By TIOL News Service

CHENNAI, APR 01, 2019: THE ISSUE IS - Whether purchase of plant & machinery as well as consumption of electricity are not mandatory requirement, for purpose of granting benefit to an industrial unit u/s 80IA. YES IS THE VERDICT.

Facts of the case:

The Revenue Department preferred the present appeal challenging the action of ITAT in holding that the Assessee was entitled to the benefit of Section 80IA when there was a concurrent finding of fact by both the Lower authorities that there was no new industrial unit, machinery or infrastructure as claimed and that the assessee was not even engaged in the manufacturing process on its own but gets it done by third parties.

High Court held:

++ the manufacture of a herbal product by a manual process with the use of some chemicals and small machinery can also amount to manufacture or production of a different commercial article which is the basic requirement u/s 80IA. The purpose of the said provision is to encourage industrialisation and investment in an industry. The purchase of plant and machinery, and consumption of electricity are not mandatory requirement as was thought by the AO in the present case. The Tribunal after describing the said manufacture / production process of the herbal product was, perfectly justified in holding that the same amounted to manufacture of a different commercial article and that therefore, the Assessee was entitled to the deduction u/s 80IA.

(See 2019-TIOL-700-HC-MAD-IT)