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1. By this order we shall dispose of this bunch of seven appeals filed by the revenue against the respective orders of the CIT(A), Chandigarh for the consecutive assessment years 1988-89, 1989-90, 1990-91, 1991-92, 1992-93, 1993-94 and 1994-95. Since the issues involved in these appeals are common, these were heard together and are being disposed of by this consolidated order for the sake of convenience.

2. The first common effective issue raised in all these appeals is that the CIT(A) was not justified in allowing special deduction under Section 80-1 of the Income-tax Act for the assessment years under consideration. The identical facts are that in the respective returns filed for the aforesaid assessment years, the assessee had claimed deduction under Section 80-1 of the Income-tax Act. However, the Assessing Officer noted that prior to the assessment years under reference, the company was being assessed in the name of M/s Hemkund Drugs (P.) Ltd., but in the accounting year relevant to assessment year 1988-89, it had changed its name to M/s Oscar Laboratories Pvt. Ltd. He also noted that in the accounting year relevant to assessment year 1988-89, the assessee had purchased plant and machinery worth Rs. 47,996, laboratory equipment Rs. 5,609 and furniture and fixtures Rs. 8,072 for the administrative office. While scrutinizing the details, the Assessing Officer noted that plant and machinery purchased by the assessee was meant only for carrying out the final performance of the activity on medicines, namely, capsule filling machine or strip sealing or for batch printing on the labels. The main manufacturing activities was done by M/s Ranbaxy Laboratories Ltd., Delhi to whom the assessee had paid processing charges of Rs. 3,01,990. Besides, the assessee had paid testing charges of Rs. 47,875 to M/s Analytical Testing Services Ltd. for testing the quality of raw material, packing material and finished goods. Thus, the Assessing Officer observed that the assessee had not carried out any manufacturing activity, rather it got the manufacturing activity done from M/s Ranbaxy Laboratories Ltd. to whom processing charges had been paid. According to the Assessing Officer, the assessee was not an industrial undertaking engaged in the business of manufacturing or production of articles and, therefore, not entitled to special deduction under Section 80-1. Accordingly, the claim of the assessee was not allowed for the assessment year 1988-89 and similar disallowance was made for the subsequent assessment years for the reason given in the assessment order for the assessment year 1988-89.

4. The ld. D.R., Smt. Rachna Singh, submitted that in the returns of income, the assessee had claimed the status of an 'industrial undertaking'. The assessee purchased machinery worth Rs. 47,996 in the form of filling machine, as strip sealing machine, packing machine etc. She submitted that the assessee did not own any plant and machinery used in manufacturing the medicines and drugs, Pharmaceuticals, etc. Instead, the assessee entered into an agreement with M/s Ranbaxy Laboratories Ltd. and the same is at pages 19 to 24 of the paper book. She drew our attention to page 19 of the paper book, which mentions that M/s Ranbaxy Laboratories Ltd. had the necessary facilities for manufacture of medicinal and pharmaceutical products and holds a valid drug manufacturing licence. Clause 1 of the agreement at page 20 of the paper book clearly mentions that M/ s Ranbaxy Laboratories Ltd. shall undertake the manufacturing of the products mentioned in Annexure-A. Clause 2 of the said agreement refers to the scope of activities of the assessee as per which the assessee was required to procure the raw-material of standard quality and specification required for manufacturing and packing drugs. Clause 4 of the agreement further mentions that the assessee was required to provide to the manufacturer necessary quality and quantity specifications for manufacturing those drugs and M/s Ranbaxy Laboratories Ltd. shall ensure manufacturing these drugs as per the required specifications. Clause 5 of the agreement further mentions that it is the responsibility of M/s Ranbaxy Laboratories Ltd. to affix on the finished products registered trademark of the assessee. Clause 6 of the said agreement clearly mentions that testing of manufactured drugs was required to be done by M/s Analytical Testing Services Pvt. Ltd. and in case M/s Ranbaxy Laboratories Ltd. failed to manufacture the goods as per the required specifications, the cost of the raw-material and inputs shall be borne by M/s Ranbaxy Laboratories Ltd. Clause 7 further stipulates that it shall be the responsibility of M/s Ranbaxy Laboratories Ltd. to arrange transportation of the finished stock to assessee's godown for which the responsibility of unloading of the goods at assessee's godown shall be that of the assessee. By referring to these clauses of the agreement, the ld. D.R. submitted that it was obvious that the entire manufacturing of the drugs and medicines was being done by M/s Ranbaxy Laboratories Ltd. to whom the assessee had paid service charges of Rs. 3,01,990. She further submitted that even the testing of finished products was to be done by another company, namely, M/s Analytical Testing Services Pvt. Ltd. to whom service charges of Rs. 40,875 were separately paid. She further submitted that even the transportation of finished goods was the responsibility of M/s Ranbaxy Laboratories Ltd. Thus the assessee could not be said to be engaged in the business of manufacturing or production of goods and articles and, therefore, the basic condition of allowing deduction under Section 80-1 was not fulfilled. She further submitted that the judgments relied on by the CIT(A) in allowing special deduction under Section 80-1 were clearly distinguishable on facts and, therefore, not applicable to the facts of present cases. She submitted that in the case of Neo Pharma P. Ltd. (supra), the facts before the Bombay High Court were that various drugs and medicines were got manufactured under the direct supervision and quality control of the assessee but in this case the assessee did not exercise such control and the entire manufacturing activity and quality control was the responsibility of M/s Ranbaxy Laboratories Ltd. Similarly, she submitted that the other decision of Bombay High Court in the case of CIT v. Penwalt India Ltd. [1992] 196 ITR 813', relied on by the CIT(A) would not be applicable because in that case only for a part of the manufacturing activity the assessee had engaged the services of somebody else. But she submitted that in this case, the entire manufacturing activity was undertaken by M/s Ranbaxy Laboratories Ltd. She further submitted that the decision of Bombay High Court in the case of Anglo French Drug Co. (Eastern) Ltd. (supra), was not applicable because earlier the assessee was manufacturing the various pharmaceutical goods of its own and thereafter transferred the entire plant and machinery to its associate concern retaining its control over the manufacture. Thus, the Bombay High Court held that the assessee could be said to be in the business of manufacturing of goods. But in the present cases, the entire manufacturing activity is being done by M/s Ranbaxy Laboratories Ltd. She further submitted that the decision of Calcutta High Court in the case of A. Mukherjee & Co. (P.) Ltd., (supra) was also not applicable because that related to printing of books. She therefore, submitted that in the present cases, the assessee did not undertake any manufacturing activity and, therefore, the assessee would not be entitled to deduction under Section 80-I.