ITO 20(1)-4, MUMBAI V. KARGWAL CORPORATION, MUMBAI

ITA 1812/MUM/2010

• Counselvise Citation: 181219914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 08-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1812/MUM/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 20(1)-4 M/S. KARAGWAL CORPORAT ION ROOM NO. 608, 6TH FLOOR A-403/404, SKYPAN CO. OP. H SG PIRAMAL CHAMBERS, PAREL VS. SOC. LTD., OBEROI COMPLEX MUMBAI 400012 ANDHERI (W), MUMBAI 400053 PAN - AADKF 9973 F APPELLANT RESPONDENT APPELLANT BY: SHRI ALEXANDER CHANDY RESPONDENT BY: NONE DATE OF HEARING: 20.10.2011 DATE OF PRONOUNCEMENT: 31.10.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XXXI, MUMBAI DATED 24.12.2009. WHEN THE CASE WAS CALLED U PON FOR HEARING EVEN THOUGH NOTICES WERE SENT, NONE APPEARED ON BEHALF O F THE ASSESSEE. THEREFORE THE APPEAL WAS DECIDED AFTER HEARING THE LEARNED D.R. EXPARTE ASSESSEE. 2. IN THIS APPEAL REVENUE HAS RAISED FOUR GROUNDS ON T WO ISSUES. GROUND NOS. 1 & 2 PERTAIN TO THE ISSUE OF GRANTING DEDUCTI ON UNDER SECTION 80IB ON THE INCOME FROM CUTTING AND POLISHING MARBLE BLOCKS AND MARBLE SLABS, WHICH ACCORDING TO THE A.O. DOES NOT AMOUNT TO MANU FACTURING OR PRODUCTION OF AN ARTICLE OR THING. THIS ISSUE IS CO VERED AGAINST THE REVENUE BY THE ORDER OF THE ITAT IN EARLIER YEARS AND THE L EARNED CIT(A) FOLLOWED THE ORDERS IN ASSESSEES OWN CASE DATED 18.11.2008 WHIL E GIVING RELIEF. 3. AS SEEN FROM THE RECORD THE ITAT IN ITA 2913/MUM/20 06 DATED 18.11.2008 FOR A.Y. 2002-03 HAS CONSIDERED THE GAM UT OF CASE LAW ON THE ISSUE AND RELYING ON THE PRINCIPLES ESTABLISHED BY THE HON'BLE RAJASTHAN ITA NO. 1812/MUM/2010 M/S. KARAGWAL CORPORATION 2 HIGH COURT IN THE CASE OF ARIHANT TILES AND MARBLES P. LTD. VS. ITO 295 ITR 148 CONSIDERED THAT ASSESSEE IS ENGAGED IN MANUFACT URING/PRODUCTION OF FINISHED FLOORING MATERIAL AND IS ENTITLED TO DEDUC TION UNDER THE PROVISIONS OF SECTION 80IB OF THE ACT. THE HON'BLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE IN ITA NO. 3017 OF 2010 DATED 25.10.2010 D ISMISSED REVENUES APPEAL HOLDING THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE IN VIEW OF THE JUDGEMENT OF THE APE X COURT IN THE CASE OF ITO VS. ARIHANT TILES AND MARBLES P. LTD. 329 ITR 7 9. SINCE THE MATTER WAS DECIDED IN FAVOUR OF THE ASSESSEE IN EARLIER YEARS, THERE IS NO NEED TO DISTURB THE FINDINGS OF THE CIT(A) ON THIS ISSUE. ACCORDING LY REVENUES GROUNDS ARE REJECTED. 4. GROUND NOS. 3&4 PERTAIN TO GRANTING OF DEDUCTION UN DER SECTION 80IB OF THE IT ACT ON JOB WORK, THE INCOME OF WHICH DOES NOT FORM PART OF MANUFACTURING ACTIVITY AS PER THE A.O. THE CIT(A), WHILE ALLOWING THE 80IB DEDUCTION ON MANUFACTURING ACTIVITY OF ASSESSEES O WN PRODUCTS, ALSO ALLOWED DEDUCTION ON JOB WORK TREATING IT AS PART O F MANUFACTURING ACTIVITY ON THE BASIS OF THE ORDER IN A.Y. 2004-05 AND ALSO IN A.Y 2005-06. AS SEEN FROM THE APPEAL FOR A.Y. 2005-06 PREFERRED BEFORE T HE ITAT, REVENUE HAS ACCEPTED THE ISSUE IN THAT YEAR AND HAS NOT PREFERR ED ANY APPEAL ON THE ISSUE OF INCLUSION OF JOB WORK CHARGES AS PART OF M ANUFACTURING RECEIPTS OF 80IB UNIT. AS SEEN FROM THE FACTS OF THE CASE ALSO, THERE IS A FINDING BY THE CIT(A) THAT THE ENTIRE JOB WORK INCOME WAS EARNED O N UNDERTAKING MANUFACTURING ACTIVITY ON BEHALF OF THIRD PARTIES A ND THE BASIC PROCESS OF MANUFACTURING REMAINS THE SAME AND THE UNIT IS EARN ING INCOME FROM TWO SOURCES; IN THE CASE OF SELF MANUFACTURING ASSESSEE IS EARNING BUSINESS PROFIT WHEREAS IN THE CASE MANUFACTURING UNDERTAKEN ON JOB WORK BASIS ASSESSEE IS GETTING JOB WORK CHARGES. IN VIEW OF TH IS, WE ARE OF THE OPINION THAT THERE IS NO NEED TO DIFFER FROM THE ORDER OF C IT(A) IN DIRECTING THE JOB WORK CHARGES TO BE TAKEN AS PART OF MANUFACTURING A CTIVITY, HAVING DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING. MOREOVER, SI MILAR ISSUE IN EARLIER YEAR ON THE BASIS OF WHICH THE CIT(A) HAS DECIDED IN THIS YEAR WAS NOT AGITATED IN APPEAL BY THE REVENUE. THEREFORE ON THA T REASON ALSO REVENUES ITA NO. 1812/MUM/2010 M/S. KARAGWAL CORPORATION 3 APPEAL DOES NOT REQUIRE ANY CONSIDERATION. ACCORDIN GLY, THE GROUNDS ARE REJECTED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 31 ST OCTOBER 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXI, MUMBAI 4. THE CIT XX, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.