Regal Industries Limited vs Commissioner of Income Tax

Adarsh Kumar Goel, J.—The Assessee has preferred this appeal u/s 260A of the Income Tax Act, 1961 (for short, "the Act") against the order dated December 19, 2008 (annexure A-7) passed by the Income Tax Appellate Tribunal, Chandigarh, Bench "A", Chandigarh in I. T. A. No. 732/CHD/01 for the assessment year 1997-98, proposing to raise the following substantial questions of law:

(i) Whether the Assessing Officer can deny the benefit u/s 80-IA when the same has been given in the preceding years in view of the law laid down in Saurashtra Cement and Chemical Industries Ltd. Vs. Commissioner of Income Tax, Gujarat-V, and Commissioner of Income Tax Vs. Paul Brothers,

(ii) Whether on the facts and in the circumstances of the present case, the learned Income Tax Appellate Tribunal is right in law in coming to the conclusion that the process of manufacturing rubber latex solution (adhesive) from the natural latex is not ''manufacture'' as stipulated in Section 80-IA of the Income Tax Act, 1961 ?

(iii) Whether the learned Income Tax Appellate Tribunal gravely erred in not considering the certificates issued by the Industries Department, Government of Himachal Pradesh, clearly showing that the Appellant was manufacturing the rubber latex solution with effect from November 1, 1994 ?

(iv) Whether the learned Income Tax Appellate Tribunal gravely erred in not relying upon the Labour Inspector''s report dated February 26, 1997, as well as the attendance registers duly checked by the Labour Inspector on February 18, 1997, which clearly shows that the Appellant was employing 25 persons in his factory premises ?

(v) Whether the learned Income Tax Appellate Tribunal misread the evidence with regard to the Labour Inspector''s report dated February 26, 1997 ?

The Assessee claimed deduction u/s 80-IA. The said claim was rejected by the Assessing Officer, which view has been upheld by the Commissioner of Income Tax (Appeals) as well as by the Tribunal. It was held that the Assessee claimed that it was purchasing latex and diluting it in a big drum called "emulsifiers fire", which could not be termed "manufacturing". The factum of carrying on manufacturing activity was also not established. The Assessee could not produce any electricity bill. There was no evidence of ESI or PF returns nor any evidence of sale of goods. The Assessee claimed that books of account were burnt in fire and though every effort was made to lodge FIR, the police department did not do so. Reliance was also placed on a certificate issued by the general manager, Solan. The Assessee produced extract from payment of wages register. The evidence of the Assessee was rejected concurrently by all the authorities.

The Tribunal observed:

In view of these facts, since at any stage, nothing has been produced/furnished evidencing that the Assessee has actually manufactured anything, therefore, we have not found any infirmity in the impugned order. Our above view is also fortified by the following decisions: Commissioner of Income Tax Vs. Hindusthan Metal Refining Works (P.) Ltd., , Commissioner of Income Tax, Trivandrum Vs. Relish Goods, , Sacs Eagles Chicory v C.I.T., (2002) 255 ITR 178 , D.D. Shah and Brothers Vs. Union of India (UOI) and Another, . If the aforesaid facts and the judicial pronouncements are kept in juxtaposition with the facts of the present appeal, we have found that the Assessee neither produced the records of purchasing raw material nor explained the process of manufacturing and also no proof of sale. For claiming deduction u/s 80-IA, the Assessee is supposed to explain that the end product, if any, is commercially known differently. However, in the present appeal, the Assessee even has not explained what is manufactured by it or whether the Assessee is actually manufacturing anything, therefore, in the absence of all these facts, the benefit of deduction cannot be extended to the Assessee. Consequently, we have not found any infirmity in the impugned order, the same is upheld.

The above findings are findings of fact and cannot be held to be perverse. The factum of manufacturing and selling having not been established, no substantial question of law arises.

The appeal is dismissed.