Poly flex (India) Pvt ltd Vs CIT & another (Supreme court)
Date-17th November, 2022
Sub- Whether deduction u/s 80IB can be claimed by a manufacturer of an item which falls under entry 25 of the eleventh schedule of the Income-tax Act,1961 which is not eligible for such claim?

The Supreme Court of India in this case was considering the claim of deduction in respect of manufacturer of polyurethane foam when the manufacturer claimed to have added few chemicals and thereafter supplied the same to manufacturers who were manufacturing automobile seats. The polyurethane foam being an article under entry 25 was not eligible for deduction. However, the appellant claimed that it was manufacturing was form which was used for manufacture of the automobile seat and was thus eligible for deduction. However, the Supreme Court rejecting the plea of the assessee held that the assessee is manufacturing polyurethane foam and supplying the same in different sizes/designs to the assembly operator, which ultimately is being used for car seats. The assessee is not undertaking any further process for end product, namely, car seats. The polyurethane foam which is supplied in different designs/sizes is being used as ingredient by others, namely, assembly operators for the car seats. Merely because the assessee is using the chemicals and ultimately what is manufactured is polyurethane foam and the same is used by assembly operators after the process of moulding as car seats, it cannot be said that the end product manufactured by the assessee is car seats/automobile seats.

The decision is helpful in claim relating to deduction u/s 80IB and implications of the said claim

Ramesh Patodia
18-11-2022