THE ACIT., CIRCLE - 4(1), Visakhapatnam V. M/s R.K.Hair Products (P),Ltd., Tanuku

ITA 144/VIZ/2013

• Counselvise Citation: 14425314 RSA 2013
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI SAKTIJIT DEY, JM ITA NO.144/VIZAG/2013 : ASST.YEAR 2009-2010 THE ASST.COMMISSIONER OF INCOME - TAX CIRCLE 4(1) VISAKHAPATNAM. VS. M/S.R.K.HAIR PRODUCTS (P) LIMITED B-10, INDUSTRIAL ESTATE TETALI, TANUKA. PAN : AACCR8421R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N.CHARYA, CIT RESPONDENT BY : SHRI G.V.N.HARI DATE OF HEARING : 2 8 .02.2014 DATE OF PRONOUNCEMENT : 04 .0 3 .2014 O R D E R PER J.SUDHAKAR REDDY (AM) : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), VISAKHAPATNAM , DATED 29.01.2013 FOR ASSESSMENT YEAR 2009-2010 ON THE FOLLOWING GROUNDS. 1. THE ORDER OF THE CIT(A) IS CONTRARY TO LAW. 2. THE CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE CANNOT BE SAID TO BE ENGAGED IN THE MANUFACTURING ACTIVITY WI THIN THE MEANING OF SEC.10B OF THE IT ACT AND HENCE, IS NOT ENTITLED TO DEDUCTION OF 100% OF THE PROFIT DERIVED THERE FROM. 3. INASMUCH AS THE ACTIVITY UNDERTAKEN BY THE ASSE SSEE IS ONLY PROCESSING OF HAIR IN THAT IT INVOLVES CLEANIN G, GRADING, DRYING, CUTTING INTO SHAPES AND SIZES, BLEACHING, DYING, CO NDITIONING AND STITCHING BY SEWING MACHINE, IT CANNOT BE TERMED AS MANUFACTURING ACTIVITY. 4. AT ALL STAGES I.E., PRE-PROCESSING AND POST PRO CESSING, HAIR CONTINUES TO BE HAIR AND IS USED AS HAIR ALONE. THE REFORE, IT CANNOT BE SAID THAT THE ASSESSEE IS ENGAGED IN ANY MANUFAC TURING ACTIVITY WITHIN THE MEANING OF THE AFORESAID SECTIO N. ITA NO.144/VIZAG/2013. M/S.R.K.HAIR PRODUCTS (P) LIMITED. 2 5. THE DEPARTMENT RESPECTFULLY RELIES ON THE DECIS ION OF PIO FOOD PACKERS CASE 46 STC 63 WHEREIN IT WAS HELD THA T WHERE THERE IS NO ESSENTIAL DIFFERENCE BETWEEN THE ORIGIN AL PRODUCT AND THE END PRODUCT, IT IS NOT POSSIBLE TO SAY THAT THE RE HAS BEEN MANUFACTURING ACTIVITY. 6. IN ORDER TO FALL WITHIN THE PURVIEW OF MANUFACT URE, SOMETHING MORE IS NECESSARY IN THAT THE PROCESS SHO ULD RESULT IN TRANSFORMATION OF AN EXISTING PRODUCT INTO A NEW AN D DIFFERENT ARTICLE HAVING DISTINCT NAME, CHARACTER OR USE. EVE N ON THE TOUCH STONE OF THIS PRINCIPLE, IT CANNOT BE SAID THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING ACTIVITY AND, HENCE IT IS NOT ENTITLED TO BENEFIT OF DEDUCTION IN TERMS OF SEC.10B OF THE ACT . 7. THE ORDER OF THE HONBLE ITAT IS ITA NO.189/VIZ AG/2009, DATED 25.06.2009 UPON WHICH THE LD.CIT(A) HAS PLACE D RELIANCE, HAS NOT BECOME FINAL, AS THE APPEAL PREFERRED BY TH E DEPARTMENT IS PENDING BEFORE THE HONBLE HIGH COURT. 2. AFTER HEARING THE RIVAL CONTENTIONS, WE FIND THA T THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE THAT THE JUDGMENT OF THE HONBLE ANDHRA PRADESH HIGH COURT IN ASSESSEES OWN CASE FOR THE E ARLIER ASSESSMENT YEAR IN ITA NO.538 OF 2012 JUDGMENT DATED 16.07.2013, WHEREIN T HE HONBLE HIGH COURT HELD AS FOLLOWS:- ON THE PERUSAL OF THE IMPUGNED JUDGMENT AND ORDER O F THE LEARNED TRIBUNAL, WE HAVE NOTICED ONLY ONE POINT TH AT IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESS EE WAS ENTITLED FOR DEDUCTION UNDER SECTION 10B OF THE INC OME TAX ACT OR NOT? THE LEARNED TRIBUNAL ON APPRECIATION OF THE FACT A ND ALSO CONSIDERING VARIOUS JUDGMENTS OF THE SUPREME COURT ON THIS ISSUE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS UNDERT AKEN THE MANUFACTURING PROCESS I.E., WIG, HAIRPIECES, PRE BO NDED STRANDS AND WEFT HAIRS, WHICH ARE COMPLETELY DIFFERENT AND DISTINCT FROM THE ORIGINAL RAW MATERIAL. THE ASSESSEE ACTUALLY PURCHA SED LARGE HUMAN HAIR TO MANUFACTURE WIGS AND OTHER HAIR WEAR PRODUCTS. ON APPRECIATION OF THE FACT IT WAS FOUND BY THE TRIBUN AL THAT THERE HAS BEEN A MANUFACTURING PROCESS AND IT EMERGES COMPLET ELY DISTINCT AND NEW PRODUCT. THEREFORE, DEDUCTION HAS TO BE ALL OWED UNDER SECTION 10B OF THE ACT. ITA NO.144/VIZAG/2013. M/S.R.K.HAIR PRODUCTS (P) LIMITED. 3 HENCE, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE IMPUGNED ORDER. 3. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THIS APPEAL OF THE REVENUE. 4. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED ON THIS 4 TH DAY OF MARCH, 2014. SD/- SD/- ( SAKTIJIT DEY ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM; DATED : 4 TH MARCH, 2014. DEVDAS* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, VISAKHAPATNAM . 4. CIT(A) VISAKHAPATNAM . 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE. BY ORDER, //TRUE COPY// (SENIOR PRIVATE SECRETARY) ITAT, VISAKHAPATNAM