OUT THAT ASSESSEE HAD VIDE REPLY DATED 16.11.2012 HAD MERELY STATED THAT THE FIRM WAS INVOLVED IN MANUFACTURING ACTIVITIES OF PRODUCTS FOR SELF USE R EQUIRED FOR EXECUTION OF CONTRACTS BEING EXECUTED BY IT. HE FURTHER OBSERVED THAT THE AUDITORS COMMENTED IN THE TAX AUDIT REPORT THAT THE ASSESSEE HAD NOT MAINTAINED THE STOCK RECORDS AND IN ABSENCE OF SUCH RECORDS IT WAS NOT PRACTICALLY POSSIBLE FOR THE AUDITORS TO GIVE THE QUANTITATIVE DETAILS. 6. THE AO FURTHER POINTED OUT THAT THE CLOSING STOC K IN HAND VALUED IN TOTAL AT RS. 40214495/- RELATED TO THE VARIOUS SITE S AND THE HEAD OFFICE AT NEW DELHI AND OTHER BRANCHES AND THERE WAS NO CLOSING S TOCK OF FACTORY AT SITARGUNJ. 7. FURTHER, THE AO REFERRED TO SALE INVOICE/ STOCK TRANSFER WHEREIN DESCRIPTION OF ITEM CLAIMED TO BE MANUFACTURED WAS AS UNDER: (1) SIGNAGE TYPE-1 TOP BOARD FULLY ASSEMBLED WITH RF BOARD SIZE FROM 1284.479MM & (2) VERTICLE POST WITH MOUNT ING CLAMPS. TOP CAP AND BASE PLATE ASSEMBLED SIZE 4350. 76 MM . 8. CONSIDERING ALL THE ABOVE ASPECTS THE AO CONCLUD ED THAT ASSESSEE WAS MERELY ASSEMBLING VARIOUS MATERIALS LIKE ALUMINUM, STEEL SHEETS, FIBERGLASS ETC. TO FORM PANELS, SIGNBOARDS, AND SIGNAGES AND RELATED PRODUCTS. THE AO DID NOT ACCEPT THE ASSESSEES CLAIM THAT IT WAS MAN UFACTURING ARTICLES AS 7 ITA 1853/DEL/2015 CONTEMPLATED U/S 80IC, AS IT DID NOT BRING INTO EXI STENCE ANY NEW ARTICLE OR SUBSTANCE. 9. AS REGARDS THE ASSESSEES CLAIM THAT THE DEDUCTI ON U/S 80IC SHOULD BE ALLOWED AS RETURN WAS FILED BELATEDLY U/S 139(4), T HE AO REFERRED TO VARIOUS CASE LAWS RELIED UPON BY ASSESSEE AND POINTED OUT T HAT A BARE PERUSAL OF SECTION 80AC MAKES IT VERY CLEAR THAT THE RETURN OF INCOME SHOULD HAVE BEEN FILED WITHIN TIME LIMIT SPECIFIED U/S 139(1). HE RE LIED ON VARIOUS CASE LAWS MENTIONED IN HIS ORDER, WHEREIN IT WAS HELD THAT RE TURN HAS TO BE FILED BEFORE DUE DATE SPECIFIED U/S 139(1) FOR CLAIMING DEDUCTIO N U/S 80IB. 10. THE THIRD REASON FOR DENYING THE DEDUCTION U/S 80IC WAS THAT ASSESSEE COMPANY PRODUCED SEVERAL LEDGERS OF ITS UNIT AT SIT ARGUNJ BUT NO SEPARATE P&L A/C AND BALANCE SHEET HAD BEEN BROUGHT ON RECOR D TO JUSTIFY THE PROFIT CLAIMED. HOWEVER, THE AO DID NOT GO IN DETAIL ON TH IS COUNT, INTER ALIA, OBSERVING THAT SINCE THE ASSESSEES CLAIM WAS NOT A DMISSIBLE FOR THE ABOVE TWO REASONS VIZ. THE ASSESSEE WAS NOT MANUFACTURIN G ANY ARTICLE OR THING AS CONTEMPLATED U/S 80IC AND THE RETURN OF INCOME WAS ALSO BELATED, THEREFORE, THIS ASPECT DID NOT REQUIRE ANY FURTHER INVESTIGATI ON. AO, ACCORDINGLY, DISALLOWED THE ASSESSEES CLAIM FOR DEDUCTION U/S 8 0IC OF RS. 1,06,47,239/-. 11. BEFORE LD. CIT(A) THE ASSESSEE, INTER ALIA, SUB MITTED THAT NONE OF THE NOTICES ISSUED TO THE ASSESSEE BY THE AO REQUIRED H IM TO JUSTIFY HOW THE 8 ITA 1853/DEL/2015 ACTIVITIES AMOUNTED TO MANUFACTURE OR PRODUCTION. I T WAS FURTHER POINTED OUT THAT DOCUMENTS WERE PRODUCED IN THE FORM OF BILLS F ROM UTTRAKHAND POWER CORPORATION, REGISTRATION UNDER CENTRAL CAPITAL INV ESTMENT SUBSIDY SCHEMES AND DOCUMENTS FROM POLLUTION CONTROL BOARD TO SHOW THAT IT WAS CARRYING OUT MANUFACTURING ACTIVITIES. LD. CIT(A), AFTER CON SIDERING THE ASSESSEES SUBMISSIONS, REQUIRED IT TO PRODUCE FOLLOWING DOCUM ENTS: - LIST OF RAW MATERIAL CONSUMED - THE MANUFACTURING PROCESS BEING CARRIED OUT - THE FINAL PRODUCT THAT IS PRODUCED - ANY INTERMEDIARY PRODUCT PRODUCED - UNDER WHICH HEAD AS PER THE EXCISE LAW IS THE FINAL PRODUCE PRODUCED - STOCK DETAILS AS PER EXCISE PROVISION - COPY OF TENDER RECEIVED BY THE APPELLANT - COPY OF RETURN AND AUDIT REPORT WHEN THE UNIT WAS L OCATED AT GRATER NOIDA. - DETAILS OF LABOUR EMPLOYED, THEIR SKILLS AND SALARY /WAGES - COPY OF INVOICE OF THE FINAL PRODUCTS. 12. THE ASSESSEE REPLIED VIDE LETTER DATED 27.10.20 14, WHICH HAS BEEN REPRODUCED BY LD. CIT(A) IN HIS ORDER. FROM THE DE TAILS FURNISHED BY THE ASSESSEE, LD. CIT(A) IN PARA 5.4.2 OBSERVED AS UNDE R: 5.4.2 THE PROCESS UNDER TAKEN BY THE APPELLANT WAS EXPLAINED AS UNDER:- I) PROCUREMENT OF MATERIAL, BOTH IMPORTED AND INDIG ENOUS II) FABRICATION OF STRUCTURAL AS PER DRAWINGS GIVEN IN THE TENDER FOR EACH ITEM. 9 ITA 1853/DEL/2015 III. GALVANIZING, POWDER COATING OF PAINTING OF T HE STRUCTURAL MEMBERS IN THE WORKSHOP OF VENDOR. IV) CUTTING, BENDING TO SHAPE AND FABRICATION ACM A S PER GIVEN DRAWINGS, V) PRE DISPATCH INSPECTION BY THIRD PARTY INSPECTIO N AT THE VENDOR PREMISES VI) TRANSPORTATION VII) ERECTION AT SITE VIII) POST INSTALLATION INSPECTION BY THIRD PARTY I NSPECTING (TPI) AT SITE INSTALLATION IX) INSPECTION BY THE OIL COMPANY ENGINEER AT SITE OF INSTALLATION THUS AS PER ABOVE THE PROCESS UNDER TAKEN BY THE AP PELLANT IS GALVANIZING, PAINTING, CUTTING AND BENDING. EVEN AS PER THE CD AND PHOTOGRAPHS PROVIDED BY THE APPELLANT THE WORK APPARENT FROM THEM IS CUTTING OF PIPES TO SIZE, TRANSFER OF THESE PIPES TO THE SITE, WHERE THE WORK OF PREPARING THE FRAMEWORK IS UNDERTAKEN AND ON THIS FRAME WORK THE SHEETS WHICH HAVE BEEN PAINTED AND ON WHICH DIFFERENT LOGOS HAVE BEEN PAST ED ARE FITTED. IT IS APPARENT THAT THE ENTIRE UNIT WHICH I S FIXED IN A PETROL PUMP ETC. CANNOT BE TRANSPORTED FROM THE APPELLANT FACTORY TO THE SITE. THE APPELLANT WAS THEREFORE ASKED TO SPEC IFY !HE PROCESS THAT ARE CARRIED OUT AT THE FACTORY AND AT THE CONTRACTEE PREMISES AND ALSO TO' SPECIFY THE MACHINERY THAT H AS BEEN INSTALLED/PURCHASED BY HIM . AS PER THE DETAILS PRO DUCED BY THE APPELLANT MOST OF THE MACHINES PURCHASED BY HIM REL ATED TO CUTTING, WELDING, DRILLING AND BENDING THE APPELLAN T CLAIMED THAT THE PRODUCTION OF SIGNAGES, STRUCTURE IN MS/SS /ALUMINUM, FABRICATION OF ACP PANELS FOR RETAIL VISUAL IDENTIT Y ELEMENTS AND ALLIED COMPONENTS FOR OIL MARKETING COMPANIES WERE CARRIED OUT AT THE FACTORY PREMISES. AT THIS SITE THE INSTA LLATION OF SUPPLIED SIGNAGES/RVI WERE DONE TO THE SATISFACTION OF THE END USER. THE PERUSAL OF THE PURCHASE BILLS SHOWED THAT THE A PPELLANT HAD PURCHASED FABRICATED MS GRILL FROM VARIOUS PARTIES IN NEW DELHI AND THIS FABRICATED GRILL WAS TRANSPORTED TO FIBER FILL 10 ITA 1853/DEL/2015 ENGINEERS, PLOT NO.2, DAULATABAD ROAD, INDUSTRIAL A REA), GURGAON. THE SALE BILLS HOWEVER SHOW TRANSPORTATION OF SIGNAGE'S AND VERTICAL POSTS FROM SITAR GANJ TO THE APPELLANT'S PREMISES AT VASANT KUNJ, NEW DELHI. THUS FROM THE P ERUSAL OF THE DOCUMENTS IT CANNOT BE STATED WITH CONVICTION - WHETHER ANY PROCESS IS BEING CARRIED OUT AT THE APP ELLANT'S PREMISES AT SITARGANJ - THE PURCHASES ARE IN FAVOUR OF THE FACTORY AT GURGA ON. - EVEN IF IT IS PRESUMED THAT WORK IS CARRIED OUT A T SITARGANJ FACTORY THEN THE NATURE OF THE WORK IS MAINLY CUTT ING, WELDING AND GALVANIZING . - THE POST AFTER CUTTING TO SIZE ARE TRANSPORTED TO T HE PARTIES SITE WHERE THE FINAL PROCESS IS CARRIED OUT. - THE PRODUCT BEING TRANSPORTED CANNOT BE SAID TO BE A DIFFERENT PRODUCT FROM THE ONE PURCHASED BY THE APP ELLANT. THUS A NEW AND DISTINCT COMMODITY CANNOT BE STATED TO HAVE BEEN PRODUCED OR MANUFACTURED BY THE APPELLANT. 13. LD. CIT(A) AFTER CONSIDERING THE PROVISIONS OF SECTION 80IC, INTER ALIA, OBSERVED THAT ALL JUDICIAL PRONOUNCEMENTS ESTABLIS H THAT THE COMMON PRODUCT AFTER UNDERGOING SOME SORT OF PROCESS SHOU LD BE A COMMERCIALLY DIFFERENT PRODUCT HAVING DIFFERENT CHARACTER, NAME AND USE. AFTER CONSIDERING VARIOUS CASE LAWS, LD. CIT(A) REJECTED THE ASSESSEE S CLAIM OBSERVING AS UNDER: IT IS THUS REQUIRED TO BE EXAMINED IN THE CASE OF THE APPELLANT WHETHER A NEW ARTICLE OR THING HAS BEEN MANUFACTURE D TO ENABLE IT TO MERIT THE REQUISITE DEDUCTION UNDER SECTION 8 0IC(2) OF THE ACT. THE ASSESSING OFFICER HAS CLAIMED THAT THE PRO CESS ADOPTED BY THE APPLICANT CANNOT BE TERMED AS MANUFACTURING PROCESS AS NO NEW PRODUCT HAS COME INTO BEING. RELIANCE IS PLA CED ON THE DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. LUCKY MINERALS PVT. LTD. 226 ITR 245. 11 ITA 1853/DEL/2015 APPLYING THE ABOVE TESTS, IF THE PRESENT CASE IS AN ALYZED, IT EMERGES THAT IN CASE OF THE APPELLANT, THE ORIGINAL ARTICLE I.E. PIPES/POSTS, AS THE PHOTOGRAPHS FURNISHED INDICATE, DO NOT UNDERGO A SUBSTANTIAL CHANGE AND A COMMERCIALLY DIF FERENT PRODUCT WITH DISTINCTIVE NAME, CHA SE DOES NOT COME INTO EXISTENCE. SOME OF THE METAL ATTACHMENTS ARE BEING MANUFACTURED AT THE GURGAON UNIT. EVEN THE MACHINER Y INSTALLED AT THE SITARGANJ FACTORY REFLECTS THE ACTIVITY OR THE LACK OF IT BEING UNDERTAKEN AT THE UNIT. THE TOTAL MACHINERY I NSTALLED IS A MERE EYE WASH TO CLAIM MANUFACTURING ACTIVITIES AT THE SITARGANJ FACTORY. THE NATURE OF THE EMPLOYEES, THEIR QUALIFI CATION, THE WAGES BEING PAID TO THEM, AND WORK ASSIGNED TO EAC H ALSO SHOW THAT THE MANUFACTURING ACTIVITY CLAIMED 0 BE C ARRIED OUT AT SITARGANJ UNIT IS A MERE EYE WASH. ESI AND PF IN RE SPECT OF SITARGANJ FACTORY SEPARATELY HAS NOT PRODUCED. IT I S ONLY IN 2012 FOR THE YEAR 2011 THAT THE APPELLANT HAS FILED NOMI NAL ROLL OF EMP10YEES AND EMPLOYMENT IN ESIP, SITARGANJ. THUS T HERE IS NO EVIDENCE OF EMPLOYEES AT SITARGANJ FOR THE YEAR UNDER CONSIDERATION. ON THE BASIS OF THE FACTS PRESENTED, THE CONCLUSION' THAT INEVITABLY FOLLOWS IS THAT THE APP ELLANT CANNOT BE SAID TO HAVE UNDERTAKEN BUSINESS ACTIVITIES WHIC H AMOUNT TO MANUFACTURE OR PRODUCTION OF AN ARTICLE AND THEREFO RE DOES NOT MERIT REQUISITE DEDUCTION UNDER SECTION 80-IC(2) OF THE ACT. IN THE LIGHT OF THE FORE-GOING DISCUSSION AND THE GIVE N SET OF FACTS, THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION UNDER S ECTION 80-IC OF THE ACT, AS IT CANNOT BE SAID TO HAVE MANUFACTUR ED OR PRODUCED ANY ARTICLE OR A THING. THE DECISION OF TH E ASSESSING OFFICER IS, THEREFORE, CONFIRMED. 5.7 WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT HAS ALSO FAILED TO FILE THE AUDIT REPORT WITHIN TIME AND THE REFORE DEDUCTION UNDER SECTION 80LC IS NOT ELIGIBLE TO THE APPELLANT. WITHOUT PREJUDICE TO THE ABOVE EVEN IF ANY HIGHER J UDICIAL AUTHORITY HOLDS A PROCESS CARRIED OUT BY THE APPELL ANT AS MANUFACTURING, THEN TOO THE PERCENTAGE OF A PROCES S CARRIED OUT AT THE SITARGANJ FACTORY IS VERY NOMINAL COMPARED T O THE OVERALL VALUE OF THE PROCESS EVEN IN THAT CASE THE PERCENTA GE OF 80LC ELIGIBLE TO THE APPELLANT SHOULD NOT BE MORE THAN 2 5%. 12 ITA 1853/DEL/2015 14. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFO RE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER IS AGAINST FACTS AND LAW AND IS BASED ON WRONG INTERPRETATIONS OF LAW & FACTS HENCE IS LIABL E TO BE STRUCK DOWN. 2. THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE D ISALLOWANCE OF DEDUCTION U/S OF RS. 1,06,47,239/-. 3. THAT THE LD. CIT(A) HAS ERRED IN CONCLUDING THAT END PRODUCT BEING MANUFACTURED/PRODUCED AT ELIGIBLE UNIT AT SIT ARGANJ FACTORY IS NOT COMMERCIALLY DIFFERENT FROM THE INPU T MATERIALS. THE CONSEQUENT CONCLUSION THAT NO MANUFACTURING ACT IVITY IS BEING CARRIED OUT IS ALSO ERRONEOUS, FACTUALLY INCO RRECT AND IS LIABLE TO BE STRUCK DOWN. 4. THAT THE LD. CIT (A) HAS GROSSLY ERRED IN NOT AD JUDICATING ALL THE GROUNDS TAKEN IN FIRST APPEAL. 5. THAT THE CONCLUSION OF THE LD AO (NOT ADJUDICATE D BY CIT(A)) THAT PROVISIONS OF SEC. SOAC ARE MANDATORY AND NOT DIRECTORY IS ERRONEOUS AND AGAINST JUDICIAL PRONOUN CEMENTS OF VARIOUS BENCHES OF THE TRIBUNAL, COURTS INCLUDING T HE APEX COURT. 6. THAT THE APPELLANT PRAYS FOR LEAVE, TO ADD, ALTE R, AMEND OR VARY ANY OF THE GROUNDS EITHER BEFORE OR AT THE TIM E OF HEARING OF THE APPEAL. 15. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FIRST ISSUE TO BE CONSIDERED IS WHETHER ACTIVITY CARRIED OUT BY THE A SSESSEE IS A MANUFACTURING ACTIVITY OR NOT SO AS TO ENTITLE IT FOR DEDUCTION U/S 80IC. HE REFERRED TO PAGES 96 TO 98 OF PB WHEREIN PROCESS CARRIED OUT BY ASSES SEE IS CONTAINED, WHICH IS REPRODUCED BELOW: 13 ITA 1853/DEL/2015 THE PROCESS OF PROCUREMENT, FABRICATION AND INSTAL LATION OF ALL THE RETAIL VISUAL IDENTITY (RVI) FEATURES CAN BE SU B-DIVIDED AS FOLLOWS: I) PROCUREMENT OF MATERIAL, BOTH IMPORTED AND INDIG ENOUS II) FABRICATION OF STRUCTURAL AS PER DRAWINGS GIVEN IN THE TENDER FOR EACH ITEM. III) GALVANISING, POWDER COATING OF PAINTING OF THE STRUCTURAL MEMBERS IN THE WORKSHOP OF VENDOR. IV) CUTTING, BENDING TO SHAPE AND FABRICATION ACM A S PER GIVEN DRAWINGS . V) PRE DISPATCH INSPECTION BY THIRD PARTY INSPECTIO N AT THE VENDOR PREMISES VI) TRANSPORTATION VII) ERECTION AT SITE VIII) POST INSTALLATION INSPECTION BY THIRD PARTY I NSPECTING (TPI) AT SITE INSTALLATION IX) INSPECTION BY THE OIL COMPANY ENGINEER AT SITE OF INSTALLATION THE ENTIRE WORK OF PROCUREMENT AND FABRICATION IS D ONE IN THE MANUFACTURING PREMISES: THE COMPLETED ELEMENTS ARE TRANSPORTED TO THE SITES AND ERECTED/INSTALLED WITH THE HELP OF NUTS, BOLTS AND SCREWS FABRICATION WORK INVOLVING WELDING IS NOT PERMITTED AT THE SITE. THE STRUCTURES AND A.CM FOR RVI FEATURES INVOLVING CANOPY AND BUILDING FASCIA ARE BROUGHT TO SITE IN READY TO ERECT CONDITION FROM THE MANUFACTURING UNIT. THE PROCESS OF GALVANIZING, POWDER COATING OR PAINTING OF THE STRU CTURALS MEMBERS TAKE IN THE MANUFACTURING UNIT. THE INSPECT ION TAKES PLACE IN TWO STAGES. IN THE FIRST STAGE THE THIRD P ARTY INSPECTION (TPI) AGENCY APPOINTED BY THE OIL COMPANY INSPECTS THE FABRICATED RVI ITEMS AT THE MANUFACTURING UNIT BEFO RE DISPATCH OF THE MATERIAL TO THE SITE. IN THE SECOND STAGE, T HE TPI AGENCY IS REQUIRED TO INSPECT THE RVI ELEMENTS AFTER ERECTION AT THE SITE. TPI AGENCY IS APPOINTED BY THE OIL COMPANY SO AS TO ENSURE 14 ITA 1853/DEL/2015 ADHERENCE TO THE SPECIFICATIONS AND MAINTAIN HIGH S TANDARDS AND THEY DO NOT PERMIT ANY OF THE ABOVE ACTIVITIES EXCE PT ERECTION AT THE SITE. MAXIMUM ERROR PERMITTED IN JOINTS IS L MM . REPRESENTATIVES ARE DEPUTED AT EACH SITE TO ASSESS THE EXACT QUANTITIES OF WORK INVOLVED AT EACH SITE. ENGINEERS FROM THE OIL COMPANY ALSO VISIT THE SITE AFTER TPI INSPECTION. A BRIEF DESCRIPTION. OF THE PROCESS UNDERTAKEN BY M /S FIBREFILL ENGINEERS WHILE PERFORMING THE WORK CONTRACT AND TH E RELEVANT ITEMS IS AS UNDER: CLADDING: (I.E. COVERING OF ANY SURFACE SUCH AS WAL LS, F1OORS, BUILDING, COLUMN ETC. BY ANY FOREIGN MATERIAL ON TH E PRE- EXISTING STRUCTURE), WAS CARRIED 'OUT 'MAINLY WITH ALUMINUM COMPOSITE SHEETS ON THE PRE EXISTING SURFACES OF WA LLS, COLUMNS, CANOPIES AND BUILDINGS. IN THE PROCESS, (A) EXACT SIZES WERE MEASURED, (B) THE SHEETS WERE CUT, (C) SURFACE WAS LEVELED WITH M.S. PIPES WHICH WERE WELDED TO THE EXISTING SURFAC E TO EVEN OUT DIFFERENT LEVELS OR VARIATIONS (I.E., TO COVER THE DEFECTS IN CIVIL CONSTRUCTION), (D) . ALUMINUM EXTRUSION WAS F IXED PIECE BY PIECE OF REQUIRED LENGTHS CUTTING OUT THE VARIOUS O PENING LIKE DOORS, WINDOWS, VENTILATORS, ACS, COOLERS, WATER .D ISPENSERS, POWER POINTS AND LIGHTING FIXTURES ETC., (E)ACM SHE ET WAS CUT AS PER THE ALUMINUM EXTRUSION THAT WAS SECURED TO T HE MS OR BUILDING THROUGH BOLTS. MONOLITHS: MONOLITH IS A COMPLETE SIGN WHICH IS MAN UFACTURED AT THE MANUFACTURING UNIT USING STEEL, ACM, PLOY C ARBONATE SHEETS & ALUMINUM TUBES. EXACT CUT TO STEEL PIPES W ERE RECEIVED, AND FABRICATED AS PER DESIGN OF THE OIL C OMPANY. THE STEEL, WAS THEN DIRECTLY DISPATCHED FROM OUR MANUFA CTURING UNIT TO THE SITE. OTHER ITEMS LIKE ACM AND POLY CARBONA TE WERE PREPARED AS PER THE DESIGN OF THE OIL COMPANY. THES E PANELS WERE THEN CLADDED ON THE CUT TO SIZE AS PER FORMAT. POC FOAM BOARDS WERE ALSO PACKED AND DISPATCHED TO THE' SITE , WHERE THEY ARE ALL ASSEMBLED .AND INSTALLED ON THE SPECIALLY C ONSTRUCTED FOUNDATION BUILT BY OIL COMPANY FOR THE SAME. BUILDING FASCIA: BUILDING FASCIA IS THE ACM CLADDI NG DONE ON TOP OF SALES BUILDING OF A PETROL PUMP. ALUMINUM CO MPOSITE PANELS (ACM) SHEETS AND ALUMINUM ACT-1 SHEETS AND 15 ITA 1853/DEL/2015 ALUMINUM ANGLE/EXTRUSION LENGTH WERE ALSO MADE AND DISPATCHED AS PER THE REQUIREMENT. THEY WERE CUT T O SIZE AS PER REQUIREMENTS OF THAT PARTICULAR SITE/PETROL PUMP. T HEY WERE INSTALLED ON THE EXISTING SITES BUILDING TOP OF THE PETROL PUMPS. THE ENTIRE BUILDING FASCIA AFTER TAKING THE EXACT M EASUREMENTS OF THE SITE, WERE MANUFACTURED AT THE MANUFACTURING UNIT AND THE COMPLETED ELEMENTS AFTER INSPECTION, WERE TRANSPOR TED TO THE SITES AND ERECTED/INSTALLED WITH THE HELP NUTS, BOL TS AND STREWS AS THE FABRICATION WORK INVOLVING WELDING IS NOT PERMI TTED AT THE SITE. CANOPY FASCIA: IT IS CLADDING WORK ON EXISTING CANO PIES OF THE OIL COMPANIES AS PER THEIR COLOUR SCHEME AND DESIGN S PROVIDED BY THE OIL COMPANIES FOR AESTHETIC LOOKS. FOR A CA NOPY FASCIA MEASUREMENT OF CANOPY WITH REGARDS TO SIZE, STRING LEVEL/STRAIGHTNESS, WATER LEVEL WERE TAKEN AND A ME AN LEVEL WAS WORKED OUT THAT, SO THAT WATER DOES NOT STOP ON THE CANOPY. IN ORDER TO MAKE A CANOPY FASCIA MS PIPE (COATED) ALUM INUM EXTENSION, ACM SHEETS, GI SHEETS ARE REQUIRED. MS P IPES OF 900 MM ARE TO BE INSTALLED ON THE CANOPY PIECE BY PIECE, SINGLE BY SINGLE ON THE DESIRED LINE LEVELS, AS WORKED OUT EARLIER (VERTICALLY) ALUMINUM EXTRUSION WAS THEN PUT/INSTAL LED ON THE MS PIPES HORIZONTALLY AGAIN PIECE BY PIECE I.E., AS PER THE STANDARD LENGTHS AVAILABLE THEN THE ACM SHEET WHICH MEASURES 900 X 4000MM LMM REQUIRED COLOURS WAS CLADDED ON TH E MS/ALUMINUM WITH THE HELP OF SCREWS/RIVETS. GI SHEE T WAS FIXED ON THE TOP OF ACM SHEET TO AVOID WATER SEEPA GE. THE ENTIRE CANOPY FASCIA AFTER TAKING THE EXACT MEASURE MENTS OF THE SITE, WERE MANUFACTURED AT THE MANUFACTURING UNIT A ND THE COMPLETED ELEMENTS AFTER INSPECTION, WERE TRANSPORT ED TO THE SITES AND ERECTED/INSTALLED WITH THE HELP NUTS, BOL TS AND SCREWS AS THE FABRICATION WORK INVOLVING WELDING IS NOT PE RMITTED AT THE SITE. 16. LD. COUNSEL POINTED OUT THAT THE FABRICATED STR UCTURES ARE AS PER THE SPECIFICATION OF CLIENTS. LD. COUNSEL POINTED OUT T HAT ONE OF THE OBJECTIONS RAISED BY AO IS THAT ASSESSEE WAS NOT MAINTAINING A NY STOCK RECORDS AND ON 16 ITA 1853/DEL/2015 THIS COUNT HE REFERRED TO THE TAX AUDIT REPORT CONT AINED IN THE PAPER BOOK AT PAGE 10 WHEREIN TAX AUDITORS HAVE QUALIFIED THEI R REPORT BY OBSERVING AS UNDER: AS THE ASSESSEE HAS NOT MAINTAINED THE STOCK RECOR DS AND IN ABSENCE OF SUCH RECORDS IT IS NOT PRACTICALLY POSSI BLE FOR US TO GIVE THE QUANTITATIVE DETAILS. 17. WITH REFERENCE TO THE ABOVE OBSERVATION, LD. CO UNSEL POINTED OUT THAT ALL THE INVOICES ARE THERE WHICH CONTAINED THE QUAN TITATIVE DETAILS BUT SINCE ASSESSEE DID NOT MAINTAIN THE STOCK RECORD, THEREF ORE, ONLY POINT TO POINT CORRELATION WAS NOT POSSIBLE. LD. COUNSEL POINTED O UT THAT IT CANNOT BE DENIED THAT SIGNAGE HAS SEPARATE COMMERCIAL USE AND, THERE FORE, ASSESSEE WAS CARRYING OUT MANUFACTURING ACTIVITY AS CONTEMPLATED U/S 80IC. IN THIS REGARD HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORACLE SOFTWARE INDIA LTD. 320 ITR 546 (SC), WHEREI N IN PARA 16 IT HAS BEEN OBSERVED: 16. IF ONE READS THE JUDGMENT IN TATA CONSULTANCY S ERVICES', IT BECOMES CLEAR THAT THE INTELLIGENCE/LOGIC (CONTENTS ) OF A PROGRAMME DO NOT CHANGE. THEY REMAIN THE SAME, BE I T IN THE ORIGINAL OR IN THE COPY. THE DEPARTMENT- NEEDS TO T AKE INTO ACCOUNT THE GROUND REALITIES OF THE BUSINESS AND SO METIMES OVERSIMPLIFIED TESTS CREATE CONFUSION, PARTICULARLY , IN MODEM TIMES WHEN TECHNOLOGY GROWS EACH DAY. TO SAY, THAT CONTENTS OF THE ORIGINAL AND THE COPY ARE THE SAME AND, THEREF ORE, THERE IS (SIC NO) MANUFACTURE WOULD NOT BE A CORRECT PROPOSI TION. WHAT ONE NEEDS TO EXAMINE IN EACH CASE IS THE PROCESS UN DERTAKEN BY THE ASSESSEE. OUR JUDGMENT IS CONFINED STRICTLY TO THE PROCESS. 17 ITA 1853/DEL/2015 IMPUGNED IN THE PRESENT CASE. IT IS FOR THIS REASON THAT THE AMERICAN COURTS IN SUCH CASES HAVE EVOLVED A NEW TE ST TO DETERMINE AS TO WHAT CONSTITUTE MANUFACTURE. THEY H AVE LAID DOWN THE TEST WHICH STATES THAT IF A PROCESS REND ERS A COMMODITY OR ARTICLE FIT FOR USE WHICH OTHERWISE IS NOT FIT, THE OPERATION FALLS WITHIN THE LETTER AND SPIRIT OF MAN UFACTURE. (SEE UNITED STATES V. INTERNATIONAL PAINT CO. ) 18. LD. COUNSEL POINTED OUT THAT THE RELEVANT TEST IS WHETHER ARTICLE PRODUCED HAS SEPARATE COMMERCIAL USE AS COMPARED TO SOURCED MATERIAL OR NOT. LD. COUNSEL FURTHER SUBMITTED THAT IN THE CASE OF CIT VS. MS. MEGHA DADOO 232 TAXMANN 419 (HP), IT HAS BEEN HELD THAT M ANUFACTURING OF ROUTE MARKERS BY UNDERTAKING PROCESS OF CUTTING S TAINLESS STEEL PIPES OF LARGER SIZES WITH ELECTRIC CUTTER INCLUDING POINTIN G AND WELDING OF PIPES, WOULD AMOUNT TO MANUFACTURE OR PRODUCTION ENTITLING ASSESSEE TO DEDUCTION U/S 80IC. 19. LD. COUNSEL SUBMITTED THAT IN CASE OF ASSESSEE ALSO THE RAW MATERIAL IS SOURCED FROM OUTSIDE AND THEN FABRICATION PROCESS I S CARRIED OUT AS EXPLAINED EARLIER AND THEREAFTER AN ARTICLE HAVING SEPARATE COMMERCIAL UTILITY COMES INTO EXISTENCE. 20. LD. COUNSEL SUBMITTED THAT THE SECOND ASPECT TO BE CONSIDERED IS WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80IC THOUGH RETURN HAS BEEN FILED BELATEDLY U/S 139(4). HE RELIED ON V ARIOUS CASE LAWS, NOTED BY 18 ITA 1853/DEL/2015 US IN THE SUBMISSIONS ADVANCED BEFORE AO, WHEREIN I T HAS BEEN, INTER ALIA, HELD THAT PROVISION OF SECTION 139(4) IS A PROVISO TO SECTION 139(1). 21. LD. COUNSEL SUBMITTED THAT THE THIRD ASPECT TO BE CONSIDERED IS REGARDING LD. CIT(A)S OBSERVATIONS THAT NO MANUFAC TURING ACTIVITY WAS CARRIED OUT AT SITARGANJ SITE DURING THE YEAR UNDER CONSIDERATION. IN THIS REGARD LD. COUNSEL REFERRED TO THE INDEX TO PAPER B OOK NO. 1, WHEREIN THE ASSESSEES REPLY DATED 10.9.2014 BEFORE LD. CIT(A) IS CONTAINED. THE SAME IS REPRODUCED HEREUNDER:- 10.9.2014 COPY OF SUBMISSION FILED BY ASSESSEE BEFO RE CIT(A) ALONGWITH ITS ENCLOSURES IN RESPECT OF EVIDENCE TO SHOW MANUFACTURING/ PRODUCTION BY THE APPELLANT AS PER T HE INCOME TAX ACT AT SITARGANJ UNIT I) BILL FROM UTTARAKHAND POWER CORPORATION LTD. DATED 12.11.2009 FOR AN INDUSTRIAL UNIT UNDER CATEGORY-RTS-7 LT AND HT INDUSTRY II) II) REGISTRATION AND LICENSE TO WORK A FACTORY FROM THE DIRECTOR OF FACTORIES FROM 31.8.2009 III) CENTRAL EXCISE CHALLAN FOR THE QUARTER ENDING DECEMBER 2009. IV) LETTER FROM THE FIRE DEPARTMENT DATED 7.9.2009 V) REGISTRATION UNDER CENTRAL CAPITAL INVESTMENT SUBSIDY SCHEME, 2003 DATED 20.8.2009. VI) LETTERS FROM UTTARAKHAND POWER CORPORATION LTD. VII) LETTER TO THE CENTRAL EXCISE DIVISION DATED 17.8.2009 REGARDING START OF THE PRODUCTION IN AUGUST 2009. VIII) DOCUMENTS FROM THE POLLUTION CONTROL BOARD DATED 23.4.2009. 19 ITA 1853/DEL/2015 22. LD. COUNSEL FURTHER REFERRED TO PAGE 163 OF PB, WHEREIN CONDITIONS OF TENDER DOCUMENTS ARE CONTAINED, IN WHICH PARA 5 REA DS AS UNDER: YOU ARE REQUIRED TO PROCURE, INSTALL AND COMMISSIO N THE MACHINERY AS PER DETAILS AVAILABLE IN ANNEXURE XXII OF THE TENDER WITHIN 45 DAYS FROM THE DATE OF THE LETTER O F INTENT AND CONFIRM TO US, SO THAT IOC ENGINEERS/ TPI AGENCY MA Y INSPECT YOUR FACTORY FOR VERIFICATION OF MACHINERY. IN CASE OF FAILURE TO PROCURE, INSTALL AND COMMISSION THE MACHINERY WITHI N 45 DAYS, THE LOI AND THIS WORK ORDER SHALL BE CANCELLED FORT HWITH AND THE EARNEST MONEY DEPOSIT/ INITIAL SECURITY DEPOSIT SHALL BE FORFEITED. 23. LD. COUNSEL FURTHER REFERRED TO PAGE 196 OF THE PB, WHEREIN THE REPORT OF THIRD PARTY INSPECTION IS CONTAINED. HE POINTED OUT THAT ASSESSEE IS MANUFACTURING SIGNAGES ETC. FOR IOC WHICH NOMINATES THIRD PARTY FOR INSPECTION. HE POINTED OUT THAT THIRD PARTY HAS CE RTIFIED THAT THE PROCESS OF MANUFACTURE WAS CARRIED OUT IN TERMS OF SPECIFICATI ON. 24. LD. COUNSEL FURTHER REFERRED TO PAGES 23 & 25 O F THE PB, WHEREIN DETAILS OF MACHINERY INSTALLED AT SITARGANJ FACTORY IS CONTAINED TO DEMONSTRATE THAT SUBSTANTIAL INVESTMENT WAS MADE AT SITARGANJ FACTORY. 25. LD. COUNSEL FURTHER REFERRED TO PAGES 215 TO 2 65 OF THE PB, WHEREIN THE COPY OF INVOICE OF THE MACHINERY PURCHASED FOR SETTING UP THE INDUSTRIAL UNDERTAKING AT SITARGANJ IS CONTAINED. HE FURTHER R EFERRED TO PAGES 268 TO 484 OF THE PB WHEREIN THE COPY OF BILLS OF ITEMS PURCHA SED BY ASSESSEE ARE CONTAINED IN WHICH THE ADDRESS OF SITARGANJ FACTORY IS GIVEN. HE POINTED OUT 20 ITA 1853/DEL/2015 THAT THE OBSERVATIONS OF LD. CIT(A) TO THE CONTRARY ON THIS COUNT ARE NOT CORRECT IN THE LIGHT OF ENORMOUS EVIDENCE BEING ON RECORD. 26. LD. COUNSEL FURTHER REFERRED TO PAGE 486 WHEREI N THE INVOICES EVIDENCING THE STOCK TRANSFERRED FROM SITARGANJ TO NEW DELHI ON 11.10.2009 IS CONTAINED. LD. COUNSEL FURTHER REFERRED TO PAGE 631 OF PB, WHEREIN LIST OF EMPLOYEES ALONG WITH DESIGNATION AT SITARGANJ UNIT IS CONTAINED. HE POINTED OUT THAT MERELY BECAUSE PF AND ESI REGISTER WAS GR ANTED SUBSEQUENTLY CANNOT BE A BASIS FOR DENYING THE ASSESSEES CLAIM REGARDING MANUFACTURING ACTIVITIES BEING CARRIED OUT AT SITE IN THE BACKDRO P OF ENORMOUS EVIDENCES ON RECORD. 27. LD. DR REFERRED TO THE PROVISIONS OF SEC. 80AC AND POINTED OUT THAT THE SAID SECTION CATEGORICALLY MENTIONS SECTION 139 (1) AND HAS USED THE NEGATIVE LANGUAGE UNLESS. SHE POINTED OUT THAT UN LESS THE ASSESSEE FILED THE RETURN BEFORE THE DUE DATE AS CONTEMPLATED U/S 139( 1), IT COULD NOT CLAIM DEDUCTION U/S 80IC. SHE FURTHER SUBMITTED THAT AS SESSEE HAS ALSO NOT FILED AUDIT REPORT ON TIME WHICH WAS FILED DURING THE CO URSE OF ASSESSMENT. SHE RELIED ON FOLLOWING DECISIONS IN SUPPORT OF HER CON TENTION THAT INCENTIVE PROVISIONS HAVE TO BE GIVEN STRICT INTERPRETATION. - SMT. TARULATA SHYAM & OTHERS VS. CIT 108 ITR 345 (SC) - CIT VS. ANJUM M.H. GHASWALA & OTHERS (SC)252 ITR 1 - STATE OF PUNJAB & OTHERS VS. SURINDER KUMAR & OTH ERS 194 ITR 434 (SC). 21 ITA 1853/DEL/2015 28. LD. DR FURTHER SUBMITTED THAT NO PROPER REASON HAS BEEN GIVEN FOR NOT FILING RETURN IN TIME. LD. DR REFERRED TO EXPLANATI ON 2 TO SECTION 139(1) WHICH DEFINES THE TERM DUE DATE. SHE SUBMITTED TH AT SECTION 139(4) NOWHERE MENTIONS THAT THE DUE DATE AS CONTEMPLATED U/S 139(1) WILL GET ALTERED IF THE RETURN IS FILED BELATEDLY U/S 139(4) . 29. LD. DR SUBMITTED THAT THE SECOND ISSUE WHICH IS TO BE CONSIDERED IS WHETHER ASSESSEE IS CARRYING OUT ANY MANUFACTURING ACTIVITY OR NOT AS CONTEMPLATED U/S 80IC. SHE REFERRED TO PAGE 266 OF THE PB, WHEREIN A NOTE ON THE PROCESS BEING UNDERTAKEN BY ASSESSEE IS CONT AINED AND POINTED OUT THAT ASSESSEE ITSELF MENTIONED THAT IT IS ONLY PROC ESS OF CUTTING , WELDING, BOLTING AND JOINTING WHICH IS ONLY A FABRICATION WO RK DONE BY ASSESSEE. 30. LD. DR REFERRED TO PAGE 215 ONWARDS WHEREIN COP Y OF INVOICES OF THE MACHINERY PURCHASED FOR SETTING UP INDUSTRIAL UNDER TAKING AT SITARGANJ UNIT IS CONTAINED TO SUBMIT THAT THE INVESTMENT IS NOT SUBS T4ANTIAL AS CLAIMED BY ASSESSEE. SHE FURTHER SUBMITTED THAT NO STOCK RECOR DS HAVE BEEN MAINTAINED BY ASSESSEE, AS HAS BEEN POINTED OUT BY THE AUDITOR S. LD. DR FURTHER RELIED ON THE ORDER OF CIT(A) PAGE 9 PARA 5.4.2 WHEREIN LD. C IT(A) DISPUTED THE FEASIBILITY OF TRANSPORTATION. SHE SUBMITTED THAT A S FAR AS THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IS CONCERNED TH AT IS WITH REFERENCE TO ROUTE MARKERS AND, THEREFORE, SHE SUBMITTED THAT ALL THESE ASPECTS TAKEN 22 ITA 1853/DEL/2015 TOGETHER MAKE IT VERY CLEAR THAT NO MANUFACTURING A CTIVITY IS CARRIED OUT BY ASSESSEE. 31. SHE SUBMITTED THAT THE THIRD ISSUE IS WHETHER A NY ACTIVITY CARRIED OUT WAS NOT AT SITARGANJ. SHE REFERRED TO PAGE 21 OF AO S ORDER WHEREIN HE HAS OBSERVED THAT ASSESSEE HAS NOT FILED ANY BALANCE-SH EET AND P&L A/C BEFORE THE AO. SHE FURTHER REFERRED TO THE NOTICE ISSUED B Y AO U/S 142(1) CONTAINED AT PAGES 32 TO 144 OF PB AND ASSESSEES REPLY TO VA RIOUS ASPECTS. IN THIS CONNECTION SHE REFERRED TO PAGE 65 OF PB, WHEREIN F ORM NO. 3 UNDER RULE 7(1) FOR REGISTRATION AND LICENSE TO WORK A FACTOR Y IS CONTAINED, IN WHICH IT IS, INTER ALIA, STATED AS UNDER: TO LICENSED PREMISES SHOWN ON PLAN APPROVED VIDE L ETTER NO. 467F/REKHA DATED 16.2.2010 ARE SITUATED IN M/S FIBE RFILL ENGINEERS PLOT NO. B-212 ELDICO SIDCUL SITARGANJ, U .S. NAGAR ADD CONSISTS OF BUILDING AS SHOWN BY MAPS. 32. SHE SUBMITTED THAT WHEN THE PLAN ITSELF WAS APP ROVED ON 16.2.2010, THEN HOW LICENSE COULD BE GIVEN PRIOR TO THAT DATE TO CARRY OUT ACTIVITIES. 33. LD. DR REFERRED TO PAGES 194 AND 195 OF PB, WHE REIN THE INSPECTION CERTIFICATE FROM RITES LTD. IS CONTAINED AND SUBMIT TED THAT INSPECTION HAS BEEN CARRIED OUT AT DELHI THOUGH THE CONTRACTOR HAD BEEN REFERRED AS ASSESSEE WITH SITARGANJ, UTTRAKHAND. SHE SUBMITTED THAT THIS DOES NOT LEAD TO ANY INFERENCE THAT THE ACTIVITIES WERE CARRIED OUT AT S ITARGANJ. 23 ITA 1853/DEL/2015 34. LD. DR FURTHER SUBMITTED THAT SINCE THE ENTIRE STOCK WAS TRANSFERRED TO NEW DELHI, THEN HOW THE INCOME PART IS EXPLAINED AT SITARGANJ. 35. LD. COUNSEL IN THE REJOINDER SUBMITTED THAT EXI STENCE OF UNDERTAKING AT SITARGANJ HAS BEEN ESTABLISHED WITH REFERENCE TO IN VOICES PRODUCED BY ASSESSEE IN REGARD TO LAND, BUILDING, MACHINERY ETC . THE P&L ACCOUNT WAS ALSO FILED BEFORE LD. CIT(A). THERE IS NO MACHINERY AT GURGAON UNIT AND ONLY FOR VAT PURPOSES ADDRESS WAS GIVEN. HE REFERRED TO PAGE 123 TO 157 WHEREIN THE DETAILS OF EPF AND ESI CONTRIBUTIONS AR E CONTAINED. LD. COUNSEL SUBMITTED THAT IF LD. CIT(A) HAD ANY DOUBT REGARDIN G THE ACTIVITIES BEING CARRIED OUT AT SITARGANJ, THEN HE SHOULD HAVE CONDU CTED THE INSPECTION. 36. LD. COUNSEL FURTHER POINTED OUT THAT ASSESSEE H AD UNDERTAKEN CONTRACT FOR SALE AND NOT CONTRACT FOR JOB AND, THEREFORE, I T CANNOT BE SAID TO BE A JOB WORK BEING CARRIED OUT BY ASSESSEE. HE FURTHER REFE RRED TO THE DECISION IN THE CASE OF CIT VS. FAITH BIOTECH PVT. LTD. TO SUBMIT THAT VALUE OF MACHINERY IS NOT A RELEVANT FACTOR FOR DECIDING WHETHER THE ASSE SSEE WAS CARRYING OUT MANUFACTURING ACTIVITY AND THE ACID TEST IS USER OF THE ARTICLE. HE POINTED OUT THAT, IN ANY CASE, THE ASSESSEES INVESTMENT IS NOT OF SMALL AMOUNT AS SUBMITTED BY LD. DR. AS REGARDS NON-MAINTENANCE OF RECORDS, LD. COUNSEL POINTED OUT THAT ITS BOOKS HAVE NOT BEEN REJECTED AND QUANTITATIVE DETAILS ARE THERE IN INVOICES. ON LATE FILING OF RETURN LD. COU NSEL SUBMITTED THAT NO 24 ITA 1853/DEL/2015 CONTRARY JUDGMENT HAS BEEN CITED BY LD. COUNSEL WHI CH SHOWS THAT 139(4) IS NOT TO BE TREATED AS PROVISO TO SECTION 139(1). 37. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RECORD OF THE CASE. PRIMARILY WE HAVE TO CONSIDER FOLLOWIN G THREE ISSUES- (A) WHETHER ANY ACTIVITY ACTUALLY CARRIED OUT BY ASSESS EE AT SITARGANJ OR NOT. (B) WHETHER SUCH ACTIVITY COULD BE TERMED AS MANUFACTUR ING OR PRODUCING OF ANY ARTICLE OR THING AS CONTEMPLATED U/S 80IC. (C) WHETHER ASSESSEE WAS ENTITLED TO DEDUCTION EVEN THO UGH IT FILED THE RETURN BELATEDLY IN VIEW OF THE PROVISIONS CONTAINE D U/S 80AC. 38. AS FAR AS THE FIRST ISSUE IS CONCERNED, WE FIND THAT AO HAS NOT QUESTIONED THIS ASPECT, BUT LD. CIT(A) HAS QUESTION ED THIS FOR THE FOLLOWING REASONS- (I) MACHINERY INSTALLED AT THE SITARGANJ FACTORY REFLEC TS THE ACTIVITY OR THE LACK OF IT BEING UNDERTAKEN AT THE UNIT. (II) THE NATURE OF THE EMPLOYEES, THEIR QUALIFICATIONS, THE WAGES BEING PAID TO THEM AND THE WORK ASSIGNED TO EACH ALSO SHO WED THAT THE MANUFACTURING ACTIVITY CLAIMED TO BE CARRIED OUT AT SITARGANJ UNIT WAS A MERE EYE WASH. (III) ESI AND PF IN RESPECT OF SITARGANJ FACTORY SEPARATE LY HAD NOT BEEN PRODUCED. IT WAS ONLY IN 2012 FOR THE YEAR 2011 THA T THE ASSESSEE HAD FILED NOMINAL ROLE OF EMPLOYEES AND EMPLOYMENT FOR ESI/ PF 25 ITA 1853/DEL/2015 IN SITARGANJ. THUS, THERE WAS NO EVIDENCE OF EMPLOY EES AT SITARGANJ IN THE YEAR UNDER CONSIDERATION. (IV) THE PURCHASE BILL SHOW THAT THE ASSESSEE HAD PURCHA SED FABRICATED MS GRILL FROM VARIOUS PARTIES IN NEW DELHI AND THI S FABRICATED BILL WAS TRANSPORTED TO FIBER FILL ENGINEERS, PLOT NO. 2 , DAULATABAD ROAD, INDUSTRIAL AREA, GURGAON. HOWEVER, THE SALE B ILLS SHOW TRANSPORTATION OF SIGNAGES AND VERTICAL POSTS FROM SITARGANJ TO THE ASSESSEES PREMISES AT VASANT KUNJ, NEW DELHI. THUS , THE MAIN OBJECTION OF LD. CIT(A) ON THIS COUNT WAS THAT THE PURCHASES WERE IN FAVOUR OF THE FACTORY AT GURGAON. 39. LD. DR HAS ALSO POINTED OUT THAT THE LICENSE W AS GRANTED ON 16.2.2010 AND, THEREFORE, NO ACTIVITY COULD BE CARR IED OUT PRIOR TO SUCH DATE. 40. IN OUR OPINION, NONE OF THESE OBJECTIONS CAN B E ACCEPTED IN THE BACKDROP OF ENORMOUS EVIDENCE ON RECORD, MORE PARTI CULARLY THE DOCUMENTS FURNISHED BY ASSESSEE VIDE REPLY DATED 10 .9.2014 41. AS FAR AS LD. DRS OBJECTION WITH REFERENCE TO THE GRANT OF LICENSE TO THE FACTORY IS CONCERNED, WE FIND THAT O N THE SAID LICENSE IT IS SPECIFICALLY WRITTEN THAT THE SAME IS ENFORCED FROM 31.8.2009. FURTHER, IN THE SAID LICENSE IN COLUMN OF DATE OF RENEWAL THE F IRST DATE MENTIONED IS 1.1.2010. IT IS FURTHER NOTED THAT IN FORM NO. 3 IT IS SPECIFICALLY MENTIONED THAT THE LICENSE SHALL REMAIN IN FORCE TILL 31.12.2 009 UNLESS FURTHER 26 ITA 1853/DEL/2015 RENEWAL. IT CLEARLY SHOWS THAT THE LICENSE WAS ENFO RCED FROM 31.8.2009 AND MERELY ON THE BASIS OF APPROVAL BEING GRANTED O N 16.2.2010 IT CANNOT BE INFERRED THAT NO ACTIVITY COULD BE CARRIED OUT B Y ASSESSEE ON THE SAID PREMISES. THEREFORE, IT IS EVIDENT THAT THE APPROVA L MIGHT HAVE BEEN INTIMATED VIDE LETTER NO. 467F/REKHA DATED 16.2.201 0, BUT THE ACTIVITIES MUST HAVE BEEN CARRIED OUT PRIOR TO THAT DATE ALSO. 42. FURTHER FROM THE BILLS ON RECORD IT IS EVIDENT THAT MACHINERY HAD BEEN INSTALLED AT THE SAID PREMISES. 43. LD. DR IN COURSE OF HER ARGUMENTS SUBMITTED TH AT THERE WAS NO SUBSTANTIAL INVESTMENT IN FIXED ASSETS AT THE PREMI SES SO AS TO ENABLE ONE TO CONCLUDE THAT ASSESSEE WAS CARRYING OUT MANUFAC TURING ACTIVITY. WE DO NOT FIND ANY SUBSTANCE IN THIS PLEA OF LD. DR BE CAUSE THE REQUIREMENT OF INVESTMENT DEPENDS ON THE NATURE OF ACTIVITY BE ING CARRIED OUT BY ASSESSEE. IT IS NOT THE CASE OF REVENUE THAT WITH T HE INVESTMENT AT SITE THE ACTIVITIES COULD NOT BE CARRIED OUT BY ASSESSEE. 44. THE ASSESSEE HAS ALSO REFERRED TO THE TENDER D OCUMENTS AND THE THIRD PARTY INSPECTION CARRIED OUT AT THE VENDERS PREMISES. FROM THESE DOCUMENTS IT IS EVIDENT THAT THE THIRD PARTY INSPEC TION WAS CARRIED OUT AT SITARGANJ UNIT AND, THEREFORE, IT CANNOT BE SAID TH AT NO ACTIVITY WAS CARRIED 27 ITA 1853/DEL/2015 OUT AT THE SAID PREMISES. THE SUBMISSIONS OF LD. DR TO THE CONTRARY ARE NOT CORRECT WHEN THE ENTIRE REPORT IS CONSIDERED. 45. LD. COUNSEL HAS ALSO RELIED ON THE DECISION IN THE CASE OF FAITH BIOTECH PVT. LTD. (SUPRA), WHERE EVEN THOUGH ASSESS EE WAS CARRYING OUT ASSEMBLING AND MANUFACTURING OF AIR PURIFIER BY USI NG SAMPLE TOOLS AND TESTING EQUIPMENTS. IT WAS HELD THAT ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S 80IC.THIS DECISION CLEARLY COUNTERS T HE CLAIM OF REVENUE THAT THE VALUE OF FIXED ASSET IS ONE OF THE DECIDI NG CRITERIA FOR ARRIVING AT A FINDING WHETHER ASSESSEE WAS CARRYING OUT MANUFAC TURING OR NOT. THE ASSESSEE HAS FILED COPIES OF INVOICES IN THE PAPER BOOK FROM WHICH IT IS EVIDENT THAT THE RAW MATERIAL WAS PURCHASED AT SITA RGANJ UNIT DURING THE RELEVANT YEAR UNDER CONSIDERATION AND THE FABRICATE D ITEMS WERE TRANSPORTED FROM THE SITARGANJ TO THE SITE OF CONTR ATEES. WE DO NOT FIND ANY REASON TO DOUBT THE CREDENTIALS OF THESE INVOIC ES PARTICULARLY WHEN LD. CIT(A) HAS NOT REFERRED TO THE SPECIFIC INVOICES TO WHICH SHE HAS REFERRED IN HER ORDER IN PARA NO. 5.4.2 REPRODUCED EARLIER. 46. THE NEXT OBJECTION IS REGARDING EMPLOYEES, THE DETAILS OF WHICH HAVE BEEN REFERRED TO BY LD. COUNSEL FOR THE ASSESS EE, NOTED IN HIS ARGUMENTS. FROM THOSE DETAILS IT IS EVIDENT THAT KE EPING IN VIEW THE 28 ITA 1853/DEL/2015 NATURE OF ACTIVITY CARRIED OUT BY ASSESSEE, THE NUM BER OF EMPLOYEES AND THEIR QUALIFICATIONS COULD NOT BE DISPUTED. 47. AS FAR AS THE OBJECTION REGARDING ESI AND PF I S CONCERNED, WE DO NOT FIND MUCH SUBSTANCE IN THE SAME BECAUSE THAT IS NO WHERE THE CRITERIA FOR CONCLUDING WHETHER ASSESSEE HAD ACTUAL LY CARRIED OUT ACTIVITY OR NOT. IF THERE IS ANY DEFAULT ON THE PART OF ASSE SSEE IN REGARD TO ESI AND PF PROVISION, THEN UNDER THE RELEVANT ACT IT WOULD BE LIABLE FOR ACTION, BUT ON THAT COUNT DEDUCTION U/S 80IC CANNOT BE DENI ED. 48. FURTHER IT IS NOTICEABLE FROM THE OBSERVATION OF LD. CIT(A), REPRODUCED EARLIER, THAT SHE HAS IN THE ALTERNATIVE ACCEPTED THAT ASSESSEE WOULD BE ENTITLED TO 25% DEDUCTION U/S 80IC. THIS ALSO CANNOT BE ACCEPTED PARTICULARLY WHEN ASSESSEE HAD PRODUCED SE PARATE LEDGERS FOR THE ACTIVITIES CARRIED OUT AT SITARGANJ UNIT. 49. IN VIEW OF ABOVE DISCUSSION, THE FIRST ISSUE S TANDS ANSWERED IN FAVOUR OF ASSESSEE AND ON THE ALLEGED GROUND THAT N O ACTIVITY WAS CARRIED OUT AT SITARGANJ UNIT, DEDUCTION U/S 80IC CANNOT BE DENIED. 50. THE NEXT ISSUE FOR OUR CONSIDERATION IS WHETHE R THE ACTIVITY CARRIED OUT BY ASSESSEE AMOUNTED TO MANUFACTURE O R PRODUCTION OF ANY ARTICLE OR THING AS CONTEMPLATED U/S 80IC OR NOT. W E HAVE EXTENSIVELY PRODUCED THE ASSESSEES CONTENTION IN REGARD TO THE ACTIVITY BEING 29 ITA 1853/DEL/2015 UNDERTAKEN BY IT. FROM THOSE SUBMISSIONS IT IS EVID ENT THAT ASSESSEE WAS PRIMARILY CARRYING OUT THE PROCESS OF PROCUREMENT, FABRICATION AND INSTALLATION OF THE RETAIL VISUAL IDENTITY (RVI), W HICH CAN BE SUBDIVIDED INTO FOLLOWING ACTIVITIES: I) PROCUREMENT OF MATERIAL, BOTH IMPORTED AND INDIG ENOUS II) FABRICATION OF STRUCTURAL AS PER DRAWINGS GIVEN IN THE TENDER FOR EACH ITEM. III) GALVANISING, POWDER COATING OF PAINTING OF THE STRUCTURAL MEMBERS IN THE WORKSHOP OF VENDOR. IV) CUTTING, BENDING TO SHAPE AND FABRICATION ACM A S PER GIVEN DRAWINGS . 51. ALL THESE ACTIVITIES DEFINITELY CULMINATE INTO PRODUCING OF AN ARTICLE, WHICH HAS DIFFERENT UTILITY IN COMMERCIAL SENSE. TH E FABRICATED ITEM CANNOT BE SAID TO BE THE SAME AS WAS THE RAW MATERIAL FOR PRODUCING THE SAME. THE RAW MATERIAL MAY NOT BE UNDERGOING ANY CHEMICAL CH ANGES BUT NONETHELESS THE SAME IS FABRICATED IN A MANNER SO AS TO CREATE AN ARTICLE WHICH IS OF USE TO ASSESSEES CUSTOMER AS PER THEIR SPECIFICATIONS. 52. LD. COUNSEL HAS REFERRED TO THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF ORACLE SOFTWARE INDIA LTD. (SUPRA), WHI CH CLEARLY HOLDS THAT IF A PROCESS RENDERS A COMMODITY OR ARTICLE FIT FOR USE, WHICH OTHERWISE IS NOT FIT, THE OPERATION FALLS WITHIN THE LETTER AND SPIRIT OF MANUFACTURING. IN OUR OPINION THIS TEST IS CLEARLY MET IN THE CASE OF ASS ESSEE AND, THEREFORE, 30 ITA 1853/DEL/2015 FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ORACLE SOFTWARE INDIA LTD. (SUPRA), ASSESSEES CLAIM IS LI ABLE TO BE ALLOWED. 53. LD. COUNSEL HAS ALSO REFERRED TO THE DECISION I N THE CASE OF MS. MEGHA DADOO (SUPRA),WHEREIN IT HAS BEEN HELD THAT MANUFAC TURE OF ROUTE MARKERS BY UNDERTAKING PROCESS OF CUTTING STAINLESS STEEL P IPES OF LARGER SIZES WITH ELECTRIC CUTTER INCLUDING PAINTING AND WELDING OF P IPES AMOUNTS TO MANUFACTURE OR PRODUCTION. IN OUR OPINION BOTH THES E DECISIONS CLEARLY SUPPORT THE ASSESSEES CLAIM THAT IT WAS CARRYING O N THE MANUFACTURING ACTIVITY AND, THEREFORE, THIS OBJECTION OF REVENUE AUTHORITY STANDS REJECTED. 54. THE THIRD ISSUE FOUR OUR CONSIDERATION IS WHETH ER IN VIEW OF THE PROVISION OF SECTION 80AC, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IC ON ACCOUNT OF LATE FILING OF RETURN. SECTION 80AC READ S AS UNDER: DEDUCTION NOT TO BE ALLOWED UNLESS RETURN FURNISHE D. 80AC. WHERE IN COMPUTING THE TOTAL INCOME OF AN ASS ESSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR C OMMENCING ON THE 1 ST DAY OF APRIL, 2006 OR ANY SUBSEQUENT OF ASSESSMENT YEAR, ANY DEDUCTION IS ADMISSIBLE UNDER SECTION 80I A OR SECTION 80IAB OR SECTION 80IB OR SECTION 80IC[ OR SECTION 8 0ID OR SECTION 80IE], NO SUCH DEDUCTION SHALL BE ALLOWED T O HIM UNLESS HE FURNISHES A RETURN OF HIS INCOME FOR SUCH ASSESS MENT YEAR ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139. 55. WHILE REFERRING TO THE FINDING OF ASSESSMENT OR DER, WE HAVE NOTED VARIOUS DECISIONS RELIED UPON BY LD. COUNSEL FOR TH E ASSESSEE, WHICH HELD THAT 31 ITA 1853/DEL/2015 SECTION 139(4) IS TO BE READ AS PROVISO TO SECTION 139(1). IT IS TRUE THAT THE HEADING OF SECTION 80AC CLEARLY SHOWS THAT DEDUCTIO N IS NOT TO BE ALLOWED UNLESS RETURN IS FURNISHED ON OR BEFORE THE DUE DAT E SPECIFIED UNDER SUB- SECTION (1) TO SECTION 139. HOWEVER, IT CANNOT BE D ENIED THAT SECTION 80IC IS AN INCENTIVE PROVISION AND IN VIEW OF VARIOUS JUDIC IAL PRONOUNCEMENTS PARTICULARLY IN THE CASE OF BAJAJ TEMPO LTD. VS. CI T 196 ITR 188(SC), THE INCENTIVE PROVISION HAS TO BE INTERPRETED IN A MANN ER SO AS TO ADVANCE THE OBJECTS OF ECONOMIC ACTIVITIES IN THE COUNTRY AND N OT TO DENY THE CLAIM MERELY ON TECHNICAL GROUNDS. 56. SECTION 139(4) READS AS UNDER: 139(4) ANY PERSON WHO HAS NOT FURNISHED A RETURN W ITHIN THE TIME ALLOWED TO HIM UNDER SUB-SECTION (1), OR WITHI N THE TIME ALLOWED UNDER A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142, MAY FURNISH THE RETURN FOR ANY PREVIOUS YEAR A T ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE R ELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASS ESSMENT, WHICHEVER IS EARLIER. PROVIDED THAT WHERE THE RETURN RELATES TO A PREVIOU S YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR, THE RE FERENCE TO ONE YEAR AFORESAID SHALL BE CONSTRUED AS A REFERENC E TO TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 57. A BARE PERUSAL OF THIS SECTION MAKES IT CLEAR T HAT THE LEGISLATURE ITSELF HAS ALLOWED THE ASSESSEE TO FILE RETURN BELATEDLY S UBJECT TO FULFILLMENT OF CONDITIONS WRITTEN IN THE SAID SECTION. THEREFORE, ONCE THOSE CONDITIONS ARE 32 ITA 1853/DEL/2015 MET, THEN RETURN FILED BY THE ASSESSEE WOULD FOR AL L TECHNICAL PURPOSES BE CONSIDERED BEING FILED U/S 139(1). THUS, KEEPING IN VIEW THE VARIOUS DECISIONS NOTED EARLIER, WE DO NOT FIND ANY REASON TO DENY THE CLAIM OF ASSESSEE ON THE GROUND OF FILING THE RETURN BELATED LY. 58. IN VIEW OF OUR OBSERVATIONS, THE ASSESSEES APP EAL IS ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 25/02/2016. SD/- SD/- (A.T. VARKEY) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25/02/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.