The DCIT, Circle-4, Baroda V. M/s. Refoil Earth Pvt.Ltd., Baroda

ITA 1617/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0289 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-08-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 09-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: SUNIL S TALATI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.1617/AHD/2008 A. Y.: 2005-06 THE D. C. I. T., CIRCLE- 4, 4 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390 007 VS M/S. REFOIL EARTH PVT. LTD., 23, AMARDEP APARTMENT, PASHABHAI PARK, GOTRI ROAD, BARODA PA NO. AAACR 9881 K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K. DHANESTA, DR RESPONDENT BY SHRI SUNIL S. TALATI, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, BARODA DATED 2 0-02-2008 FOR ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUND: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN TREATING THE PRODUCTION OF FULLERS EARTH AS MANU FACTURE AND THEREBY ALLOWING DEDUCTION U/S 80 IB OF THE I. T. A CT, 1961 DESPITE THE FACT THAT IT IS PROCESSING FOR REMOVAL OF IMPURITIES AND CONTAMINATION FROM THE BASIC RAW MATERIAL FULLE RS EARTH BY WASHING AND DRYING BY USING ACID AND THERE IS HA RDLY ANY DIFFERENCE BETWEEN THE INPUT AND OUTPUT AND AS SUCH IT DOES NOT AMOUNT TO MANUFACTURE OF PRODUCTION OF AN ARTIC LE OR A THING AS CONTEMPLATED FOR ALLOWING BENEFIT OF DEDUC TION U/S 80 IB OF THE I. T. ACT, 1961. 2. THE AO DENIED DEDUCTION U/S 80 IB OF THE IT ACT ON THE GROUND THAT THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE COMP ANY DO NOT AMOUNT TO MANUFACTURE OF ANY ARTICLES OR THINGS. IN THIS VIEW OF THE MATTER, THE AO HELD THAT SINCE THE ESSENTIAL CONDITIONS LAID OUT I N SECTION 80 IB OF THE IT ACT HAD NOT BEEN FULFILLED, THE ASSESSEE WAS DISENT ITLED FROM THE CLAIM OF DEDUCTION UNDER THIS SECTION. THE AO ALSO MENTIONED THAT SIMILAR DISALLOWANCE WAS MADE IN THE PRECEDING ASSESSMENT Y EAR 2004-05 AND ITA NO.1617/AHD/2008 DCIT, CIR-4, BARODA VS M/S. REFOIL EARTH PVT. LTD. 2 ACCORDINGLY ASSESSEES CLAIM FOR DEDUCTION U/S 80 I B OF THE IT ACT AMOUNTING TO RS.32,82,428/- WAS DISALLOWED. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) IN THE CASE OF THE SAME ASSESSEE IN APPEALS FOR ASSESSMENT YEARS 2000-01 TO 2004-05, THE LEARNED CI T(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LEARNED CI T(A) NOTED THAT THE IDENTICAL ISSUE WAS CONSIDERED BY HIM VIDE CONSOLID ATED ORDER DATED 07-02-2007 FOR ASSESSMENT YEARS 2000-01 TO 2004-05 AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. IT WAS, THEREFOR E, HELD THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE ACTIVITIES CARRIE D OUT BY THE ASSESSEE DO NOT AMOUNT TO MANUFACTURE AND, THEREFORE, DENYING D EDUCTION U/S 80 IB OF THE IT ACT. THE CLAIM OF DEDUCTION U/S 80 IB OF THE IT ACT WAS ACCORDINGLY ALLOWED AND THE APPEAL OF THE ASSESSEE WAS ALLOWED BY THE LEARNED CIT(A). 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE IDENTICAL ISSUE WAS CONSIDERED BY ITAT AHMEDABA D BENCH IN THE CASE OF THE SAME ASSESSEE FOR ASSESSMENT YEARS 2000-01 T O 2004-05 VIDE ORDER DATED 12-02-2010 AND THE DEPARTMENTAL APPEALS HAVE BEEN DISMISSED. COPY OF THE ORDER IS FILED ON RECORD. T HE LEARNED DR CONCEDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS. 4. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) HAS FOLLOWED HIS EARLIER ORDER DATED 07-02-2007 FOR EARLIER ASSESSMENT YEARS 2000-01 TO 2004-05 WHEREBY DEDUCTI ON U/S 80 IB OF THE IT ACT HAS BEEN ALLOWED TO THE ASSESSEE. THE OR DER OF THE LEARNED CIT(A) DATED 07-02-2007 ABOVE, WAS CHALLENGED BY TH E REVENUE IN APPEAL BEFORE THE TRIBUNAL IN ITA NO. 2008/AHD/2007 TO 201 2/AHD/2007 AND THE DEPARTMENTAL APPEALS HAVE BEEN DISMISSED VIDE O RDER DATED 12-02-2010 BY THE TRIBUNAL. THE OPERATIVE PORTION O F THE ORDER OF THE TRIBUNAL HELD AS UNDER: ITA NO.1617/AHD/2008 DCIT, CIR-4, BARODA VS M/S. REFOIL EARTH PVT. LTD. 3 IN THE CASE OF THE ASSESSEE ALSO, END PRODUCT ATTR ACTS EXCISE DUTY AND AS STATED THE END PRODUCT IS HAVING DIFFER ENT CHARACTER AND USE AND HENCE ENTITLED TO DEDUCTION U /S. 80 IB AS THE ASSESSEE IS ENGAGED IN MANUFACTURING OR PROD UCTION OF DIFFERENT PRODUCT. BY FOLLOWING THE SAME ORDER, WE DISMISS THE DEPARTM ENTAL APPEAL. 5. AS A RESULT, THE DEPARTMENTAL APPEAL IS DISMISSE D. ORDER PRONOUNCED ON 13-08-2010. SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-0 8-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD