September 2014
Industrial undertaking: Manufacture: Deduction u/s. 80-IB: A. Ys. 2004-05 to 2007-08: Assessee buying monitor, key board, mouse etc. and assembling them and selling computers so assembled: Activity is manufacturing activity: Assessee is entitled to deduction u/s. 80-IB:
By K. B. Bhujle Advocate
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CIT vs. Sai Infosystem India P. Ltd.; 365 ITR 433 (Guj):
The assessee bought basic computer items such as monitor, key board, mouse, etc., and was into the activity of assembling them. The assessee claimed deduction u/s. 80-IB of the Income-tax Act, 1961. For the A. Ys. 2004-05 to 2007-08, the Assessing Officer disallowed the claim holding that the activity of the assessee could not be said to be manufacturing activity so as to enable the assessee to claim the deduction. The Tribunal allowed the assessee’s claim.
In appeal by the Revenue, the Gujarat High Court upheld the decision of the Tribunal and held as under:
“i) T he Tribunal had rightly deleted the disallowance of deduction u/s. 80-IB made by the Assessing Officer. There was a specific finding of the Commissioner(Appeals) that the assessee had employed at least ten persons. This was a finding of fact and it could not be said that the assessee was not entitled to deduction u/s. 80-IB of the Act.
ii) T he questions raised in the present tax appeals are held against the Revenue and in favour of the assessee. Consequently, the tax appeals are dismissed.”
