The ITO, Ward-1, Tanuku V. M/s Arqube Industries (India) Ltd., Duvva, Tanuku Mandal

ITA 227/VIZ/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0590 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.227/VIZAG/2010 ASSESSMENT YEAR : 2007-08 ITO WARD-1 TANUKU M/S. ARQUBE INDUSTRIES (INDIA) LTD. DUVVA, TANUKU MANDAL (APPELLANT) VS. (RESPONDENT) PAN NO.AAFCA 4512P APPELLANT BY: SHRI SUBRATA SARKAR, DR RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS:- 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE DECISION OF THE ITAT, ON WHICH THE CIT(A) HAS R ELIED UPON, IN THE CASE OF M/S. R.K. HAIR PRODUCTS (P) LTD, VISAKH APATNAM IS NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERA TION. THE CIT(A) HAS FAILED TO NOTE THAT ALTHOUGH THE ASSESSING OFFI CER HAS MADE A PASSING REFERENCE TO THE CASE OF M/S. R.K. HAIR PRO DUCTS (P) LTD., VIZAG, THE PROCESS INVOLVED IN THE ASSESSEES CASE ARE DISTINGUISHABLE FROM THOSE APPEARING IN THE FORMER S CASE. IN THE CASE OF M/S. R.K. HAIR PRODUCTS (P) LTD., VIZAG, IT IS UNDERSTOOD THAT THE COMPANY IS MANUFACTURING WIGS, HAIR PIECES, PRE BONDED STRANDS AND WEFT HAIRS ETC. AND, HENCE, ITS PRODUCTS CAN BE USED DIRECTLY BY THE CONSUMER AS A FINISHED PRODUCT, WHEREAS IN THE PRESENT CASE, THE ASSESSEE COMPANY PROCESSES THE RAW MATERIAL I.E . RAW HAIR TO SEMI-FINISHED MATERIAL AND EXPORTS IN BULK TO THE I NTERNATIONAL COMMUNITY AND, AS SUCH, ITS PRODUCTS ARE REQUIRED T O BE PROCESSED FURTHER AND, THUS, ARE NOT READY FOR USE BY THE END USERS. 3. THE CIT(A) ERRED IN GRANTING EXEMPTION U/S 10B OF T HE ACT AS THE ASSESSEE-COMPANY HAS NOT FULFILLED THE CONDITION TH AT IT SHOULD MANUFACTURE OR PRODUCE ANY ARTICLE. 4. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 5. THE APPELLANT/AO CRAVES TO ADD AMEND OR ALTER ANY O F THE GROUNDS AS THE CASE MAY ARISE. 2. DURING THE COURSE OF HEARING OUR ATTENTION WAS I NVITED WITH THE SUBMISSION THAT THE IMPUGNED ISSUES ARE SQUARELY CO VERED BY THE ORDER OF THE 2 TRIBUNAL IN THE CASE OF R.K. HAIR PRODUCTS (P) LTD. IN FAVOUR OF THE ASSESSEES. THOUGH THE ASSESSING OFFICER HAS OBSERVED IN HIS OR DER THAT THE FACTS OF THE IMPUGNED CASE ARE QUITE IDENTICAL WITH THE FACTS OF THE CASE OF M/S. R.K. HAIR PRODUCTS (P) LTD. BUT IT DID NOT FOLLOW THE ORDER O F THE TRIBUNAL WHILE ADJUDICATING THE ISSUE AND HE DENIED THE CLAIM OF T HE ASSESSEES FOR THE SIMPLE REASON THAT THE DECISION OF THE TRIBUNAL IN THE CAS E OF R.K. HAIR PRODUCTS (P) LTD. HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND TH E MATTER HAS BEEN TAKEN UP WITH THE HONBLE HIGH COURT. WHEREAS, THE CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEES. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT AS LONG AS THE ORDER OF THE TRIBUNAL IS NOT REVERSED BY THE HIGH C OURT, IT HOLDS FIELD AND THE SUBORDINATE AUTHORITIES INCLUDING THE ASSESSING OFF ICER BOUND TO FOLLOW THE SAME. HE HAS NO JURISDICTION TO QUESTION THE VERAC ITY OF THE ORDER OF THE TRIBUNAL. IF THE REVENUE IS AGGRIEVED, THEY CAN CHA LLENGE THE ORDER OF THE TRIBUNAL IN THE HIGHER FORUM BUT TILL THE ORDER OF THE TRIBUNAL IS REVERSED THE SUBORDINATE AUTHORITIES ARE SUPPOSED TO FOLLOW THE SAME IN ITS LETTER AND SPIRIT. SINCE THE CIT(A) HAS DECIDED THE ISSUE FOL LOWING THE ORDER OF THE TRIBUNAL, THE SAME MAY BE CONFIRMED. 4. THE LD. D.R. EXCEPT PLACING THE RELIANCE ON THE ORDER OF THE ASSESSING OFFICER HAS NOT DISPUTED THE FACTUAL ASPECT. 5. HAVING CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE A.O. IN HIS ORDER HAS ADMITTED THAT T HE FACTS OF THE INSTANT CASE ARE QUITE IDENTICAL WITH FACTS OF THE R.K. HAIR PRO DUCTS PVT. LIMITED. HE DID NOT FOLLOW THE ORDER OF THE TRIBUNAL ONLY FOR THE R EASON THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT. THIS APPROACH OF THE ASSESSING OFFICER IS NOT PROPER AND IT REFLECTS THE DISOBEDIENCE OR DISRESPECT TO THE ORDER OF THE HIGHER FORUM FOR WHICH AN ACTION C AN BE TAKEN AGAINST HIM UNDER THE CONTEMPT OF COURT ACT. WE HOWEVER DO NOT WISH TO INITIATE THAT PROCEEDINGS AGAINST HIM. WE SIMPLY WARN HIM NOT TO ADOPT THIS PRACTICE IN FUTURE. UNDISPUTEDLY, THE FACTS OF THE INSTANT CAS E ARE QUITE IDENTICAL WITH THE CASE OF R.K. HAIR PRODUCTS PVT. LIMITED AND IN THAT CASE THIS ISSUE HAS BEEN 3 DECIDED IN FAVOUR OF THE ASSESSEE. CIT(A) FOLLOWIN G THE ORDER OF THE TRIBUNAL HAS DECIDED THE ISSUE. WE THEREFORE FIND NO INFIRM ITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, WE CONFIRM THE SAME. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. PRONOUNCED IN THE OPEN COURT ON 22.7.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 22 ND JULY, 2010 COPY TO 1 THE ITO, WARD-1, SAJJAPURAM, TANUKU, W.B. DIST. 2 M/S. ARQUBE INDUSTRIES (INDIA) LTD, MANAGING DIRE CTOR SRI G. RAGHU RAMA RAJU, D.NO.5-1-7/1, DUVVA, TANUKU MANDAL 3 THE CIT, RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM