The ACIT, 3(1), Bhopal V. M/s R.M.Chemicals Pvt. Ltd., Bhopal

ITA 597/IND/2010

• Counselvise Citation: 59722714 RSA 2010
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: M C MEHTA
• Keywords: Business income; Depreciation; TDS
• Section: 80IB; 10B; 32; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.597/IND/2010 A.Y. 2007-08 ACIT-3(1), BHOPAL ... APPELLANT VS M/S. R.M. CHEMICALS PVT. LTD., BHOPAL PAN AAACR 7154 D ... RESPONDENT APPELLANT BY : SHRI KESHAVE SAXENA, CIT/DR RESPONDENT BY : S/SHRI.HITESH CHIMNANI & M.C. MEH TA DATE OF HEARING : 21.11.2011 DATE OF PRONOUNCEMENT : 21.11.2011 O R D E R PER JOGINDER SINGH THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDE R OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 2.7.2010 ON THE GROUND THAT THE LEARNED CIT(A) ERRED IN DIRE CTING THE 2 ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80-IC, EVE N THOUGH SUCH DEDUCTION IS NOT PERMISSIBLE FOR MANUFACTURING OF ARTICLES OR THINGS ON LABOUR JOB BASIS. 2. DURING HEARING OF THIS APPEAL, THE LEARNED COUNS EL FOR THE ASSESSEE CONTENDED THAT THE IMPUGNED ISSUE IS COVER ED BY THE DECISION OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 20 06-07 (ITA NO. 474/IND/2010) IN THE CASE OF THE ASSESSEE ITSEL F. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE LEARNED CIT DR. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. IN VIEW OF THE ABO VE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE A FORESAID ORDER OF THE TRIBUNAL DATED 28.6.2011 :- THE APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 5.5.2008 ON THE GROUND THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION TO RS. 2,33,923/- OUT OF ADDITION OF RS. 74,10,223/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED UNDER CHAPTER VIA IN RESPECT OF U/S 80IC AND U/S 80IB(3) OF THE ACT WHEREAS THE ASSESSEE HAS 3 FILED THE CROSS OBJECTION ON THE GROUND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN MAINTAINING THE DISALLOWANCE OF ENTIRE AMOUNT OF RS.2,33,923/- U/S 80IB AND 80IC OF THE ACT. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI ARUN DEWAN, LEARNED SENIOR DR AND SHRI M.C. MEHTA ALONG WITH SHRI HITESH CHIMNANI, LD. COUNSEL FOR ASSESSEE. SO FAR AS THE APPEAL OF THE REVENUE IS CONCERNED, THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE LEARNED ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE AS THE PROFIT AND GAINS CLAIMED TO BE DERIVED FROM THE UNDERTAKING ARE NOT FROM THE BUSINESS OF MANUFACTURING OR PRODUCTION. ON THE OTHER HAND, THE LD. COUNSEL FOR ASSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. THE BRIEF FACTS ARE THAT THE ASSESSEE, A PRIVATE LIMITED COMPANY, IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF DETERGENT BAR AND POWER AT DHULE, MAHARASHTRA AND VILLAGE BADDI HIMACHAL PRADESH. OUT OF THE PROFIT AND GAINS FROM BUSINESS AT BADDI, RS. 68,44,020/- WAS CLAIMED AS DEDUCTION UNDER SECTION 80IC AND RS. 5,66,203/- AT DHULE UNDER SECTION 80IB OF THE ACT. THE LEARNED ASSESSING OFFICER DISALLOWED AND ADDED BOTH THE CLAIMED DEDUCTIONS BY OPINING THAT THE ASSESSEE IS MERELY DOING A JOB WORK, THEREFORE, NOT ENGAGED IN MANUFACTURING ACTIVITIES AS REQUIRED UNDER THE ACT. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DECIDED IN FAVOUR OF THE ASSESSEE 4 WHICH IS UNDER CHALLENGE BEFORE THE TRIBUNAL. THE ASSESSEE IS DOING JOB WORK FOR HINDUSTAN LEVER LIMITED FOR WHICH RAW MATERIAL AND PACKING MATERIAL IS SUPPLIED BY HINDUSTAN LEVER LIMITED TO THE ASSESSEE AND THE MARKETING OF THE SAME IS ALSO DONE BY HINDUSTAN LEVER LIMITED FOR WHICH PROCESSING CHARGES ARE GIVEN TO THE ASSESSEE AFTER DEDUCTING TDS. THE OBSERVATION OF THE LEARNED ASSESSING OFFICER IS REPRODUCED HEREUNDER :- IN THE CASE OF THE ASSESSEE COMPANY MERELY JOB WORK ON BEHALF OF HLL WAS DONE. IN THAT WAY ASSESSEE COMPANY IS NOT INVOLVED IN THE RISK OF AN ENTERPRISE. NEITHER ASSESSEE COMPANY IS INVOLVED IN THE RISK OF MARKET FLUCTUATIONS. NEITHER ASSESSEE COMPANY HAS TO BOTHER ABOUT PURCHASE, PACKAGING AND MARKETING OF FINISHED PRODUCTS. IN THAT WAY ASSESSEE IS NOT INDULGING IN A BUSINESS ACTIVITY IN A MANNER THAT CAN SATISFY LEGISLATIVE INTENT OF CHAPTER-VIA. BECAUSE THESE SECTIONS CLEARLY GIVE BENEFIT FOR BUSINESS UNDERTAKING ESTAB LISHED WITH ENTREPRENEURIAL SKILLS TO DO THE BUSINESS BEARING ALL THE RISKS INVOLVED. THEREFORE, CLAIM OF THE ASSESSEE OF DEDUCTION CANNOT BE ALLOWED AND TREATED AS HIS BUSINESS INCOME IN NORMAL COURSE. 4. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUC ING HEREUNDER THE RELEVANT PROVISIONS OF THE SECTIONS AS ARE APPLICABLE FOR THE RELEVANT ASSESSMENT YEAR UNDER C ONSIDERATION I.E. 2006-07:- DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERT AIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. 80A 80-IB. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRE D TO IN SUB-SECTIONS 5 (3) TO 81 [(11), (11A) AND (11B) 81A ] (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE A LLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAK ING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (I) IT IS NOT FORMED 82 BY SPLITTING UP 82 , OR THE RECONSTRUCTION 82 , OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF A N INDUSTRIAL UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-E STABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BU SINESS OF ANY SUCH INDUSTRIAL UNDERTAKING AS IS REFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN TH AT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; (III) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR TH ING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHE DULE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PA RT OF INDIA : PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL, IN RELATION TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDER TAKING REFERRED TO IN SUB-SECTION (4) SHALL APPLY AS IF THE WORDS NOT BEING ANY ART ICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE HAD BEEN OMITTED. EXPLANATION 1.FOR THE PURPOSES OF CLAUSE (II), A NY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OTHER TH AN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLANT PREVIOU SLY USED FOR ANY PURPOSE, IF THE FOLLOWING CONDITIONS ARE FULFILLED, NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME PREVIO US TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RES PECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOME OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DATE OF THE INSTALLATION OF THE MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2.WHERE IN THE CASE OF AN INDUSTRIAL UNDERTAKING, ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY U SED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TO TAL VALUE OF THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF THE MACHINERY OR PLANT U SED IN THE BUSINESS, 6 THEN, FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-S ECTION, THE CONDITION SPECIFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMP LIED WITH; (IV) IN A CASE WHERE THE INDUSTRIAL UNDERTAKING MA NUFACTURES OR PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOYS TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF PO WER, OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUFACTURING PROCESS C ARRIED ON WITHOUT THE AID OF POWER. (3) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING SHALL BE TWENTY-FIVE PER CENT (OR THIRTY PER CENT W HERE THE ASSESSEE IS A COMPANY), OF THE PROFITS AND GAINS DERIVED FROM SUC H INDUSTRIAL UNDERTAKING FOR A PERIOD OF TEN CONSECUTIVE ASSESSM ENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSES SEE IS A CO- OPERATIVE SOCIETY) BEGINNING WITH THE INITIAL ASSES SMENT YEAR SUBJECT TO THE FULFILMENT OF THE FOLLOWING CONDITIONS, NAMELY : (I) IT BEGINS TO MANUFACTURE OR PRODUCE, ARTICLES OR THINGS OR TO OPERATE SUCH PLANT OR PLANTS AT ANY TIME DURING THE PERIOD BEGIN NING FROM THE 1ST DAY OF APRIL, 1991 AND ENDING ON THE 31ST DAY OF MA RCH, 1995 OR SUCH FURTHER PERIOD AS THE CENTRAL GOVERNMENT MAY, BY NO TIFICATION IN THE OFFICIAL GAZETTE, SPECIFY WITH REFERENCE TO ANY PAR TICULAR UNDERTAKING; (II) WHERE IT IS AN INDUSTRIAL UNDERTAKING BEING A SMALL SCALE INDUSTRIAL UNDERTAKING, IT BEGINS TO MANUFACTURE OR PRODUCE AR TICLES OR THINGS OR TO OPERATE ITS COLD STORAGE PLANT [NOT SPECIFIED IN SUB-SECTION (4) OR SUB-SECTION (5)] AT ANY TIME DURING THE PERIOD BEGI NNING ON THE 1ST DAY OF APRIL, 1995 AND ENDING ON THE 31ST DAY OF MARCH, 83 [2002]. 84 (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BE GINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PR OFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING : PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESSEE IS A CO-OPERATIVE SOCIETY) SUBJE CT TO FULFILMENT OF THE CONDITION THAT IT BEGINS TO MANUFACTURE OR PROD UCE ARTICLES OR THINGS OR TO OPERATE ITS COLD STORAGE PLANT OR PLAN TS DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1993 AND ENDING ON THE 31ST DAY OF MARCH, 85 [2004] : PROVIDED FURTHER THAT IN THE CASE OF SUCH INDUSTRIES IN THE NORTH- EASTERN REGION, AS MAY BE NOTIFIED 86 BY THE CENTRAL GOVERNMENT, THE AMOUNT OF DEDUCTION SHALL BE HUNDRED PER CENT OF PR OFITS AND GAINS FOR A PERIOD OF TEN ASSESSMENT YEARS, AND THE TOTAL PER IOD OF DEDUCTION SHALL IN SUCH A CASE NOT EXCEED TEN ASSESSMENT YEAR S : 87 [ PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SUB-SECTION SHALL BE ALLOWED FOR THE ASSESSMENT YEAR BEGINNING ON THE 1S T DAY OF APRIL, 2004 OR ANY SUBSEQUENT YEAR TO ANY UNDERTAKING OR E NTERPRISE REFERRED TO IN SUB-SECTION (2) OF SECTION 80-IC :] 7 88 [ PROVIDED ALSO THAT IN THE CASE OF AN INDUSTRIAL UNDERTAKING IN TH E STATE OF JAMMU AND KASHMIR, THE PROVISIONS OF THE F IRST PROVISO SHALL HAVE EFFECT AS IF FOR THE FIGURES, LETTERS AND WORD S 31ST DAY OF MARCH, 2004, THE FIGURES, LETTERS AND WORDS 31ST DAY OF MARCH, 89 [2012] HAD BEEN SUBSTITUTED : PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SUB-SECTION SHALL BE ALLOWED TO AN INDUSTRIAL UNDERTAKING IN THE STATE O F JAMMU AND KASHMIR WHICH IS ENGAGED IN THE MANUFACTURE OR PROD UCTION OF ANY ARTICLE OR THING SPECIFIED IN PART C OF THE THIRTEE NTH SCHEDULE.] (5) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING LOCATED IN SUCH INDUSTRIALLY BACKWARD DISTRICTS AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE PRESCRIBED GUI DELINES 90 , BY NOTIFICATION 91 IN THE OFFICIAL GAZETTE, SPECIFY IN THIS BEHALF AS INDUSTRIALLY BACKWARD DISTRICT OF CATEGORY A OR A N INDUSTRIALLY BACKWARD DISTRICT OF CATEGORY B SHALL BE, (I) HUNDRED PER CENT OF THE PROFITS AND GAINS DERI VED FROM AN INDUSTRIAL UNDERTAKING LOCATED IN A BACKWARD DISTRICT OF CATEG ORY A FOR FIVE ASSESSMENT YEARS BEGINNING WITH THE INITIAL ASSESSM ENT YEAR AND THEREAFTER, TWENTY-FIVE PER CENT (OR THIRTY PER CEN T WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS OF AN INDUSTRIA L UNDERTAKING : PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION SHALL NOT EXCEED TEN CONSECUTIVE ASSESSMENT YEARS OR WHERE THE ASSESSEE IS A CO-OPERATIVE SOCIETY, TWELVE CONSECUTIVE ASSESSMENT YEARS : PROVIDED FURTHER THAT THE INDUSTRIAL UNDERTAKING BEGINS TO MANUFACTU RE OR PRODUCE ARTICLES OR THINGS OR TO OPERATE ITS COLD S TORAGE PLANT OR PLANTS AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF OCTOBER, 1994 AND ENDING ON THE 31ST DAY OF MARCH, 92-94 [2004]; (II) HUNDRED PER CENT OF THE PROFITS AND GAINS DER IVED FROM AN INDUSTRIAL UNDERTAKING LOCATED IN A BACKWARD DISTRICT OF CATEG ORY B FOR THREE ASSESSMENT YEARS BEGINNING WITH THE INITIAL ASSESSM ENT YEAR AND THEREAFTER, TWENTY-FIVE PER CENT (OR THIRTY PER CEN T WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS OF AN INDUSTRIA L UNDERTAKING : PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED EIGHT CONSECUTIVE ASSESSMENT YEARS (OR WHERE THE ASSESSEE IS A CO-OPERATIVE SOCIETY, TWELVE CONSECUTIVE ASSESSMENT YEARS) : PROVIDED FURTHER THAT THE INDUSTRIAL UNDERTAKING BEGINS TO MANUFACTU RE OR PRODUCE ARTICLES OR THINGS OR TO OPERATE ITS COLD S TORAGE PLANT OR PLANTS AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF OCTOBER, 1994 AND ENDING ON THE 31ST DAY OF MARCH, 92-94 [2004]. (6) THE AMOUNT OF DEDUCTION IN THE CASE OF THE BUSI NESS OF A SHIP SHALL BE THIRTY PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH SHIP FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS INCLUDIN G THE INITIAL ASSESSMENT YEAR PROVIDED THAT THE SHIP (I) IS OWNED BY AN INDIAN COMPANY AND IS WHOLLY US ED FOR THE PURPOSES OF THE BUSINESS CARRIED ON BY IT; 8 (II) WAS NOT, PREVIOUS TO THE DATE OF ITS ACQUISIT ION BY THE INDIAN COMPANY, OWNED OR USED IN INDIAN TERRITORIAL WATERS BY A PER SON RESIDENT IN INDIA; AND (III) IS BROUGHT INTO USE BY THE INDIAN COMPANY AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1991 AND ENDING ON THE 31ST DAY OF MARCH, 1995. (7) THE AMOUNT OF DEDUCTION IN THE CASE OF ANY HOTE L SHALL BE (A) FIFTY PER CENT OF THE PROFITS AND GAINS DERIVE D FROM THE BUSINESS OF SUCH HOTEL FOR A PERIOD OF TEN CONSECUTIVE YEARS BEGINNI NG FROM THE INITIAL ASSESSMENT YEAR AS IS LOCATED IN A HILLY AREA OR A RURAL AREA OR A PLACE OF PILGRIMAGE OR SUCH OTHER PLACE AS THE CENTRAL GO VERNMENT MAY, HAVING REGARD TO THE NEED FOR DEVELOPMENT OF INFRAS TRUCTURE FOR TOURISM IN ANY PLACE AND OTHER RELEVANT CONSIDERATI ONS, SPECIFY BY NOTIFICATION IN THE OFFICIAL GAZETTE AND SUCH HOTEL STARTS FUNCTIONING AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1990 AND ENDING ON THE 31ST DAY OF MARCH, 1994 OR BEGINNING ON THE 1ST DAY OF APRIL, 1997 AND ENDING ON THE 31ST DAY OF MARCH, 20 01: PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHALL APPLY T O A HOTEL LOCATED AT A PLACE WITHIN THE MUNICIPAL JURISDICTIO N (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED ARE A COMMITTEE OR A CANTONMENT BOARD OR BY ANY OTHER NAME) OF CALCUTTA, CHENNAI, DELHI OR MUMBAI, WHICH HAS STARTED OR STARTS FUNCTIONING ON OR AFTER THE 1ST DAY OF APRIL, 1997 AND BEFORE THE 31ST DAY OF MARCH , 2001: PROVIDED FURTHER THAT THE SAID HOTEL IS APPROVED BY THE PRESCRIBED AUTHORITY FOR THE PURPOSE OF THIS CLAUSE IN ACCORDA NCE WITH THE RULES 95 MADE UNDER THIS ACT AND WHERE THE SAID HOTEL IS APP ROVED BY THE PRESCRIBED AUTHORITY BEFORE THE 31ST DAY OF MARCH, 1992, SHALL BE DEEMED TO HAVE BEEN APPROVED BY THE PRESCRIBED AUTH ORITY FOR THE PURPOSE OF THIS SECTION IN RELATION TO THE ASSESSME NT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1991; (B) THIRTY PER CENT OF THE PROFITS AND GAINS DERIV ED FROM THE BUSINESS OF SUCH HOTEL AS IS LOCATED IN ANY PLACE OTHER THAN THOSE M ENTIONED IN SUB- CLAUSE (A) FOR A PERIOD OF TEN CONSECUTIVE YEARS BE GINNING FROM THE INITIAL ASSESSMENT YEAR IF SUCH HOTEL HAS STARTED O R STARTS FUNCTIONING AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1991 AND ENDING ON THE 31ST DAY OF MARCH, 1995 OR BEGINNING ON THE 1ST DAY OF APRIL, 1997 AND ENDING ON THE 31ST DAY OF MARCH, 20 01: PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHALL APPLY T O A HOTEL LOCATED AT A PLACE WITHIN THE MUNICIPAL JURISDICTIO N (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED ARE A COMMITTEE, TOWN AREA COMMITTEE OR A CANTONMENT BOARD OR BY ANY OTHE R NAME) OF CALCUTTA, CHENNAI, DELHI OR MUMBAI, WHICH HAS START ED OR STARTS FUNCTIONING ON OR AFTER THE 1ST DAY OF APRIL, 1997 AND BEFORE THE 31ST DAY OF MARCH, 2001; (C) THE DEDUCTION UNDER CLAUSE (A) OR CLAUSE (B) S HALL BE AVAILABLE ONLY IF 9 (I) THE BUSINESS OF THE HOTEL IS NOT FORMED BY THE SPLITTING UP, OR THE RECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE OR BY THE TRANSFER TO A NEW BUSINESS OF A BUILDING PREVIOUSLY USED AS A H OTEL OR OF ANY MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; (II) THE BUSINESS OF THE HOTEL IS OWNED AND CARRIE D ON BY A COMPANY REGISTERED IN INDIA WITH A PAID-UP CAPITAL OF NOT L ESS THAN FIVE HUNDRED THOUSAND RUPEES; (III) THE HOTEL IS FOR THE TIME BEING APPROVED BY THE PRESCRIBED AUTHO-RITY 95 : PROVIDED THAT ANY HOTEL APPROVED BY THE PRESCRIBED AUTHORITY 95 BEFORE THE 1ST DAY OF APRIL, 1999 SHALL BE DEEMED TO HAVE BEEN APPROVED UNDER THIS SUB-SECTION. 96 [(7A) THE AMOUNT OF DEDUCTION IN THE CASE OF ANY MU LTIPLEX THEATRE SHALL BE (A) FIFTY PER CENT OF THE PROFITS AND GAINS DERIV ED, FROM THE BUSINESS OF BUILDING, OWNING AND OPERATING A MULTIPLEX THEATRE, FOR A PERIOD OF FIVE CONSECUTIVE YEARS BEGINNING FROM THE INITIAL ASSESS MENT YEAR IN ANY PLACE : PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHALL APPLY T O A MULTIPLEX THEATRE LOCATED AT A PLACE WITHIN THE MUNICIPAL JUR ISDICTION (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOT IFIED AREA COMMITTEE OR A CANTONMENT BOARD OR BY ANY OTHER NAM E) OF CHENNAI, DELHI, MUMBAI OR KOLKATA; (B) THE DEDUCTION UNDER CLAUSE (A) SHALL BE ALLOW ABLE ONLY IF (I) SUCH MULTIPLEX THEATRE IS CONSTRUCTED AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 2002 AND ENDING ON THE 31ST DAY OF MARCH, 2005; (II) THE BUSINESS OF THE MULTIPLEX THEATRE IS NOT FORMED BY THE SPLITTING UP, OR THE RECONSTRUCTION, OF A BUSINESS ALREADY IN EXI STENCE OR BY THE TRANSFER TO A NEW BUSINESS OF ANY BUILDING OR OF AN Y MACHINERY OR OF PLANT PREVIOUSLY USED FOR ANY PURPOSE; (III) THE ASSESSEE FURNISHES ALONGWITH THE RETURN OF INCOME, THE REPORT OF AN AUDIT IN SUCH FORM AND CONTAINING SUCH PARTICULARS AS MAY BE PRESCRIBED 97 AND DULY SIGNED AND VERIFIED BY AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288 , CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED. (7B) THE AMOUNT OF DEDUCTION IN THE CASE OF ANY CON VENTION CENTRE SHALL BE (A) FIFTY PER CENT OF THE PROFITS AND GAINS DERIV ED, BY THE ASSESSEE FROM THE BUSINESS OF BUILDING, OWNING AND OPERATING A CONVEN TION CENTRE, FOR A PERIOD OF FIVE CONSECUTIVE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR; (B) THE DEDUCTION UNDER CLAUSE (A) SHALL BE ALLOW ABLE ONLY IF 10 (I) SUCH CONVENTION CENTRE IS CONSTRUCTED AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 2002 AND ENDING ON THE 31ST DAY OF MARCH, 2005; (II) THE BUSINESS OF THE CONVENTION CENTRE IS NOT FORMED BY THE SPLITTING UP, OR THE RECONSTRUCTION, OF A BUSINESS ALREADY IN EXI STENCE OR BY THE TRANSFER TO A NEW BUSINESS OF ANY BUILDING OR OF AN Y MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; (III) THE ASSESSEE FURNISHES ALONGWITH THE RETURN OF INCOME, THE REPORT OF AN AUDIT IN SUCH FORM AND CONTAINING SUCH PARTICULARS AS MAY BE PRESCRIBED 98 , AND DULY SIGNED AND VERIFIED BY AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288 , CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CL AIMED.] (8) THE AMOUNT OF DEDUCTION IN THE CASE OF ANY COMP ANY CARRYING ON SCIENTIFIC RESEARCH AND DEVELOPMENT SHALL BE HUNDRE D PER CENT OF THE PROFITS AND GAINS OF SUCH BUSINESS FOR A PERIOD OF FIVE ASSESSMENT YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR IF SUCH COMPANY (A) IS REGISTERED IN INDIA; (B) HAS THE MAIN OBJECT OF SCIENTIFIC AND INDUSTRI AL RESEARCH AND DEVELOPMENT; (C) IS FOR THE TIME BEING APPROVED BY THE PRESCRIB ED AUTHORITY 99 AT ANY TIME BEFORE THE 1ST DAY OF APRIL, 1999. 1 [(8A) THE AMOUNT OF DEDUCTION IN THE CASE OF ANY CO MPANY CARRYING ON SCIENTIFIC RESEARCH AND DEVELOPMENT SHALL BE HUN DRED PER CENT OF THE PROFITS AND GAINS OF SUCH BUSINESS FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS, BEGINNING FROM THE INITIAL ASSESS MENT YEAR, IF SUCH COMPANY (I) IS REGISTERED IN INDIA; (II) HAS ITS MAIN OBJECT THE SCIENTIFIC AND INDUST RIAL RESEARCH AND DEVELOPMENT; (III) IS FOR THE TIME BEING APPROVED BY THE PRESCR IBED AUTHORITY 2 AT ANY TIME AFTER THE 31ST DAY OF MARCH, 2000 BUT BEFORE THE 1S T DAY OF APRIL, 3 [2007]; (IV) FULFILS SUCH OTHER CONDITIONS AS MAY BE PRESC RIBED 4 .] 5 [ (9) THE AMOUNT OF DEDUCTION TO AN UNDERTAKING SHALL BE HUNDRED PER CENT OF THE PROFITS FOR A PERIOD OF SEVEN CONSECUTI VE ASSESSMENT YEARS, INCLUDING THE INITIAL ASSESSMENT YEAR, IF SUCH UNDE RTAKING FULFILS ANY OF THE FOLLOWING, NAMELY: (I) IS LOCATED IN NORTH-EASTERN REGION AND HAS BEG UN OR BEGINS COMMERCIAL PRODUCTION OF MINERAL OIL BEFORE THE 1ST DAY OF APR IL, 1997; (II) IS LOCATED IN ANY PART OF INDIA AND HAS BEGUN OR BEGINS COMMERCIAL PRODUCTION OF MINERAL OIL ON OR AFTER THE 1ST DAY O F APRIL, 1997; (III) IS ENGAGED IN REFINING OF MINERAL OIL AND BE GINS SUCH REFINING ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 5A [ BUT NOT LATER THAN THE 31ST DAY OF MARCH, 2012 ] . 11 SPECIAL PROVISIONS OF SECTION 80IC IN RESPECT OF CERTAIN UNDERTAKINGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES ARE AS UNDER FOR THE ASSESSMENT YEAR 2006-07 :- 80-IC. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE IN CLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN E NTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHAL L, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE A LLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE, (A) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PR ODUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANY ART ICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEE NTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING (I) ON THE 23RD DAY OF DECEMBER, 2002 AND ENDING B EFORE THE 1ST DAY OF APRIL, 29 [2007], IN ANY EXPORT PROCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE B OARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED 30 BY THE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF SIKKIM; OR (II) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BE FORE THE 1ST DAY OF APRIL, 2012, IN ANY EXPORT PROCESSING ZONE OR INTEGRATED I NFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GROWTH CENTRE OR I NDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TECHNOLOGY PARK OR I NDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED 30 BY THE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCH AL; OR (III) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY EXPORT PROCESSING ZONE OR INTEG RATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED 30 BY THE BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN ANY OF THE NORTH-EAST ERN STATES; (B) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PR ODUCE ANY ARTICLE OR THING, SPECIFIED IN THE FOURTEENTH SCHEDULE OR COMM ENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANU FACTURES OR PRODUCES ANY ARTICLE OR THING, SPECIFIED IN THE FOU RTEENTH SCHEDULE OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING 12 (I) ON THE 23RD DAY OF DECEMBER, 2002 AND ENDING B EFORE THE 1ST DAY OF APRIL, 31 [2007], IN THE STATE OF SIKKIM; OR (II) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BE FORE THE 1ST DAY OF APRIL, 2012, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR (III) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY OF THE NORTH-EASTERN STATES. (3) THE DEDUCTION REFERRED TO IN SUB-SECTION (1) SH ALL BE (I) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE R EFERRED TO IN SUB-CLAUSES (I) AND (III) OF CLAUSE (A) OR SUB-CLAUSES (I) AND (III ) OF CLAUSE (B), OF SUB- SECTION (2), ONE HUNDRED PER CENT OF SUCH PROFITS A ND GAINS FOR TEN ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESS MENT YEAR; (II) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-CLAUSE (II) OF CLAUSE (A) OR SUB-CLAUSE (II) OF CLAUSE (B), OF SUB-SECTION (2), ONE HUNDRED PER CENT OF SUCH PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR AND THE REAFTER, TWENTY- FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSE E IS A COMPANY) OF THE PROFITS AND GAINS. (4) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY: (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECON STRUCTION, OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF A N UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-ESTABLISHMENT , RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33B , IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. EXPLANATION.THE PROVISIONS OF EXPLANATIONS 1 AND 2 TO SUB-SECTION (3) OF SECTION 80-IA SHALL APPLY FOR THE PURPOSES OF CLAUSE (II) OF THI S SUB-SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUS E (II) OF THAT SUB- SECTION. (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, NO DEDUCTION SHALL BE ALLOWED UNDER ANY OTHER SECTION CONTAINED IN CHA PTER VIA OR IN SECTION 10A OR SECTION 10B , IN RELATION TO THE PROFITS AND GAINS OF THE UNDERTAKING OR ENTERPRISE. (6) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, NO DEDUCTION SHALL BE ALLOWED TO ANY UNDERTAKING OR ENTERPRISE UNDER T HIS SECTION, WHERE THE TOTAL PERIOD OF DEDUCTION INCLUSIVE OF THE PERI OD OF DEDUCTION UNDER THIS SECTION, OR UNDER THE SECOND PROVISO TO SUB-SE CTION (4) OF SECTION 80-IB OR UNDER SECTION 10C , AS THE CASE MAY BE, EXCEEDS TEN ASSESSMENT YEARS. (7) THE PROVISIONS CONTAINED IN SUB-SECTION (5) AND SUB-SECTIONS (7) TO (12) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLY TO THE ELIGIBLE UNDERTAKING OR ENTERPRISE UNDER THIS SECTION 32 . (8) FOR THE PURPOSES OF THIS SECTION, 13 (I) INDUSTRIAL AREA MEANS SUCH AREAS, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T; (II) INDUSTRIAL ESTATE MEANS SUCH ESTATES, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T; (III) INDUSTRIAL GROWTH CENTRE MEANS SUCH CENTRE S, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T; (IV) INDUSTRIAL PARK MEANS SUCH PARKS, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T; (V) INITIAL ASSESSMENT YEAR MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING OR THE ENTER PRISE BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS, OR COMME NCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION; (VI) INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE MEANS SUCH CENTRES, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICI AL GAZETTE, SPECIFY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT; (VII) NORTH-EASTERN STATES MEANS THE STATES OF A RUNACHAL PRADESH, ASSAM, MANIPUR, MEGHALAYA, MIZORAM, NAGALAND AND TRIPURA; (VIII) SOFTWARE TECHNOLOGY PARK MEANS ANY PARK S ET UP IN ACCORDANCE WITH THE SOFTWARE TECHNOLOGY PARK SCHEME NOTIFIED BY THE GOVERNMENT OF INDIA IN THE MINISTRY OF COMMERCE AND INDUSTRY; (IX) SUBSTANTIAL EXPANSION MEANS INCREASE IN THE INVESTMENT IN THE PLANT AND MACHINERY BY AT LEAST FIFTY PER CENT OF THE BOO K VALUE OF PLANT AND MACHINERY (BEFORE TAKING DEPRECIATION IN ANY YEAR), AS ON THE FIRST DAY OF THE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPAN SION IS UNDERTAKEN; (X) THEME PARK MEANS SUCH PARKS, WHICH THE BOARD , MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMENT.] 5. IF THE LANGUAGE USED IN SUB-CLAUSE (III) TO SUB-SECTION (2) TO SECTION 80IB IS KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL ALONG WITH THE ASSERTION MADE BY THE LEARNED RESPECTIVE COUNSEL, IT DISCUSSES ABOUT DEDUCTION TO ANY INDUSTRIAL UNDERTAKING WHICH MANUFACTURES OR PRODUCES ANY ARTICLE OR THING AND SUB-SECTION (1) TO SECTION 80IB SPEAKS ABOUT ANY PROFIT AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY 14 BUSINESS MEANING THEREBY THERE SHOULD BE DIRECT CO-RELATION BETWEEN THE UNDERTAKING AND THE PRODUCTION. SINCE THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF DETERGENT BARS AND POWDERS SINCE 17 TH JUNE, 1996, CONSEQUENTLY, IT FALLS UNDER THE CATEGORY OF ELIGIBLE BUSINESS WHICH FURTHER FALLS UNDER SUB- SECTION (3) AND THE PROFIT , THEREFORE, THE PROFIT SO EARNED IS ELIGIBLE FOR DEDUCTION U/S 80IB AT THE PRESCRIBED RATE FOR THE RELEVANT PERIOD. ALMOST IDENTICAL LANGUAGE HAS BEEN USED IN SECTION 80IC WHICH ALSO SPEAKS ABOUT ANY BUSINESS REFERRED TO IN SUB-SECTION (2). NOW THE QUESTION ARISES WHETHER SUCH DEDUCTION IS ALLOWABLE TO THE ENTERPRISE WHICH IS DOING JOB WORK. THE OBVIOUS REPLY IS YES BECAUSE WHILE DOING SUCH ACTIVITY FIRSTLY ALL THE INFRASTRUCTURE LIKE PLANT AND MACHINERY IS REQUIRED TO BE USED AND SECONDLY THE END PRODUCT IS DERIVED FROM SUCH UNDERTAKING AND THE END PRODUCT IS ALSO COMMERCIALLY DISTINCT FROM THE RAW MATERIAL SO USED, THEREFORE, THE INCOME IS DIRECTLY GENERATED FROM THE ELIGIBLE BUSINESS. 6. THE WORD INDUSTRY HAS A WIDE IMPORT. WHERE THERE IS A SYSTEMATIC ACTIVITY ORGANIZED BY A CORPORATION BETWEEN EMPLOYER AND EMPLOYEE (THE DIRECT AND SUBSTANTIAL ELEMENT IS COMMERCIAL) FOR THE PRODUCTION AND/DISTRIBUTION OF GOODS AND SERVICES CALCULATED TO SATISFY HUMAN WANTS AND WISHES (NOT SPIRITUAL OR RELIGIOUS). THE TRUE FOCUS IS FUNCTIONAL AND THE DECISIVE TEST IS THE NATURE OF ACTIVITY, THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND CONFIRM THE SAME. 15 6. SO FAR AS THE CLAIMED DEDUCTION U/S 80IC OF THE ACT (BADDI UNIT) IS CONCERNED, WE FIND THAT THE RELEVANT CONDITIONS FULFILLED THE REQUIRED CONDITIONS AS THE ASSESSEE COMPANY IS HAVING ITS OWN MANUFACTURING UNIT AT BADDI AND IS REGISTERED WITH THE CENTRAL EXCISE. THE ASSESSEE DID JOB WORK FOR HINDUSTAN LEVER LIMITED, THEREFORE, FULFILS THE CONDITIONS AS STIPULATED UNDER SUB-SECTION (2) WHICH FURTHER SPEAKS ABOUT MANUFACTURING OR PRODUCTION OF ANY ARTICLE OR THING. SUB-SECTION (3) DEALS WITH THE PERIOD FOR WHICH DEDUCTION IS ALLOWED AND SUB-SECTION (4) SPEAKS OF CERTAIN OTHER CONDITIONS WHICH ARE ALSO FULFILLED BY THE ASSESSEE. SINCE THE RAW MATERIAL AND PACKAGING MATERIAL IS PROVIDED BY HINDUSTAN LEVER LIMITED AND THE ASSESSEE PRODUCED COMMERCIALLY DISTINCT PRODUCT BY TRANSFORMING THE RAW MATERIAL INTO A COMMERCIALLY NEW PRODUCT DISTINCT FROM RAW MATERIAL, CONSEQUENTLY, MANUFACTURING PROCESS IS COMPLETE WHICH RESULTS INTO A NEW ARTICLE OR A THING. IT DOES NOT MAKE ANY DIFFERENCE IF SUCH PRODUCE IS MANUFACTURED FOR HIMSELF OR ON JOB BASIS SINCE THE ASSESSEE HAS PUT LABOUR, MACHINERY, EQUIPMENT AND OTHER INFRA-STRUCTURE, ETC. FOR MANUFACTURING OF SUCH ARTICLES, CONSEQUENTLY, THE ASSESSEE QUALIFIES THE CONDITIONS WHICH ARE REQUIRED FOR PRODUCTION. THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). SINCE VARIOUS CASE LAWS HAVE ALREADY BEEN DELIBERATED UPON IN THE IMPUGNED ORDER BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), THEREFORE, WE ARE REFRAINING OURSELVES IN REPEATING THE SAME, CONSEQUENTLY, 16 THIS APPEAL OF THE REVENUE IS HAVING NO MERIT, THEREFORE, DISMISSED. 6. NOW WE SHALL TAKE UP THE CROSS OBJECTION OF THE ASSESSEE OBJECTING MAINTENANCE OF DISALLOWANCE OF ENTIRE AMOUNT OF RS.2,33,923/- UNDER SECTIONS 80IB AND 80IC OF THE ACT. THE ASSESSING OFFICER ADDED RS. 2,33,923/- ON ACCOUNT OF PROFIT ON SALE OF MACHINERY. ADMITTEDLY, SALE OF MACHINERY IS NOT A MANUFACTURING ACTIVITY BUT THE ASSESSING OFFICER WAS SUPPOSED TO DISALLOW THE CLAIMED DEDUCTION AT THE RATE OF 30%. SINCE THE FACTS ARE NOT OOZING OUT FROM THE ASSESSMENT ORDER AS WELL AS FROM THE IMPUGNED ORDER, THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE FACTS AND TO DECIDE IN ACCORDANCE WITH LAW. AT BEST, THE CLAIMED DEDUCTION AT THE RATE OF 30% CANNOT BE ALLOWED BUT AT THE SAME TIME, THE WHOLE AMOUNT CANNOT BE ADDED, THEREFORE, TO THIS EXTENT, THIS ISSUE IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. IN THE AFORESAID ORDER, THE TRIBUNAL HAS ALREADY CO NSIDERED THE MANUFACTURING ACTIVITIES OF THE ASSESSEE UNIT SITUA TED AT DHULE (MAHARASHTRA) AND BADDI (HIMACHAL PRADESH) FOR CLAI MED DEDUCTION U/S 80-IB AND 80-IC, RESPECTIVELY. THE AS SESSEE IS A 17 PRIVATE LIMITED COMPANY ENGAGED IN MANUFACTURING OF DETERGENT BAR AND POWDER. IN THE PRESENT APPEAL ALS O, THE ISSUE RELATES TO 80-IC OF THE ACT. THE CLAIM OF DED UCTION WAS DISALLOWED BY THE LD. ASSESSING OFFICER AND TREATED THE INCOME AS BUSINESS INCOME IN NORMAL COURSE. THE RELEVANT P ORTION FROM THE ASSESSMENT ORDER IS REPRODUCED HEREUNDER: IN THE CASE OF THE ASSESSEE COMPANY MERELY JOB WORK ON BEHALF OF HLL WAS DONE. IN THAT WAY ASSESSEE COMPANY IS NOT INVOLVED IN THE RISK OF AN ENTERPRIS E. NEITHER ASSESSEE COMPANY IS INVOLVED IN THE RISK OF MARKET FLUCTUATIONS. NEITHER ASSESSEE COMPANY HAS T O BOTHER ABOUT PURCHASE, PACKAGING AND MARKETING OF FINISHED PRODUCTS. IN THAT WAY ASSESSEE IS NOT INDU LGING IN A BUSINESS ACTIVITY IN A MANNER THAT CAN SATISFY LEGISLATIVE INTENT OF CHAPTER-VIA. BECAUSE THESE SECTIONS CLEARLY GIVE BENEFIT FOR BUSINESS UNDERTAK ING ESTABLISHED WITH ENTREPRENEURIAL SKILLS TO DO THE BUSINESS BEARING ALL THE RISK INVOLVED. IF THE AFORESAID REASONING OF THE LD. ASSESSING OFF ICER IS KEPT IN JUXTAPOSITION WITH THE PROVISIONS OF THE ACT, SUB-S ECTION (1) OF SECTION 80-IC SPEAKS ABOUT GROSS TOTAL INCOME WHICH INCLUDES ANY PROFIT AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISES FROM ANY BUSINESS REFERRED TO IN SUB- SECTION (2) BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASS ESSEE FROM 18 SUCH PROFIT AND GAINS AS SPECIFIED. SUB-SECTION (4) SPEAKS ABOUT FULFILMENT OF CERTAIN CONDITIONS. HOWEVER, TH E DEDUCTION HAS BEEN DISALLOWED BY THE LD. ASSESSING OFFICER ME RELY ON THE PLEA THAT THE ASSESSEE COMPANY WAS DOING JOB WORK O N BEHALF OF HLL AND ALL RISK RELATING TO THE BUSINESS IS BOR NE BY THE HLL AND NOT BY THE ASSESSEE COMPANY. NO SUCH DIFFERENTI ATION HAS BEEN MADE IN THE PROVISIONS OF THE ACT WHETHER THE MANUFACTURING HAS BEEN DONE ON JOB WORK OR FOR ITS OWN. THE SECTION CLEARLY SPEAKS ABOUT ANY PROFIT FROM ANY BUSINESS. THERE IS NO DISPUTE BY THE REVENUE THAT THE ASSESSE E HAS NOT FULFILLED THE CONDITIONS LAID DOWN IN THE SECTION. THE ASSESSEE STARTED MANUFACTURING DURING THE PREVIOUS YEAR RELE VANT TO ASSESSMENT YEAR 2006-07 AND THE SAME WAS ALLOWED. S INCE THE FACTS ARE IDENTICAL TO ASSESSMENT YEAR 2006-07 AND THE ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND THE REVENUE HAS NOT DIFFERENTIATED THE FACTS, T HEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). T HE SAME IS UPHELD. 19 FINALLY, THE APPEAL OF THE REVENUE IS HAVING NO ME RIT, THEREFORE, DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN IN THE PRE SENCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.11.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE