The ACIT, Vapi Circle, Vapi V. M/s. National Lamination Ind., Nani Daman

ITA 1477/AHD/2011

• Counselvise Citation: 147720514 RSA 2011
• Duration Of Justice: 4 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS SHINDE

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER ./ ITA NO. 1477/AHD/2011 / ASSESSMENT YEAR: 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI. VS. NATIONAL LAMINATION INDUSTRIES, DABHEL, NANI DAMAN. PAN :AACFN 4402 D / (APPELLANT) / (RESPONDENT) REVENUE BY : MR. VILAS SHINDE, SR. D.R. ASSESSEE(S) BY : SMT. URVASHI SHODHAN, A.R. / DATE OF HEARING : 19/08/2015 / DATE OF PRONOUNCEMENT: 20/08/2015 / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VALSAD DATED 17-03- 2011 FOR ASSESSMENT YEAR 2008-09. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE INCOME FROM SCRAP SAL ES OF RS.1,53,17,633/- IS ELIGIBLE FOR DEDUCTION U/S. 80- IB WITHOUT CONSIDERING FACT THAT IT HAS NO DIRECT OR IMMEDIATE NEXUS WITH THE MANUFACTURING ACTIVITY OF THE ASSESSEE. ITA NO.1477/AHD/2011 ACIT VS. NATIOINAL LAMINATION INDUSTRIES FOR AY 2008-09 2 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL PLACED BEFORE US. WE FIND THAT THE IDENTICAL ISSUE CONSID ERED BY THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2007-08 VIDE ITA NO.22 35/AHD/2010 ORDER DATED 7-1-2011, IN THE ABOVE ORDER ITAT UPHEL D THE ORDER OF THE LD. CIT (A) WITH THE FOLLOWING FINDING:- 5. WITH THIS BACKGROUND, WE HAVE HEARD BOTH THE SI DES AT SOME LENGTH. THE ONLY OBJECTION OF LD. DEPARTMENTAL REPR ESENTATIVE SHRI S.R. MALIK WAS THAT THE GENERATION OF SCRAP WAS NOT LINKED WITH THE MANUFACTURING ACTIVITY AS NOTED BY THE ASSESSING OF FICER, THEREFORE, THE ISSUE WAS NOT COVERED BY THE DECISION OF HONBLE HI GH COURT. ON THE OTHER HAND, LD. A.R. HAS STRONGLY OPPOSED THE SAID OBSERVATION PRIMARILY ON THE GROUND THAT WITHOUT VERIFYING THE CORRECT FACTS OF THE CASE, THE ASSESSING OFFICER HAD ARBITRARILY HELD TH AT THE PRODUCTION OF A SCRAP WAS NOT A BY-PRODUCT OF THE MANUFACTURING ACT IVITY. IT HAS ALSO BEEN STATED THAT THOUGH THERE WAS NO CHANGE IN THE MANUFACTURING ACTIVITY OF THE ASSESSEE; AND THAT THERE WAS NO CHA NGE IN THE PRODUCTION OF SCRAP COMPARING THE PAST RECORDS OF THE CASE; AN D THAT THE DEDUCTION ON SALE OF A SCRAP HAS ALWAYS BEEN ALLOWED IN THE P AST, HENCE THERE WAS NO OCCASION ON THE PART OF THE ASSESSING OFFICER TO DISTURB THE ALREADY ACCEPTED STAND OF THE REVENUE. IN SUPPORT OF THE CL AIM FOLLOWING CASE LAWS HAVE ALSO BEEN RELIED UPON:- SR.NO. DECISION IN THE CASE OF REPORTED IN 1 DY.CIT VS. HARJIVANDAS JUTHABHAI ZAVERI & ANOTHER [2002] 258 ITR 785 (GUJ.) 2 DY.CIT VS. CORE HEALTHCORE LTD. [2009] 308 ITR 263 (GUJ.). 3 NIRMA INDUSTRIES LTD. VS. ACIT [2005] 95 ITD 119 [AHD] (SB) 4 FENNER (INDIA) LTD. VS. CIT [21000] 241 ITR 803 (MAD.) 6. THE ADMITTED FACTUAL POSITION IS THAT THE ASSESS EE IS USING RAW- MATERIAL CALLED AS CRGO ELECTRICAL STEEL SHEETS. TH E STEEL SHEETS ARE IN VARIOUS SHAPES WHICH ARE CUT INTO VARIOUS SIZES. DU RING THIS PROCESS, ITA NO.1477/AHD/2011 ACIT VS. NATIOINAL LAMINATION INDUSTRIES FOR AY 2008-09 3 SIGNIFICANT SCRAP IS GENERATED; HENCE, THE VEHEMENT CLAIM IS THAT THE SCRAP OF STEEL CREATED ON CUTTING OF STEEL SHEETS N ATURALLY HAS A DIRECT LINK AS WELL AS NEXUS WITH THE MANUFACTURING ACTIVI TY. WE ARE OF THE VIEW THAT THE TOTALITY OF THE CIRCUMSTANCES THUS, W ARRANTS TO HOLD THAT THE INCOME GENERATED ON SALE OF SCRAP WAS DERIVED F ROM THE INDUSTRIAL MANUFACTURING ACTIVITY OF THE ASSESSEE, THEREFORE, QUALIFIES FOR THE DEDUCTION AS PRESCRIBED UNDER THE ACT. RESULTANTLY, THE LD. CIT (A) HAS RIGHTLY FOLLOWED THE DECISION OF THE HONBLE JURISDI CTIONAL HIGH COURT AND HIS VIEW IS HEREBY AFFIRMED. THIS GROUND OF THE REVENUE IS DISMISSED. 4. THE RATIO OF THE ABOVE DECISION OF THE ITAT COU LD BE SQUARELY APPLICABLE TO THE YEAR UNDER APPEAL OF THE REVENUE. WE THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF ITAT I N ASSESSEES OWN CASE UPHOLD THE ORDER OF THE LD. CIT (A) AND DISMIS S THE APPEAL OF THE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 20TH AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 20/08/2015 PATKI !'#'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !' # / CONCERNED CIT 4. # ( ) / THE CIT(A) 5. &'( ' , ' , ! / DR, ITAT, AHMEDABAD 6. (-. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD