ITO, Baddi V. M/s Himachal Winding Wire Products, Solan

ITA 1464/CHANDI/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1378 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KEMWAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI N.BARATHVAJA SANKAR, VICE PRESIDENT AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1464 /CHANDI/2010 ( A.Y. 2007-08 ) INCOME-TAX OFFICER, VS. M/S HIMACHAL WINDING WIRE PRODUCTS BADDI. VILLAGE BURANWALA, P.O.BAROTIWALA, (H.P.) TEH. KASOLI, SOLAN. PAN: AADFH5165Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.S.KEMWAL RESPONDENT BY : SHRI C.S.ANAND O R D E R PER N.BARATHVAJA SANKAR : THIS IS AN APPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08 IN THE CASE OF M/S HIMACHAL WINDING WIRE PRODUCTS, VILLAGE BURANWALA, DISTT. SO LAN. THE ONLY ISSUE RAISED BY THE REVENUE BEFORE US FOR ADJU DICATION IS WHETHER THE COMMISSIONER OF INCOME-TAX (A) HAS ERR ED IN HOLDING THAT THE ASSESSEE IS ENGAGED IN MANUFACTURE OF WIRE AND IS HENCE ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0IC, ESPECIALLY IN VIEW OF THE SUPREME COURT JUDGMENT IN COLLECTOR OF CENTRAL EXCISE VS. TECHNOWELD INDUSTRIES LTD. (2 003) 153 2 ELT 209 (SC) WHERE SUCH ACTIVITY WAS HELD TO BE NOT AMOUNTING TO MANUFACTURE. 2. THE BRIEF FACTS PERTAINING TO THIS ISSUE ARE THA T THE ASSESSEE DERIVES INCOME FROM MANUFACTURING AND SALE OF BARE COPPER WIRES AND BUNCHED COPPER WIRE OBTAINED FROM COPPER WIRE/RODS. THE COMMERCIAL PROCESS STARTED W.E.F. 2 7.4.2004. THE ASSESSEE DECLARED TOTAL SALES OF RS.56,39,91,71 5/- PLUS JOB WORKS OF RS.23,72,422/- ON WHICH NET PROFIT OF RS.7,12,65,505/- YIELDING NET PROFIT OF 12.63%. TH E ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IC AMOUNTING TO RS.7,44,06,003/-. THE ASSESSING OFFICER HELD THAT SO-CALLED MANUFACTURING OF BARE COPPER WIRES DOES NOT AMOUNT TO MANUFACTURING FOR THE PURPOSES OF CLAIMING DEDUCTIO N UNDER SECTION 80IC OF THE ACT. HE, THEREFORE, DISALLOWE D THE DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT. T HE ASSESSING OFFICER ALSO WORKED OUT THE JOB WORKS AT RS.2,81,99,585/- AND EXCESS PROFIT SHOWN AT RS.4,30 ,66,020/- WAS TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLO SED SOURCES. REGARDING THE CLAIM UNDER SECTION 80IC OF THE ACT FOR RS.2,23,56,480/- THE ASSESSING OFFICER HELD THA T THE ASSESSEE DID NOT FULFILL THE NECESSARY CONDITIONS AND THE SAME WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME O F THE ASSESSEE. 3. AGGRIEVED BY THIS DECISION OF THE ASSESSING OFFI CER THE ASSESSEE MOVED IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE R ELIED ON 3 THE DECISION OF THE CHANDIGARH BENCH OF I.T.A.T. IN ASSESSEES OWN CASE IN I.T.A.NO.651/CHD/2009 FOR ASSESSMENT YE AR 2005-06, DATED 30.11.2009. THE COMMISSIONER OF IN COME-TAX (A) AFTER GOING THROUGH THE SUBMISSION OF THE ASSES SEE AND FACTS OF THE CASE WAS OF THE VIEW THAT THESE GROUND S ARE COVERED BY THE ORDER OF THE JURISDICTIONAL I.T.A.T. DATED 30.11.2009 VIDE PARA NO.18 IN I.T.A.NO.651/CHD/2009 FOR ASSESSMENT YEAR 2005-06 WHICH READS AS UNDER :- IN FINAL ANALYSIS AND, AFTER APPLYING THE JUDICIAL INTERPRETATION OF THE TERMS MANUFACTURE AND PRODUCTION TO THE FACTS AND CIRCUMSTANCES OF THE CAPTIONED APPELLANTS, IT IS NOT POSSIBLE TO COME TO THE CONCLUSION THAT ANY LEGAL INFIRMITY EXISTS IN THE CLAIM OF THE APPELLANTS FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES, AS WELL AS, THE POSITION OF THE LAW IN A CORRECT PERSPECTIVE AND, IT IS THUS HELD THAT, THE APPELLANTS ARE ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE INCOMES DERIVED FROM THEIR INDUSTRIAL UNDERTAKINGS. THUS, THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME-TAX (A) ARE SET ASIDE AND THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT AS PER LAW. THUS THE COMMISSIONER OF INCOME-TAX (A) ALLOWED TH E APPEAL OF ASSESSEE. 4 4. NOW THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL B EFORE US WITH THIS ISSUE. 5. AT THE TIME OF HEARING, THE LEARNED D.R. REITERA TED THE CONTENTS OF THE ASSESSMENT ORDER AS HIS SUBMISSIONS . 6. PER CONTRA, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD THE COPIES OF THE FOLLOWING ORDERS OF THI S TRIBUNAL FOR ASSESSMENT YEARS 2005-06 & 2006-07 IN THE CASE OF THE SAME ASSESSEE:- 1. I.T.A.NO. 651/CHANDI/2009 (ASSTT. YEAR 2005-06) 2. I.T.A.NO. 997/CHANDI/2009 (ASSTT. YEAR 2006-07) BY PLACING ABOVE ORDERS ON RECORD THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE POINT AT ISSUE IS S QUARELY COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE DE CISIONS OF THIS TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THE FACTS AND MATERIAL ON RECORD INCLUDING THE DECISION S OF THIS TRIBUNAL PLACED BEFORE US. WE FIND FORCE IN THE CO NTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE POINT AT ISSUE IS SQUARELY COVERED IN ASSESSEES FAVOUR IN VIEW OF T HE FOLLOWING OBSERVATIONS OF THE TRIBUNAL FOR ASSESSMENT YEARS 2 005-06 AND 2006-07 RESPECTIVELY :- IN FINAL ANALYSIS AND , AFTER APPLYING THE JUDICIAL INTERPRETATION OF THE TERMS MANUFACTURE AND PRODUCTION TO THE FACTS AND CIRCUMSTANCES OF CAPTIONED APPELLANTS, IT IS NOT 5 POSSIBLE TO COME TO THE CONCLUSION THAT ANY LEGAL INFIRMITY EXISTS IN THE CLAIM OF THE APPELLANT FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES, AS WELL AS, THE POSITION OF THE LAW IN A CORRECT PERSPECTIVE AND, IT IS THUS HELD THAT, THE APPELLANTS ARE ENTITLED TO CLAIM OF DEDUCTION U/S 80IC OF THE ACT ON THE INCOMES DERIVED FROM THEIR INDUSTRIAL UNDERTAKINGS. THUS, THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (A) ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S 80IC OF THE ACT AS PER LAW. THE ISSUE OF ALLOWANCE OF DEDUCTION CLAIMED U/S 80IC OF THE ACT AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2005-06 WHERE IN THE TRIBUNAL IN ITA NO.651/CHANDI/2009 RELATING TO THE ASSESSEE ALONGWITH ITA NO.215/CHANDI/2009, ITA NO.382/CHANDI/2009 AND ITA NO.662/CHANDI/2009 RELATING TO THE OTHER ASSESSEES, VIDE ORDER DATED 30.11.2009 HAD HELD THAT THE MANUFACTURING PROCESS UNDERTAKING BY THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. THE TRIBUNAL IN THE SAID ORDER HAS ELABORATELY CONSIDERED THE ISSUE AT LENGTH AND HELD THAT THE MANUFACTURING PROCESS UNDERTAKEN BY THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE IS ELIGIBLE FOR DEDUCTION CLAIMED U/S 80IC OF THE ACT. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN ASSESSEES OWN CASE, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION U/S 80IC OF THE ACT TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AS THE FACTUAL ASPECTS OF THE ISSUE ARE IDENTICAL TO THE FACTUAL MATRIX IN 6 ASSESSMENT YEAR 2005-06. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS ALLOWED. 8. FOLLOWING THE ABOVE DECISIONS OF THIS TRIBUNAL W E ARE INCLINED TO DISMISS REVENUES APPEAL. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE END OF T HE HEARING ON 14.02. 2011. SD/- SD/- (SUSHMA CHOWLA) (N.BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT DATED 14 TH FEB.,2011 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R.