Law:

Section:

Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings - Whether production of compound rubber on job work basis for tyre manufacturing companies by assessee would amount to 'production of an article or thing' qualifying for deduction under section 80-IB - Held, yes FACTS The assessee-company was engaged in the manufacture of precured tread rubber and also in the job work of mixing rubber with chemicals, process oil, etc., to make compound rubber for tyre manufacturing companies. The compound rubber was packed and sent to tyre manufacturing companies for use in the manufacture of tyres. The assessee claimed deduction under section 80-IB at 25 per cent of the profit earned from the industry wherein rubber mixing work was done on a job work basis for tyre manufacturing companies. The Assessing Officer held that the job work done by the assessee by mixing rubber with chemicals, process oil, etc., to make compound rubber would not amount to 'manufacture or production of any article or thing' within the meaning of section 80-IB and, so much so, the assessee was not entitled to any deduction. In appeals, the disallowance was confirmed. On appeal to the High Court : HELD The decision of the Division Bench of the Kerala High Court in CIT v. Forbes Ewart & Figgis (P.) Ltd. [1999] 238 ITR 762 is clearly on the same point, though in the context of investment allowance under section 32A, because the assessee in that case also was engaged in making of compound rubber for tyre manufacturing companies. The Court held that compound rubber was an article or thing produced by the assessee in its factory entitling it to investment allowance. Section 80-IB is worded in the same way as section 32A and, therefore, the aforesaid decision squarely applied to the facts of the instant case also. The Supreme Court has given a wide meaning to the expressions 'manufacture or production of any article or thing', occurring in sections 32A, 80-IB, etc. In CIT v.Sesa Goa Ltd. [2004] 271 ITR 331/[2005] 142 Taxman 11, the Supreme Court held that processing of iron ore amounts to manufacture or…

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