The Supreme Court, in Commissioner of Income Tax – 1, Mumbai vs Hindustan Petroleum Corporation Ltd, has upheld the Income Tax Appellate Tribunal’s finding that the activity of filling of cylinder with compressed LPG gas amounts to ‘production’ for the purposes of Sections 80HH, 80-I and 80-IA of the Income Tax Act.
Assessees, who are engaged in the process of bottling Liquefied Petroleum Gas (LPG) cylinders meant for domestic use, claimed benefit of Sections 80HH, 80-I and 80-IA of the Income Tax Act. Their claim for deductions was disallowed by the assessing officer. Later, the appellate tribunal and the high court held otherwise.
A bench comprising Justice AK Sikri and Justice Ashok Bhushan upheld the following reasoning adopted by the tribunal:
Upholding the tribunal order, the bench observed: “The LPG obtained from the refinery undergoes a complex technical process in the assessees’ plants and is clearly distinguishable from the LPG bottled in cylinders and cleared from these plants for domestic use by customers.”