INCOME TAX ACT, 1961

Section 80-IB

Deduction under section 80-IB - Manufacture or production - Assessee-company providing services to mineral oil companies and generation of logs -

Assessee was engaged in wireline logging perforation and related oil fields activities for various national and international mineral oil companies. Assessee claimed deduction under section 80-IB qua its two units, namely, Unit 2 Duliajan and Unit 3 Agartala. Declining the contentions raised by the assessee company, AO proceeded to hold that the assessee company was only providing services to mineral oil concerns and generation of logs does not amount to manufacture or production of article or thing and as such deduction claimed by the assessee-company was not allowable as the assessee had failed to satisfy necessary conditions requried under section 80-IB. CIT(A) confirmed the disallowance of deductions claimed by the assessee under section 80-IB. Held: Following the decision rendered by the Delhi High Court in assessee's own case, assessee-company was an industrial undertaking engaged in the business of manufacturing or production of an article or thing for the purpose of section 80-IB. So, AO as well as CIT(A) had erred in assessment years 2004-05, 2007-08 & 2008-09 in denying the deduction claimed by the assessee company under section 80-IB on the ground that the assessee-company was not a manufacturing concern.

Followed:Delhi High Court in assessee's own case vide Order, dated 121-5-2011 : (2011) 335 ITR 292 (Del).