75th Founding Day Lecture Meeting on “India@2030” Know More

March 2012

Deduction u/s.80IB Manufacture: Production of perfumed hair oil by using coconut oil and mineral oil is manufacture: Assessee entitled to deduction u/s.80IB.

By K. B. Bhujle, Advocate
Reading Time 2 mins
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The assessee was engaged in the business of production of perfumed hair oil using coconut oil and mineral oil as per the requirement of M/s. Hindustan Lever Ltd. The assessee’s claim for deduction u/s.80IB was rejected by the Assessing Officer holding that the activity did not amount to manufacture for the purposes of section 80IB. The Tribunal allowed the assessee’s claim.

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:

“(i) The finding of fact recorded by the ITAT is that the production of the perfumed hair oil as per the requirement of Hindustan Lever Ltd. constituted manufacture of a product distinct from the inputs used and on the said manufactured product the Central Excise Duty has been paid. The Apex Court in the case of CCE v. Zandu Pharmaceutical Works Ltd., reported in (2006) 12 SCC 453 has held that addition of perfume to coconut oil to produce perfumed oil constitutes a manufacturing process.

(ii) Moreover, in the present case it is not in dispute that the deduction u/s.80IB of the Act has been allowed to the assessee in the first year of manufacture and that order has attained finality.

(iii) In these circumstances, the decision of the ITAT in holding that the assessee is engaged in manufacturing activity and hence entitled to avail deduction u/s.80IB cannot be faulted.”

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