Royal Impex, Vapi V. The Income tax Officer,Vapi Ward-3, Vapi

ITA 1207/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9003 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-02-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 21-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C
• Assessee Lawyers: M K PATEL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 1207/AHD./2007 ASSESSMENT YEAR : 2003-2004 ROYAL IMPEX, SILVASA -VS.- INCOME TAX OFFICER, VA PI, WARD-3, VAPI (PAN : AAEFR 9752 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.K. PATEL RESPONDENT BY : SHRI M.C. PANDIT, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 29.11.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), VALSAD IN CONF IRMING THE ACTION OF ASSESSING OFFICER TREATING THE ACTIVITIES OF THE ASSESSEE AS A NON-MA NUFACTURING ACTIVITY FOR THE PURPOSE OF GRANTING DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF CUTTING AND POLISHING OF MARBLE STONE AS ALSO MENTI ONED BY THE A.O. IN THE ASSESSMENT ORDER. THE ASSESSEE PROCURES ROUGH MARBLE BLOCKS, WHICH IS FIR ST CUT OR CHISELED USING A HAMMER AND A CHISEL. THEREAFTER THE BLOCK IS CUT INTO THE FORM O F SLABS. THEREAFTER, THESE SLABS ARE PLACED UNDER A POLISHING MACHINE TO MAKE THE SURFACES SMOOTH. TH EN EDGES OF THE TILES ARE CUT USING CIRCULAR SAW BLADES. THIS IS THE ACTIVITY DONE BY THE ASSESS EE. NEEDLESS TO SAY THAT THE PROCESSES INVOLVED IN THE ACTIVITY OF THE ASSESSEE ARE VARYING FORMS O F CUTTING- CHISELING, POLISHING AND CUTTING EDGES. CHISELING IS CUTTING OUT UNEVEN BULGING SURF ACES OF STONE USING A HAMMER AND A CHISEL. POLISHING IS ALSO A FORM OF CUTTING WHEREIN MINUTE UNEVEN SURFACES ARE CUT OFF USING WATER AND ABRASIVES BY EMPLOYING A POLISHING MACHINE. LIKEWIS E, CUTTING OFF THE EDGES OF TILES USING A CIRCULAR SAW IS ALSO A CUTTING ACTIVITY. THUS BASIC ALLY, THE ACTIVITY PERFORMED BY THE ASSESSEE ON ROUGH STONE SLAB IS CUTTING. WHETHER IT BE A CUTTIN G ACTIVITY PERFORMED BY A SCISSOR OR WITH THE HELP OF A HAMMER AND CHISEL OR WITH POLISHING MACHI NE OR WITH CIRCULAR SAW BLADE OR WITH ANY OTHER TOOLS, CUTTING STILL REMAINS CUTTING. 2 ITA NO. 1207/AHD/2007 2.1. IN THE ASSESSMENT ORDER, THE A.O. TOOK THE VIE W THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IB AS IT IS NOT ENGAGED I N THE MANUFACTURING ACTIVITY. ON APPEAL IN THE IMPUGNED, THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS) UPHELD THE ACTION OF A.O. 3. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE SH RI M.K. PATEL APPEARED AND CONTENDED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CUTTING AND POLISHING OF MARBLE STONE. THE ACTIVITY OF THE ASSESSEE INCLUDES PROCESSES OF CHISELING, POLIS HING AND CUTTING EDGES OF MARBLE SLABS. INCIDENTAL TO THE MAIN ACTIVITY OF CUTTING, TWO TYP ES OF WASTES ARE CREATED, WHICH ARE PIECES OF STONES CUT OUT DURING CHISELING AND CUTTING OF EDGE S AND SLURRY CREATED DURING POLISHING. HE ALSO CONTENDED THAT THE PURPOSE OF THE ABOVE ACTIVITY OF THE ASSESSEE IS TO MAKE POLISHED MARBLE SLABS AND NOT TO MAKE PIECES OF STONES OR SLURRY. IN SUPP ORT OF THIS, HE RELIED ON THE LATEST JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ITO VS.- ARIHANT TILES AND MARBLES P. LTD. REPORTED IN (2010) 320 ITR 79 (SC), WHEREIN ALMOST ON IDENTICAL ACTIVITIES, WHICH WERE CARRIED OUT BY ARIHANT TILES AND MARBLES P. LTD., IT WAS HELD THAT THE ASSESSEE IS AN INDUSTRIAL UNDERTAKING ENGAGED IN MANUFACTURE AND PRODUCTION OF ARTICLE OR THINGS. THE LD. COUNSEL OF THE ASSESSEE ACCORDINGLY CONTENDED THAT THIS JUDGMENT OF THE HON 'BLE SUPREME COURT, THE ASSESSING OFFICER BE DIRECTED TO ALLOW THE DEDUCTION UNDER SECTION 80 IB TO THE TUNE OF RS.15,49,904/- CLAIMED IN THE RETURN OF INCOME. 4. ON THE OTHER HAND, SHRI M.C. PANDIT, SR. D.R. AP PEARING ON BEHALF OF REVENUE CONTENDED THAT THE ACTIVITY CARRIED OUT BY THE ASSESSEE NEEDS VERIFICATION AT THE END OF A.O. IF THE ACTIVITIES ARE SAME AS ARE IN THE CASE OF ARIHANT TILES AND MA RBLES P. LTD. (SUPRA), IN THAT EVENT THE A.O. MAY ALLOW THE DEDUCTION UNDER SECTION 80IB AFTER VE RIFICATION OF THE CALCULATION. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUT HORITIES BELOW. THE VARIOUS ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE ALMOST IDENTICAL WH ICH ARE CARRIED OUT BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ARIHANT TILES AND MARB LES P. LTD. (SUPRA). WE ARE, THEREFORE, OF THE VIEW THAT THE ASSESSEE IS AN INDUSTRIAL UNDERTAKING ENGAGED IN THE BUSINESS OF MANUFACTURE AND PRODUCTION OF ARTICLE OR THINGS. THE BUSINESS OF AS SESSEE RELATES TO CUTTING AND POLISHING OF MARBLE STONE AS ALSO MENTIONED BY THE A.O. IN THE ASSESSME NT ORDER. THE ASSESSEE PROCURES ROUGH MARBLE 3 ITA NO. 1207/AHD/2007 BLOCKS, WHICH IS FIRST CUT OR CHISELED USING A HAMM ER AND A CHISEL. THEREAFTER THE BLOCK IS CUT INTO THE FORM OF SLABS. THEREAFTER, THESE SLABS ARE PLAC ED UNDER A POLISHING MACHINE TO MAKE THE SURFACES SMOOTH. THEN EDGES OF THE TILES ARE CUT US ING CIRCULAR SAW BLADES, THEREFORE, FOR THIS PURPOSE THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB OF THE ACT. HOWEVER, THE WORKING OF CALCULATION NEEDS VERIFICATION AT THE EN D OF A.O. THEREFORE, THE MATTER IS RESTORED TO THE FILE OF A.O. WITH THE DIRECTION THAT HE WILL VE RIFY THE WORKING AND ALLOW THE DEDUCTION UNDER SECTION 80IB TO THE ASSESSEE IN ACCORDANCE WITH LAW . 6. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL OF THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12.02.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12/ 02 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.