Deduction 80IC-Manufacturing Plastic Pet Bottles, Jars not negative list item in 13th Schedule

Deduction u/s 80IC avaialble for manufacturing of PET bottles, Caps, jars etc. which are not plastic articles and do not fall in the negative list  items mentioned in the 13th schedule.


ITA No. 1309Del/2013 Assessment Year: 2009-10

ITO vs. M/s Om Shree Gita Industries

Date of Order: 11/03/2016



This appeal of the Revenue is directed against order dated 17/12/2012 of the Commissioner of Income tax (appeals)-XXVI, New Delhi for assessment year 2009-10 raising following grounds of appeal:

1.”the CIT appeal has erred in deleting disallowance of Rs. 66, 10, 095/- under section 80 IC of the income tax act despite the fact that the assessee was engaged in manufacturing of plastic products which is covered in negative list of 13 schedule”

2.” The CIT appeal has erred in deleting the disallowance by holding that the assessee has been granted exemption under the excise act and therefore no disallowance can be made under the provisions of the income tax act without any basis.”

2. The facts in brief are that the assessee, a partnership firm, was engaged in manufacturing of Pet bottles, Cap jars etc from its factory located in the state of Himachal Pradesh. The assessee filed its return of income for the year under consideration on 22/09/2009 declaring nil income after claiming deduction of Rs. 66, 10, 094/- under section 80 IC of the Income-tax Act ( in short the Act). The assessee also filed audit report in form No. 10CCB of Income-tax Rules in support of its claim under section 80 IC of the act. In the course of scrutiny proceedings, the Assessing Officer held that the products manufactured by the company falls under the category of ‘plastics and articles thereof’, which are covered in item No. 20 of the Thirteenth schedule, which is an item of negative list on which deduction under section 80 IC of the Act was not admissible under the Act. Whereas, the assessee contested that the item Pet bottles etc manufactured by the assessee firm was covered in item No. 3923 in excise tariff manual and therefore same were not under the negative list for the purpose of deduction under section 80 IC of the Act. The Assessing Officer did not accept the contention of the assessee and held that the assessee did not fulfill the condition as down under section 80 IC (2) (a) of the Act and thus deduction under section 80IC amounting to Rs. 66, 10, 094/-was disallowed. The Ld. CIT of (appeal), after considering the submission of the assessee that the Central excise department also granted exemption holding that the product of the assessee was not falling under the negative list of articles, deleted the disallowance of deduction made under section 80 IC of the Act. Aggrieved, the Revenue is in appeal before the Tribunal.

3. In both the grounds raised by the Revenue, the sole issue involved is of deleting disallowance of deduction of Rs. 66, 10, 095 claimed under section 80IC of the Act.

4. Before us, at the outset, the ld. authorised representative of the assessee submitted that in another sister concern of the assessee, the identical issue has been allowed by the Tribunal, Delhi, A bench in accordance with the judgement of the Hon’ble Delhi High Court in writ petition No. 1987/2012 and others. He further submitted that the subsequent appeal of the Department was also dismissed by the Hon’ble High Court in appeal number ITA 514/2014 . The ld. Authorised Representative filed a copy of the decision of the tribunal in the case of Sh. Ajai Kumar Sharma in ITA No. 1310/Del/2013 for assessment year 2009-10 alongwith the copy of the orders of the Hon’ble High Court and a copy of which was also provided to the senior departmental representative, who fairly accepted that the issue in dispute was covered in favour of the assessee by the above decision of the Tribunal and the judgement of the High Court.

5. We have heard the rival submissions and perused the material on record. We find from the order of the Tribunal that the assessee in that case was also engaged in production of items identical to the present assessee. Further, We find that grounds identical to the assessee were raised by the Revenue in the appeal in the case of Sh. Ajai Kumar Sharma in ITA No. 1310/Del/2013. The Tribunal in para 7 of its order has given finding is as under:

“7. Since the issue raised in the ground is fully covered by the above cited judgement of the Hon’ble Delhi High Court in the case of the present assessee itself, we are not inclined to entertain the request of the Ld. DR to direct the assessee to file the excise records or interfere with the findings of the Ld. Commissioner of income tax (appeals) on the issue. The same is upheld. The grounds are accordingly rejected.”

6. We further find that the Hon’ble High Court in the case of Sh Ajai Kumar Sharma ( supra) has decided the issue as under :

“the issue raised is whether the respondent assessee was entitled to benefit under section 80 IC of the income tax act, 1961 as the respondent assessee was manufacturing PET bottles , Caps, jars etc. The contention of the revenue was that the aforesaid articles fall in the negative list mentioned in the 13th schedule of the act and covered by NT No. 20 which refers to plastics and articles thereof, covered under sub clauses 39.09 to 39.15 of the National industrial classification, 1988.

The aforesaid issue was considered by the High Court in the case of the respondent assessee in W.P.(C) 1987/2012 and others connected matters decided on 18th February, 2013, wherein it was held that the aforesaid articles manufactured by the respondent assessee do not fall within the heading 39.09 to 39.15 of National industrial classification, 1988 but fall within the heading 39.23.

The aforesaid finding recorded with by this High Court has been followed by the tribunal in the impugned order. The appeal therefore does not have any merit and deserves to be dismissed. Ordered accordingly.”

7. Thus in view of above facts and circumstances, we find that issue in dispute is covered by the decision of the Hon’ble High Court and the Tribunal in the case of Sh. Ajai Kumar Sharma (supra) in favour of the assessee, thus respectfully following the findings of the Hon’ble High Court and the Tribunal in the case of Sh. Ajai Kumar Sharma(supra), we, therefore , accordingly, dismiss the grounds of the Revenue.

8. In the result, the appeal of the Revenue is dismissed.

The decision is pronounced in the open court on 11 th March, 2016.


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