COMMISSIONER OF INCOME TAX C.R. BUILDING QUEENS ROAD BANGALORE AND THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-6(1) QUEENS ROAD BANGALORE Vs. M/S MITTAL CREATIONS NO. 5. F-2, I PHASE PEENYA INDUSTRIAL AREA BANGALORE

JUDGEMENT

(1.) THIS appeal is by the revenue challenging the order passed by the tribunal holding that the receipts from job work do not fall within the clause (baa) of the explanation below Section, 80HHC(4b) of the Income Tax Act, 1961.

(2.) THE appeal was admitted on 21.8.2011 to consider the following substantial question of law: Whether the appellate authorities were right in granting relief to the assessee and the same is in confirmity with Explanation (baa) to Section 80HHC of the Income Tax Act, 1961

(3.) FROM the material on record, it is clear the assessee is in the manufacture and export of ready made garments, In the course of the said export business, utilising some men and machinery, they have undertaken some job work and they have received the aforesaid amount of Rs,33,12,545/ - as a part of the business activity of the assessee viz., manufacture and export of ready made garments Explanation (baa) refers to receipts by way of brokerage, commission, interest, rent, Charges or any other receipt of a similar nature included in such profits. They are the types of income which has no bearing insofar as the manufacturing activity of the assessee is concerned or the income derived from such manufacturing activity. However, the assessee has earned these receipts from job work utilising the very same machinery and men and as a part of his manufacturing activity. Therefore, these is a direct nexus between the job work and the manufacturing activity carried on by the assessee insofar as the export at manufacturing items is concerned. Therefore, this income does not fall within the definition of (baa) and therefore, the said receipt has to be included in the total profits. That is precisely what the tribunal as well as the appellate authority has held. In that view of the matter, there is no merit in this appeal Accordingly, we answer the substantial question of law in favor of the assessee and against the revenue.