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1.   DCIT Vs. Legancy Foods Pvt. Ltd., I.T.A. No. 3643/Del/2013, Date of Order: 22.08.2014, ITAT - Delhi

Deduction U/s 80IC can be claimed, where no chemical change in the composition of the raw material during manufacturing process.

Held Yes

Assessee set up a unit at Baddi in Himachal Pradesh for packing of Horlics, Boost. The assessee filed its return of income claiming deduction u/s 80IC i.e. 100% of the profits of the business. AO disallow such claim on the basis that in Form 3CD of the audit report the nature of business shown as “rendering services of job work” and there is no chemical change in the composition of raw material, hence the activity carried out by the assessee is not manufacturing.

Assessee submitted that he is contract manufacturer and has entered into an Agreement with M/s Glaxo Smith Kline Consumer Healthcare Ltd according to which raw-materials were to be supplied by M/s GSKCH & thereafter the assessee would do processing by using its own Plant & Machinery and assessee is also registered with Central Excise according to which same is treated as manufacturing.

Held that Admittedly the assessee was registered with the excise department. In the audit report of the excise department the assessee has been shown to be engaged in the manufacture of Malt Based Foods, falling within chapter 19 of CETA attracting central excise duty. It is also not disputed that assessee has already been allowed deduction u/s 80IC in earlier years from A.Y. 2005-06 to A.Y. 2008-09. No change in facts for the assessment year in question has been brought on record.

(Please click here for judgment)

2.  Asstt. CIT Vs. Shri Mahesh Chunilal Shah, I.T.A. No. 210/Ahd/2011, Date of Order: 27/08/2014, ITAT - Ahmedabad

AO cannot value a co-owned property at different value from the value as accepted in the case of another co-owner.

Held Yes

Assessee an individual filed his return for A.Y. 2007-08. During the course of assessment AO noticed that assessee sold a godown and claimed capital gains. AO asked to furnish the purchase deed but assessee failed to produced it. In the absence of evidence of cost of acquisition, AO estimated cost of acquisition at Rs. 5 lacs instead of Rs. 27 lacs and made addition.

Assessee submitted that property was co- owned by the assessee along with his brother and his portion of capital gain was duly accepted by the department. He further submitted that since the property is same, a different view on cost of the assets cannot be taken for another co-owner. Hon’ble ITAT held that the differential treatment cannot be meted out to another co-owner while making the assessment of same property or while valuing the same property. In the result appeal of revenue is dismissed.

(Please click here for judgment)