The ACIT, Central Circle-1, Surat V. Tripti Menthol Industries, Jammu & Kashmir

ITA 1807/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 0048 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANILKUMAR BHARADWAJ
• Assessee Lawyers: RAMESH MAL
• Keywords: Depreciation
• Section: 133A; 80IB; 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.1807/AHD/2014 / ASSTT. YEAR: 2010-2011 ACIT, CENT.CIR.1 SURAT. VS. TRIPTI MENTHOL INDUSTRIES SIDCO INDUSTRIAL LANE LANE NO.2, PHASE-I BARIBHRAMA, JAMMU JAMMU & KASHMIR PAN : AAEFT 6198 E / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI ANILKUMAR BHARADWAJ, SR.DR ASSESSEE BY : SHRI RAMESH MALPANI ! / DATE OF HEARING : 26/04/2017 '#$ ! / DATE OF PRONOUNCEMENT: 22 /05/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-II, AHMEDABAD DATED 10.3.2014 PASSED FOR THE ASSTT.YEAR 2010-2011. 2. SOLITARY SUBSTANTIAL GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING ADDITION OF RS.2,93,03,279/- WHICH WAS ADDED BY THE AO BY MAKING A DISALLOWANCE OF CLAIM OF DEDUCTI ON UNDER SECTION 80IB(4) OF THE INCOME TAX ACT, 1961. ITA NO.1807/AHD/2014 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF MENTHOL CRYSTALS & ALLIED PRODUCTS. ITS INDUSTRIAL UNDERTAKING WAS SITUATED AT SIDCO INDUSTRIAL COMPLEX, BARI BRAHMNA, J&K. IT HAS FILED ITS RETUR N OF INCOME ON 29.10.2010 DECLARING TOTAL INCOME AT NIL AFTER CLAI MING DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT. ACCORDING TO T HE AO, A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT WAS CARRIE D OUT AT THE PREMISES OF THE ASSESSEE ON 28.1.2010. THEREFORE, BEING A CASE OF SURVEY, IT WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 8.2.2011 WHICH WAS DULY SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVE ALED TO THE AO THAT STATEMENT OF SHRI GAJANAN AGRAWAL, PARTNER OF THE A SSESSEE-FIRM WAS RECORDED AT THE TIME OF SURVEY. IN HIS REPLY, HE H AS DISCLOSED THAT ASSESSEE-FIRM HAS EMPLOYED 9 WORKERS PLUS GUARDS. THE AO HAS REPRODUCED THE ANSWER GIVEN BY SHRI GAJANAN AGRAWAL DURING HIS STATEMENT RECORDED AT THE TIME OF SURVEY. THIS QUE STION AND ANSWER READ AS UNDER: Q. PLEASE STATE HOW MANY WORKERS ARE THERE IN YOUR FACTORY TRIPTI MENTHOL INDUSTRIES ? A. AT PRESENT THERE ARE NINE WORKERS + 2 GUARDS. THE DETAILS OF WHICH IS LABOURERS UNSKILLED : 5 MANAGER : 1 SECURITY GUARDS : 2 OPERATORS : 3 ON THE STRENGTH OF THIS STATEMENT, THE LD.AO HARBO URED A BELIEF THAT ONE OF THE CONDITIONS ENUMERATED IN SECTION 80 IB(2)(IV) OF THE ACT IS THAT INDUSTRIAL UNDERTAKING FOR CLAIMING DEDUCTI ON UNDER THIS SECTION WOULD EMPLOY TEN OR MORE WORKERS IN MANUFACTURING P ROCESS CARRIED OUT BY IT WITH THE AID OF POWER, OR EMPLOY TWENTY OR MO RE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. ACCORDING ITA NO.1807/AHD/2014 3 TO THE AO, THE ASSESSEE DID NOT FULFILL THIS CONDIT ION, AND THEREFORE, DID NOT ENTITLE FOR DEDUCTION UNDER SECTION 80IB(4). H E ACCORDINGLY DISALLOWED CLAIM OF THE ASSESSEE. 4. DISSATISFIED WITH THE DISALLOWANCE, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). IT FILED WRITTEN SU BMISSIONS AND CONTENDED THAT SIMILAR ASPECT WAS RAISED IN THE ASS TT.YEAR 2009-10 ALSO WHEREIN THE LD.CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. THE LD.CIT(A) HAS TAKEN COGNIZANCE OF THE SUBMISSION MA DE BY THE ASSESSEE AND DELETED THE DISALLOWANCE. 5. THE LD.DR WHILE IMPUGNING THE ORDER OF THE LD.CI T(A) CONTENDED THAT ASSESSEE FAILED TO PRODUCE SUFFICIENT MATERIAL INDICATING THE FACT THAT IT HAS EMPLOYED MORE THAN 10 WORKERS. IN OTHE R WORDS THE STAND OF THE REVENUE IS THAT FOR PROVING THE STATEMENT OF A PARTNER AS ERRONEOUS, THE ASSESSEE SHOULD HAVE PRODUCED SUFFIC IENT EVIDENCE EXHIBITING THE FACT THAT PARTNER HAS GIVEN SUCH STA TEMENT UNDER MISCONCEPTION OF FACT. THE ASSESSEE FAILED TO GIVE THAT MATERIAL BEFORE THE AO. THEREFORE, THE LD.AO HAS RIGHTLY DISALLOWE D THE CLAIM AND THE LD.CIT(A) FAILED TO APPRECIATE THE CONTROVERSY IN R IGHT PERSPECTIVE. THE LD.DR TOOK US THROUGH THE DETAILS OF VARIOUS WORKER S PLACED BY THE ASSESSEE AT PAGE NSO.26 TO 175 OF THE PAPER BOOK AN D POINTED OUT THAT THERE IS NO COHERENCE IN THE PAYMENT OF SALARY CONT INUOUSLY THROUGHOUT THE YEAR. SOME OF THE VOUCHERS ARE ONLY RS.670. H E DREW OUR ATTENTION TOWARDS PAGE NO.91 OF THE PAPER BOOK AND SUBMITTED THAT WHICH LABOUR THE ASSESSEE COULD GET FOR A SUM OF RS .670/- ? ON THE STRENGTH OF THESE SHORTCOMINGS, HE CONTENDED THAT T HE LD.CIT(A) HAS NOT APPRECIATED THE CONTROVERSY IN CONSONANCE WITH THE RECORD AVAILABLE. 6. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESS EE RELIED UPON THE ORDER OF THE CIT(A). HE POINTED OUT THAT THE ASSES SEE HAS SUBMITTED COMPLETE DETAILS EXHIBITING PAYMENT MADE BY THE ASS ESSEE, ATTENDANCE ITA NO.1807/AHD/2014 4 REGISTER MAINTAINED IN THE COMPUTER, LEDGER ACCOUNT OF SALARY/WAGES PAID TO THE WORKERS. COPIES OF LABOUR ACCOUNTS BIL LS AND THE DETAILS OF SECURITY AGENCY SERVICES WERE ALSO GIVEN TO THE AO. A COMPREHENSIVE CHART SHOWING MONTH-WISE DETAILS OF THE WORKERS EMP LOYED IN WAS ALSO PRODUCED. HE ALSO POINTED OUT THAT ALL THESE FACTS WERE PLACED BY THE ASSESSEE IN THE WRITTEN SUBMISSIONS FILED BEFORE TH E LD.CIT(A), WHICH IS FILED ON PAGE NOS.1 TO 9 OF THE PAPER BOOK. THEREA FTER, HE RELIED UPON THE ORDERS OF THE ITAT, MUMBAI BENCH IN THE CASE OF ACIT VS. MS. RICHA CHADA REPORTED IN 96 ITD 325 (MUM). JUDGMENT OF HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. BIML A RANI, 56 TAXMANN.COM 316 AND JUDGMENT OF HONBLE ALLAHABAD H IGH COURT IN THE CASE OF CIT VS. SULTAN & SONS RICE MILL, 272 ITR 18 1. HE FURTHER RELIED UPON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JYOTI PLASTICS WORKS P.LTD., 339 ITR 491. HE P LACED ON RECORD COPIES OF ALL THESE JUDGMENTS. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. WE ARE OF THE VIEW THAT SECTIONS 80IB(1), (2) AND (4) HAS DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT IS IMPERATIVE UPON US TO TAKE NOTE OF THESE CLAUSES. IT READ AS UNDER : 80-IB. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REF ERRED TO IN SUB- SECTIONS (3) TO (11), (11A) AND (11B) (SUCH BUSINES S BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSES SEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAK ING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : ITA NO.1807/AHD/2014 5 (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONS TRUCTION, OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN INDUSTRIAL UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE- ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASS ESSEE OF THE BUSINESS OF ANY SUCH INDUSTRIAL UNDERTAKING AS IS R EFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; (III) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR TH ING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVE NTH SCHEDULE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PART OF INDIA : PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL, I N RELATION TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDERTAKING REFERRED TO IN SUB-SECTION (4) SHALL APPLY AS IF TH E WORDS 'NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE E LEVENTH SCHEDULE' HAD BEEN OMITTED. EXPLANATION 1.FOR THE PURPOSES OF CLAUSE (II), ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OT HER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLAN T PREVIOUSLY USED FOR ANY PURPOSE, IF THE FOLLOWING CONDITIONS A RE FULFILLED, NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME PR EVIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN I NDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESP ECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOM E OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DATE OF THE INST ALLATION OF THE MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2.WHERE IN THE CASE OF AN INDUSTRIAL U NDERTAKING, ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY U SED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TO TAL VALUE OF THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF THE MACHINERY OR PLA NT USED IN THE BUSINESS, THEN, FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-SECTION, THE CONDITION SPECIFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMPLIED WITH; (IV) IN A CASE WHERE THE INDUSTRIAL UNDERTAKING MAN UFACTURES OR PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOY S TEN OR MORE ITA NO.1807/AHD/2014 6 WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER, OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUF ACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. XXX XXX XXX XXX XXX XXX (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECI FIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PR OFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE A SSESSMENT YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR AND THER EAFTER TWENTY- FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSE E IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRI AL UNDERTAKING : PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION DOES NO T EXCEED TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESSEE IS A CO-OPERATIVE SOCIETY) SUBJECT TO FULFILMENT OF THE CONDITION THAT IT BEGINS TO MANUF ACTURE OR PRODUCE ARTICLES OR THINGS OR TO OPERATE ITS COLD STORAGE P LANT OR PLANTS DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL , 1993 AND ENDING ON THE 31ST DAY OF MARCH, 2004 : PROVIDED FURTHER THAT IN THE CASE OF SUCH INDUSTRIE S IN THE NORTH- EASTERN REGION, AS MAY BE NOTIFIED BY THE CENTRAL G OVERNMENT, THE AMOUNT OF DEDUCTION SHALL BE HUNDRED PER CENT OF PR OFITS AND GAINS FOR A PERIOD OF TEN ASSESSMENT YEARS, AND THE TOTAL PERIOD OF DEDUCTION SHALL IN SUCH A CASE NOT EXCEED TEN ASSES SMENT YEARS : PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SUB-SECT ION SHALL BE ALLOWED FOR THE ASSESSMENT YEAR BEGINNING ON THE 1S T DAY OF APRIL, 2004 OR ANY SUBSEQUENT YEAR TO ANY UNDERTAKING OR E NTERPRISE REFERRED TO IN SUB-SECTION (2) OF SECTION 80-IC: PROVIDED ALSO THAT IN THE CASE OF AN INDUSTRIAL UND ERTAKING IN THE STATE OF JAMMU AND KASHMIR, THE PROVISIONS OF THE F IRST PROVISO SHALL HAVE EFFECT AS IF FOR THE FIGURES, LETTERS AN D WORDS '31ST DAY OF MARCH, 2004', THE FIGURES, LETTERS AND WORDS '31ST DAY OF MARCH, 2012' HAD BEEN SUBSTITUTED : PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SUB-SECT ION SHALL BE ALLOWED TO AN INDUSTRIAL UNDERTAKING IN THE STATE O F JAMMU AND ITA NO.1807/AHD/2014 7 KASHMIR WHICH IS ENGAGED IN THE MANUFACTURE OR PROD UCTION OF ANY ARTICLE OR THING SPECIFIED IN PART C OF THE THIRTEE NTH SCHEDULE. 8. A PERUSAL OF THIS SECTION WOULD INDICATE THAT IF THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFIT OR GAIN D ERIVED FROM ANY BUSINESS REFERRED TO SUB-SECTIONS 3 TO 11, THEN SUC H BUSINESS BEING REFERRED TO AS AN ELIGIBLE BUSINESS WOULD BE ENTI TLED TO CLAIM DEDUCTION AS MENTIONED IN TERMS OF PERCENTAGE IN RESPECTIVE S ECTION. IT IS PERTINENT TO OBSERVE THAT THE ASSESSEES MANUFACTUR ING UNDERTAKING IS SITUATED IN A BACKGROUND AREA OF THE STATE AND IT I S ELIGIBLE FOR DEDUCTION AS CONTEMPLATED IN SUB-SECTION (4). THIS DEDUCTION IS SUBJECT TO THE CONDITIONS ENUMERATED IN SUB-SECTION (2) OF SECTION 80IB. THE AO HAS NOT DISPUTED ELIGIBILITY OF ASSESSEE OF FULFILLMENT OF THE CONDITIONS MENTIONED IN SECTION 80IB(1)(4) EXCEPT THAT THE ASS ESSEE FAILED TO FULFILL CONDITIONS PROVIDED IN SUB-CLAUSE (IV) OF SUB-SECTI ON (2) WHICH CONTEMPLATES THAT IN A CASE WHERE AN INDUSTRIAL UND ERTAKING MANUFACTURERS OR PRODUCES ARTICLE OR THINGS, THE UN DERTAKING EMPLOYS TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARR IED ON WITH THE AID OF POWER. ACCORDING TO THE AO, SINCE THE ASSESSEE WAS MANUFACTURING WITH THE AID OF POWER, THEREFORE, IT SHOULD EMPLOY TEN WORKERS IN THE MANUFACTURING PROCESS. THE AO IS HARPING UPON THE STATEMENT OF PARTNER, SHRI GAJANAN AGRAWAL AND OBSERVED THAT ONE MANAGER AND TWO GUARDS WERE REQUIRED TO BE EXCLUDED FROM THE TOTAL ELEVEN PERSONS EMPLOYED BY THE ASSESSEE. 9. ON THE OTHER HAND, STAND OF THE ASSESSEE IS THAT NOT ONLY ELEVEN, IT HAS EMPLOYED THIRTEEN PERSONS. PARTNER HAS COMM ITTED MISTAKE BY GIVING DETAILS. THE BREAK-UP OF THE WORKERS GIVEN BY THE PARTNERS IN HIS REPLY IS UNSKILLED-5, MANAGER-1, SECURITY GUARDS -2 AND OPERATORS-3. THUS, WHOLE CONTROVERSY BOILS DOWN TO A VERY SMALL ISSUE WHETHER THE MANAGER/OPERATORS ARE TO BE COUNTED IN THE LIST OF WORKERS WHO CAN BE STATED TO HAVE BEEN EMPLOYED IN THE MANUFACTURING P ROCESS. FOR ITA NO.1807/AHD/2014 8 BUTTRESSING THIS PROPOSITION, THE ASSESSEE HAS PLAC ED RELIANCE UPON A LARGE NUMBER OF DECISIONS, WHEREIN SIMILAR ASPECTS HAS FALLEN FOR CONSIDERATION. 10. WE WOULD LIKE TO FIRST MAKE DECISION OF THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT.BIMLA RANI (S UPRA). IN THIS CASE, THE ASSESSEE WAS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF POLYTHENE BAGS AND TUBES (PACKING MATERIAL). A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT AT HER PREMISES ON 3.9.2004. ON ACCOUNT OF THIS INCIDENT, IT REVEALED TO THE AO THAT THE ASSESSEE HAS FURNISHED LIST OF EIGHT WO RKERS INVOLVED IN THE MANUFACTURING PROCESS. BESIDES THAT TWO OTHER EMPL OYEES ONE WORKING AS SUPERVISOR AND OTHER AS MANAGER WAS ALSO CONSIDE RED BY THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SECTION 80IB. THE AO DISALLOWED CLAIM OF THE ASSESSEE ON THE GROUND THAT SHE HAD NO T EMPLOYED TEN WORKERS. BUT ON APPEAL, THE LD.CIT(A) ALLOWED HER CLAIM WHICH MET APPROVAL OF ITAT ALSO. DEPARTMENT TOOK IT IN APPEA L BEFORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT HELD THAT MAN AGER AND SUPERVISOR ARE INVOLVED IN MANUFACTURING PROCESS, A ND THEREFORE, THEY ARE ALSO TO BE COUNTED WHILE CALCULATING NUMBER OF WORKERS EMPLOYED BY THE ASSESSEE. THE DISCUSSION MADE BY THE HONBLE H IGH COURT IN PARA- 14 OF THE JUDGMENT READS AS UNDER: 14. THE MAIN ARGUMENT OF THE REVENUE THAT TWO PERS ONS, NAMELY, SURINDER MITTAL-SUPERVISOR AND NARINDER MOH AN MITTAL- WORKS MANAGER, COULD NOT BE COUNTED AS WORKERS IN A DDITION TO OTHER EIGHT WORKERS, ALTHOUGH IS ATTRACTIVE BUT WE ARE NOT INCLINED TO ACCEPT THE AFORESAID PLEA ON BEHALF OF THE REVEN UE, SINCE VARIOUS PROCESSES STARTING FROM PURCHASE OF RAW MAT ERIAL AND TILL THE SALE OF FINISHED GOODS, FORM AN INTEGRAL PART O F THE MANUFACTURING PROCESS. THEREFORE, THE WORDS 'EMPLOY S TEN OR MORE WORKERS IN A MANUFACTURING PROCESS' NORMALLY W OULD COVER THE ENTIRE PROCESS CARRIED ON BY THE INDUSTRIAL UND ERTAKING FOR CONVERTING THE RAW MATERIAL INTO FINISHED GOODS. FO R THE AFORESAID PROPOSITION, REFERENCE CAN BE MADE TO CITV. SULTAN & SONS RICE MILL [20051 272 ITR 181/145 TAXMAN 506 (ALL.). CITV . HANUMAN ITA NO.1807/AHD/2014 9 RICE MILLS [20051 275 1TR 79 (MP) AND CIT V. AJMANI INDUSTRIES [20061 153 TAXMAN 43 (ALL.). WE ARE OF THE CONSIDER ED OPINION THAT THE VIEW OF THE ITAT THAT NORMALLY OWNER COULD NOT BE COUNTED AS A WORKER BUT IN THE INSTANT CASE, THE DI SPUTE REVOLVED AROUND WORKS MANAGER AND SUPERVISOR, THEREFORE SUBS TANTIAL COMPLIANCE ABOUT THE NUMBER OF WORKERS WOULD SATISF Y THE REQUIREMENT UNDER THE ACT AND THE POSITION DURING A BNORMAL SITUATIONS COULD NOT BE COUNTED IS ABSOLUTELY JUSTI FIED. LIKEWISE RELIANCE BY THE ITAT ON THE DECISION OF THE JURISDI CTIONAL HIGH COURT IN ANSYSCO'S CASE (SUPRA), IS ALSO WELL PLACE D. IN ANSYSCO'S CASE (SUPRA), THE ISSUE WAS WHETHER THE TRIBUNAL WA S JUSTIFIED IN UPHOLDING THE ORDER OF THE FIRST APPELLATE AUTHORIT Y IN ALLOWING DEDUCTION UNDER SECTION 80-IA OF THE ACT ON THE GRO UND THAT MANUFACTURING PROCESS INCLUDES PACKING, STITCHING, MOUNTING AND DISPATCH OF FINISHED GOODS, THEREFORE, WORKERS EMPL OYED IN ALLIED ACTIVITIES WERE TO BE TREATED AS THOSE EMPLOYED IN MANUFACTURING PROCESS. HOWEVER, IN THE INSTANT CASE, ADMITTEDLY, A WORKS MANAGER IS LIKE A HIGHLY TECHNICAL QUALIFIED WORKER HAVING MANAGERIAL RESPONSIBILITY, LIKEWISE, A SUPERVISOR I S ALSO LIKE A HIGHLY SKILLED SUPERVISORY WORKER. THEREFORE, BOTH THESE PERSONS CANNOT BE TAKEN OUT FROM THE CATEGORIES OF WORKERS. IT IS WELL KNOWN THAT 'MANUFACTURING PROCESS' INCLUDES ALL ACT IVITIES IN RELATION TO MANUFACTURE, THEREFORE, THE SAME ENCOMP ASSES THE ENTIRE PROCESS OF CONVERTING RAW MATERIAL INTO FINI SHED GOODS TO MAKE IT COMMERCIALLY EXPEDIENT AND EVEN HANDLING AN D TRANSFER OF RAW MATERIAL IS INTEGRALLY CONNECTED WITH THE PROCE SS OF MANUFACTURE. IN THE AFOREMENTIONED BACKGROUND, WE S EE NO REASON TO DISAGREE WITH THE FINDING RECORDED BY THE ITAT UPHOLDING THE FINDINGS OF THE CIT (A) QUA DEDUCTION UNDER SECTION 80-IB. 11. SIMILARLY, AN IDENTICAL ISSUE CAME UP BEFORE TH E ITAT IN THE CASE OF ACIT VS.MS. RICHA CHADHA (SUPRA). IN THIS CASE, THE ASSESSEE WAS ENGAGED IN MANUFACTURING OF CHEMICALS. THE AO DID AN INSPECTION AT THE PREMISES OF THE ASSESSEE AND OBSERVED THAT THE ASSESSEE WAS NOT HAVING TEN WORKERS. THE TRIBUNAL WHILE CONSIDERING DETAILS OF THE WORKERS EMPLOYED BY THE ASSESSEE OBSERVED THAT MANU FACTURING PROCESS MEANS NOT ONLY MANUFACTURING ACTIVITY, BUT ALSO SUCH OTHER ACTIVITIES SUPPORTING THE MAIN MANUFACTURING PROCES S. THUS, IN A CHEMICAL FACTORY, IF CERTAIN WORKERS ARE EMPLOYED F OR BRINGING CHEMICALS TO THE SITE, AND THEY WERE EMPLOYED FOR MAINTAINING AND PRESERVING THE FINAL PRODUCT OR ITS TRANSPORTATION, CAN ALSO BE SA ID TO BE EMPLOYED IN ITA NO.1807/AHD/2014 10 THE MANUFACTURING PROCESS. IN OTHER WORDS, SECURIT Y GUARDS EMPLOYED BY THE ASSESSEE IN THE CASE BEFORE US WOULD ALSO BE CONSIDERED AS PART OF THE WORKERS ENGAGED IN THE MANUFACTURING PROCESS . APART FROM THESE TWO CASES, DECISION OF THE HONBLE ALLAHABAD HIGH C OURT IN THE CASE OF CIT VS. SULTAN & SONS RICE MILL (SUPRA) WAS ALSO BR OUGHT TO OUR NOTICE. THE ASSESSEE WAS A REGISTERED FIRM MANUFACTURING RI CE AND DEALING IN FOODGRAINS. IT HAD CLAIMED DEDUCTION UNDER SECTION 80HH AND 80J. THIS DEDUCTION WAS DISALLOWED BY THE AO ON THE GROUND TH AT THE ASSESSEES RICE AND RICE BRAN PROCESS WAS AUTOMATIC AND DID NO T EMPLOY TEN OR MORE WORKERS IN THE MANUFACTURING PROCESS. THE HON BLE HIGH COURT HAS HELD THAT EXPRESSION MANUFACTURING PROCESS IS TO BE CONSTRUED LIBERALLY AND PROCESS WOULD BE CONSIDERED AS STARTE D WITH PROCUREMENT OF RAW-MATERIAL AND TERMINATES WITH PRODUCTION OF T HE FINISHED ARTICLES. THUS, ALL THE WORKERS ENGAGED THROUGHOUT THE PROCES S WOULD BE CONSIDERED TO BE EMPLOYED IN THE MANUFACTURING PROC ESS OF RICE AND RICE BRAN. THE HONBLE HIGH COURT HAS UPHELD CONCLUSION OF THE TRIBUNAL THAT WORKERS WHO WERE ENGAGED IN PALLEDAR , HULLING LABOUR, BHOOSI HATWAI , FATAKNEWALA WERE ALSO TO BE COUNTED IN THE LIST OF WORKERS EMP LOYED IN MANUFACTURING PROCESS. THE HONBLE BOMBAY HIGH COU RT HAS ALSO CONCURRED WITH THIS VIEW OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. JYOTI PLASTICS WORKS P.LTD. (SUPRA). THUS, MANAGER, SUPERVISOR AND SECURITY GUARDS ARE ALSO TO BE COUNTED IN THE L IST OF WORKERS. THE AO HAS NOT USED ANY OTHER EVIDENCE AGAINST THE ASSE SSEE EXCEPT STATEMENT GIVEN BY SHRI GAJANAN AGRAWAL WHICH HAS B EEN EXTRACTED (SUPRA). THERE IS NO REFERENCE TO ANY OTHER MATERI AL AT THE END OF THE AO IN THE ASSESSMENT ORDER. WE FIND THAT BEFORE TH E LD.CIT(A), THE ASSESSEE HAS REITERATED ITS STAND AS TO HOW IT HAS BUTTRESSED ITS CLAIM DEMONSTRATING THE FACT THAT MORE THAN TEN WORKERS W ERE EMPLOYED. THE ASSESSEE HAS PRODUCED FOLLOWING DETAILS DURING THE ASSESSMENT PROCEEDINGS IN WHICH NO DEFECTS HAVE BEEN POINTED O UT: ITA NO.1807/AHD/2014 11 A) VOUCHERS BY WHICH PAYMENTS OF SALARIES/WAGES WE RE MADE TO THE WORKERS IN EACH MONTH (VOUCHERS OF ALL MONTH S) B) PRINT OUT OF THE WORKERS REGISTER MAINTAINED IN THE COMPUTER CONTAINING THE COMPLETE DETAILS OF THE WOR KERS ALONG WITH THE NATURE OF WORK DONE BY THEM. C) THE COPY OF LEDGER ACCOUNT OF SALARY/WAGES PAID TO ABOVE WORKERS D) THE APPELLANT ALSO EMPLOYED SECURITY GUARDS IN A DDITION TO ABOVE WORKERS. THESE SECURITY GUARDS WERE EMPLOYED THROUGH SECURITY AGENCIES. THE COPIES OF LEDGER ACCOUNTS A ND BILLS OF THE SECURITIES AGENCIES WERE FURNISHED TO THE LEARNED A O. THESE SECURITY GUARDS WERE FOR CHECKING THE INWARDS AND O UTWARDS OF THE FACTORY. E) A COMPREHENSIVE CHART CONTAINING MONTH-WISE DETA ILS OF THE WORKERS EMPLOYED WAS ALSO FURNISHED. WE ENCLOSE HEREWITH COPIES OF ALL THE ABOVE DOCUMEN TS WHICH WERE FURNISHED TO LD.AO. FROM THESE DOCUMENTS IT I S CLEARLY PROVED THAT THE APPELLANT HAD EMPLOYED THIRTEEN TO SIXTEEN WORKERS THROUGHOUT THE YEAR. 12. WE HAVE CONSIDERED ALL THESE MATERIALS AVAILABL E IN THE PAPER BOOK IN THE LIGHT OF THE AUTHORITATIVE PRONOUNCEMEN TS OF HONBLE PUNJAB AND HARYANA HIGH COURT AND HONBLE BOMBAY HIGH COUR T. ON DUE CONSIDERATION OF ALL THESE MATERIALS, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS RIGHTLY ALLOWED THE DEDUCTION TO THE ASSESSEE. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 22 ND MAY, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 02/05/2017