Case Law Details
DCIT Vs M/s Dynamic Transmission Limited (ITAT Delhi)
With regard to addition of Rs. 63,66,574/- on account of job work charges u/s. 80IC of the I.T. Act, 1961 is concerned, we note that the AO has observed that deduction u/s. 80IC is available only in respect of articles or things manufactured by itself in its specified industrial unit. As per AO the job work charges are not allowable as these are not income received from articles or things manufactured or produced in its eligible unit.
But the AO has not disputed that job work charges were received from articles or things manufactured or produced in its eligible unit. However, we find considerable cogency in the contention raised by the Ld. AR of the assesse that the nature of job work done and also process done for completing such job work.
Further as per the cost sheet, delivery challans and bills raised for job work charges, a distinct and new object was created. The word ‘manufacture’ is of much wider connotation and would include any process as a result of which a different commodity having distinct name, use and character emerges from the raw material.
Therefore, it cannot be denied that the assessee received job work charges from the manufacturing process through which a new product has emerged from the raw material supplied by its customers. We find considerable cogency in the contention raised by the ld. Counsel of the assessee that the AO in the assessment years 2012-13, 2013- 14 & 2014-15 in assessee’s own case has allowed the deduction under Chapter VIA u/s. 80-IC and also the ITAT, ‘H’ Bench, New Delhi vide its order dated 27.3.2015 passed in the case of ITO vs. Zeon Lifessciences Ltd. for the assessment year 2006-07 held that the assessee job work charges have to be treated as manufacturing activity, and it is not envisaged u/s. 80-IC to maintain separate books of account for manufacturing on his own account and for job work.
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