Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 7970 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-02-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Assessment Year
2011-2012
Appeal Filed On
22-12-2015
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.2311 & 2312/MDS/2015 ' (' / ASSESSMENT YEARS : 2011-12 & 2012-13 M/S JEWELS MAGNUM, NO.333, FIRST FLOOR, BIG BAZAR ST., COIMBATORE 641 001. PAN : AAGFJ 3110 Q V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, COIMBATORE. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. T. BANUSEKAR, CA & B. RAMAKRISHNAN, CA ,-*+ . / / RESPONDENT BY : SH. PATHLAVATH PEERYA, CIT 0 . 1$ / DATE OF HEARING : 13.01.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 19.02.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, COIMBATORE , DATED 16.12.2015, FOR THE ASSESSMENT Y EARS 2011-12 AND 2012-13. SINCE COMMON ISSUE ARISES FOR CONSIDE RATION IN THESE 2 I.T.A. NOS.2311 & 2312/MDS/15 APPEALS, WE HEARD BOTH THE APPEALS TOGETHER AND DIS POSING OF BY THIS COMMON ORDER. 2. SH. T. BANUSEKAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD TO DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 10AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDI NG TO THE LD. REPRESENTATIVE, THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN BUSINESS OF MANUFACTURING GOLD JEWELLERY. THE ASSE SSEE OBTAINED APPROVAL IN THE MEPZ SPECIAL ECONOMIC ZONE FOR MANU FACTURING GOLD BANGLES AND GOLD PENDANTS. THE ASSESSEE CLAIME D DEDUCTION UNDER SECTION 10AA OF THE ACT ON THE BASIS OF THE A PPROVAL GRANTED BY MEPZ SPECIAL ECONOMIC ZONE. HOWEVER, THE ASSESS ING OFFICER REJECTED THE CLAIM OF EXEMPTION UNDER SECTION 10AA OF THE ACT ON THE GROUND THAT THE ASSESSEE DELAYED THE COMMENCEME NT OF PRODUCTION AT SPECIAL ECONOMIC ZONE. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE HAS NOT MANUFACTURED T HE ITEM OF JEWELLERY AUTHORIZED BY THE MEPZ SPECIAL ECONOMIC ZONE. ADVERTING TO THE FIRST GROUND OF REJECTION BY THE A SSESSING OFFICER, NAMELY, COMMENCEMENT OF PRODUCTION AT SPECIAL ECONO MIC ZONE, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSEE- FIRM WAS 3 I.T.A. NOS.2311 & 2312/MDS/15 MANUFACTURING GOLD PENDANTS/MEDALLIONS FOR EXPORT. IN FACT, THE SPECIAL ECONOMIC ZONE BY AN ORDER DATED 10.06.2008, APPROVED THE ASSESSEE FOR MANUFACTURING OF GOLD BANGLES AND GOLD PENDANTS/ MEDALLIONS. THE ASSESSEE COMMENCED THE TRIAL PRODU CTION OF GOLD PENDANTS/MEDALLIONS IN APRIL, 2009, WITHIN ONE YEAR FROM THE DATE OF GRANT OF APPROVAL. THE ASSESSEE HAS ALSO PURCHASED 82.5 KVA GENSET IN OCTOBER, 2008. THE MEPZ SPECIAL ECONOMIC ZONE GRANTED PERMISSION FOR INSTALLATION OF THE GENSET O N 05.12.2008. THE ASSESSEE HAS PRODUCED COPIES OF THE FILE TO SUP PORT THAT THE ASSESSEE HAS COMMENCED MANUFACTURING ACTIVITY. ME PZ SPECIAL ECONOMIC ZONE, BY AN ORDER DATED 03.09.2014, FOUND THAT THE ASSESSEE COMMENCED PRODUCTION AS ON 14.04.2009. ACC ORDING TO THE LD. REPRESENTATIVE, ONCE THE SPECIAL ECONOMIC Z ONE ACCEPTS THE DATE OF COMMENCEMENT OF PRODUCTION, THE ASSESSI NG OFFICER CANNOT SAY THAT THE ASSESSEE HAD DELAYED COMMENCEME NT OF PRODUCTION BEYOND THE TIME LIMIT MENTIONED IN THE L ETTER OF APPROVAL. IN FACT, THE AUTHORITY WHO GRANTED APPROV AL ACCEPTED THAT THE ASSESSEE HAS COMMENCED PRODUCTION AS ON 14.04.2 009. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER CANNOT TAKE DIFFERENT VIEW. 4 I.T.A. NOS.2311 & 2312/MDS/15 3. REFERRING TO THE BUSINESS ACTIVITY OF THE ASSESS EE, THE LD. REPRESENTATIVE EXPLAINED THAT THE ASSESSEE-FIRM IMP ORTS GOLD BAR AND CONVERTS IT INTO GOLD MEDALLIONS/PENDANTS FOR E XPORT. REFERRING TO PROCESS OF CONVERSIONS AND MANUFACTURE, THE LD. REPRESENTATIVE SUBMITTED THAT AFTER IMPORT OF GOLD BAR, THE SAME W AS CONVERTED INTO ROLLING GOLD SHEETS. THEREAFTER THE GOLD WOULD BE MELTED AND BLENDED. AFTER CARRYING OUT BLANKING, CORRECTIONS, THE GOLD PENDANTS/MEDALLIONS WOULD BE POLISHED AND THEREAFTE R, EMBOSSING WOULD BE DONE. ONCE EMBOSSING WAS DONE, THE GOLD M EDALLIONS / GOLD PENDANTS PRODUCED BY THE ASSESSEE WOULD GO FOR QUALITY CHECK. AFTER COMPLETION OF QUALITY CHECK, THE GOLD PENDANTS/ MEDALLIONS WOULD BE PROCURED AND IT WOULD BE EXPORT ED OUT OF INDIA. ACCORDING TO THE LD. REPRESENTATIVE, THE GOLD BAR U NDERGOES DIFFERENT PROCESSES BEFORE BECOMING THE FINAL PRODU CTION, NAMELY, GOLD MEDALLION/GOLD PENDANT. REFERRING TO THE QUAN TITY OF GOLD BAR IMPORTED AND ITS VALUE, THE LD. REPRESENTATIVE SUBM ITTED THAT THE ASSESSEE HAS MADE SUBSTANTIAL EXPORT AND EARNED FOR EIGN EXCHANGE. DURING THE ASSESSMENT YEAR 2011-12, THE ASSESSEE HAS EARNED ` 27.82 CRORES AND FOR THE ASSESSMENT YEAR 2012-13, T HE ASSESSEE HAS EARNED ` 38.81 CRORES. REFERRING TO THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. PALLAVA GRANITE INDUSTR IES (I)(P.) LTD. 5 I.T.A. NOS.2311 & 2312/MDS/15 (2014) 42 TAXMANN.COM 102, THE LD. REPRESENTATIVE S UBMITTED THAT MANUFACTURE WOULD INCLUDE EVERY PROCESS, WHICH UL TIMATELY RESULTS IN PRODUCTION OF NEW ARTICLE HAVING A DIFFERENT CHA RACTER. ULTIMATELY, THE HIGH COURT FOUND THAT CUTTING AND POLISHING OF GRANITE SLABS WOULD AMOUNT TO MANUFACTURE OR PRODUCTION OF AN ART ICLE OR THING AND HENCE IT IS ELIGIBLE FOR EXEMPTION. REFERRING TO THE DEFINITION IN SPECIAL ECONOMIC ZONE ACT, 2005, THE LD. REPRESENTA TIVE SUBMITTED THAT MANUFACTURE MEANS TO MAKE, PRODUCE, FABRICAT E, ASSEMBLE, PROCESS OR BRING INTO EXISTENCE, BY HAND OR BY MACH INE, A NEW PRODUCT HAVING A DISTINCTIVE NAME, CHARACTER OR USE AND SHALL INCLUDE PROCESS SUCH AS REFRIGERATION, CUTTING, POL ISHING, BLENDING ETC. SINCE THE GOLD BAR IMPORTED BY THE ASSESSEE U NDERGOES A SERIES OF PROCESS BEFORE IT REACHES THE FINAL STAGE AS GOLD MEDALLION/ GOLD PENDANT, ACCORDING TO THE LD. REPRESENTATIVE, THE END PRODUCT MANUFACTURED BY THE ASSESSEE, NAMELY, GOLD MEDALLIO N / GOLD PENDANT HAS TO BE TREATED AS A NEW ARTICLE. REFERR ING TO THE ASSESSMENT ORDER, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSEE MANUFACTURED GOLD MEDALLIONS. SPECIAL ECO NOMIC ZONE AUTHORIZES THE ASSESSEE TO MANUFACTURE ONLY GOLD BA NGLES AND GOLD PENDANTS. IN VIOLATION OF APPROVAL GRANTED BY SPEC IAL ECONOMIC ZONE, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSE SSING OFFICER 6 I.T.A. NOS.2311 & 2312/MDS/15 FOUND THAT THE ASSESSEE HAS MANUFACTURED GOLD MEDAL LIONS. ACCORDING TO THE LD. REPRESENTATIVE, WHAT WAS MANUF ACTURED BY THE ASSESSEE IS ONLY GOLD PENDANTS AND NOT MEDALLIONS. REFERRING TO THE DICTIONARY MEANING OF THE WORD MEDALLION IN C ONCISE OXFORD ENGLISH DICTIONARY, TWELFTH EDITION, THE LD. REPRES ENTATIVE SUBMITTED THAT MEDALLION MEANS A PIECE OF JEWELLERY IN THE SHAPE OF A MEDAL, WORN AS A PENDANT. THEREFORE, THE MEDALLION IS NOT HING BUT A PRODUCT OF JEWELLERY WHICH WOULD BE WORN AS PENDANT . THEREFORE, MEDALLION IS A SPECIES AND PENDANT GENESIS. PENDA NT, ACCORDING TO THE LD. REPRESENTATIVE, IS ALSO CALLED AS MEDALL ION. THE TERM PENDANT IS CARRIED IN ITS DEFINITION TO INCLUDE M EDALLION EVEN IN THE TECHNICAL SENSE. 4. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT TH ERE IS NO REFERENCE ABOUT ANY DEMARCATION OR CLASSIFICATION U NDER SPECIAL ECONOMIC ZONE RULES, 2006. EVEN THE CUSTOMS TARIFF ACT MAKES NO CLASSIFICATION AS PENDANT AND MEDALLION. TH E FUNCTIONAL UTILITY OF THE MEDALLION AND PENDANT IS ONE AND THE SAME. ACCORDING TO THE LD. REPRESENTATIVE, THE PREDOMINANT AND PRIMARY USE OF COMMODITY MUST BE TAKEN INTO ACCOUNT APART FROM UND ERSTANDING IT IN COMMON PARLANCE. ACCORDING TO THE LD. REPRESENT ATIVE, THE 7 I.T.A. NOS.2311 & 2312/MDS/15 ASSESSING OFFICER FAILED TO CONSIDER THE FUNCTIONAL UTILITY OF THE MEDALLION. PLACING RELIANCE ON THE JUDGMENT OF APE X COURT IN HINDUSTAN SANITARYWARE & INDUSTRIES LTD. V. COLLECT OR OF CUSTOMS (1999) 114 ELT 778, THE LD. REPRESENTATIVE SUBMITTE D THAT COMPONENT IS A GENUS, HOWEVER, THE SPARE IS A SPECI ES. SIMILARLY, THE APEX COURT IN GUJARAT STATE FERTILIZER CO. V. C OLLECTOR OF CENTRAL EXCISE 919970 91 ELT 3, FOUND THAT THE TERM FERTIL IZER IS A GENESIS WHICH MAY CONSIST OF VARIOUS SPECIES OF FERTILIZERS , NAMELY, CHEMICAL FERTILIZER, SOIL FERTILIZER, ANIMAL OR VEGETABLE FE RTILIZER, ETC. REFERRING TO THE OPINION SAID TO BE GIVEN BY THE PRESIDENT OF MADRAS JEWELLERY & DIAMOND MERCHANTS ASSOCIATION, THE LD. REPRESENTA TIVE SUBMITTED THAT SHRI JAYANTHILAL, THE PRESIDENT OF MADRAS JEWE LLERS AND DIAMOND MERCHANT ASSOCIATION, CLARIFIED THAT FOREIG N NATIONAL CALLS WHAT IS UNDERSTOOD AS PENDANT IN INDIA AS MEDALLI ON. HE ALSO CLARIFIED THAT PENDANT IS GENESIS AND MEDALLION IS SPECIES. THEREFORE, THE ASSESSING OFFICER IS NOT CORRECT IN SAYING THAT WHAT WAS MANUFACTURED BY THE ASSESSEE IS MEDALLION AND N OT PENDANT. ACCORDING TO THE LD. REPRESENTATIVE, THE PRODUCT MA NUFACTURED BY THE ASSESSEE IS PENDANT. IT MAY ALSO BE KNOWN AS M EDALLION IN OTHER PART OF THE GLOBE. THEREFORE, THE ASSESSEE I S ENTITLED FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. 8 I.T.A. NOS.2311 & 2312/MDS/15 5. ON THE CONTRARY, SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THERE W AS A SURVEY IN THE PREMISES OF THE ASSESSEE UNDER SECTION 133A OF THE ACT ON 24.02.2014. DURING THE COURSE OF SURVEY OPERATION, THE REVENUE AUTHORITIES FOUND THAT THE ASSESSEE HAS NOT MANUFAC TURED GOLD BANGLES AND PENDANTS. MEPZ SPECIAL ECONOMIC ZONE G RANTED APPROVAL ONLY FOR MANUFACTURING GOLD BANGLES AND PE NDANTS. THE OTHER CONDITION IMPOSED BY SPECIAL ECONOMIC ZONE IS THAT THE ASSESSEE HAS TO COMMENCE THE PRODUCTION BEFORE 10.0 6.2009. THE ASSESSEE PURCHASED THE RAW MATERIAL ONLY ON 03.09.2 009, THEREFORE, THE ASSESSEE COULD NOT HAVE COMMENCED PRODUCTION WI THIN SIX MONTHS PERIOD ALLOWED BY THE SPECIAL ECONOMIC ZONE WHILE GRANTING APPROVAL. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSEE HAS NOT COMMENCED THE PRODUCTION WITHIN TH E TIME LIMIT OF SIX MONTHS STIPULATED BY SPECIAL ECONOMIC ZONE 6. NOW COMING THE EXPORT OF FINISHED GOODS, THE LD. D.R. POINTED OUT THAT THE ASSESSEE WAS AUTHORIZED BY SPE CIAL ECONOMIC ZONE TO MANUFACTURE GOLD BANGLES AND PENDANTS. THE ASSESSEE, IN VIOLATION OF THE APPROVAL GRANTED BY SPECIAL ECONOM IC ZONE, MANUFACTURED GOLD MEDALLIONS. ACCORDING TO THE LD. D.R., GOLD 9 I.T.A. NOS.2311 & 2312/MDS/15 MEDALLION IS NOTHING BUT A GOLD COIN WITH PURITY OF 99.5%. THE ASSESSEE WAS NOT AUTHORIZED TO MANUFACTURE GOLD MED ALLIONS. WHEN THE MANAGING DIRECTOR SHRI K. SRINIVASAN WAS E XAMINED, HE CONFIRMED THAT THE ASSESSEE MANUFACTURED ONLY MEDAL LIONS. ONE OF THE MANAGERS SHRI K. PARTHASARATHY ALSO CLARIFIED T HAT RIGHT FROM THE COMMENCEMENT OF THE BUSINESS, THE ASSESSEE- FIRM MA NUFACTURED ONLY GOLD MEDALLIONS AND NO BANGLE OR PENDANT WAS M ANUFACTURED IN THE UNIT. THIS WAS ALSO FURTHER CONFIRMED BY TH E PRODUCTION SUPERVISOR SHRI C. SADASIVAM. THE ASSESSEE OBTAINE D THE OPINION OF GOVERNMENT APPROVED VALUER AND HE OPINED THAT ME DALLION IS USUALLY ROUND IN SHAPE AND USED FOR MERITORIOUS AWA RDS/GIFTS. THE GOLD COIN IS USUALLY ROUND IN SHAPE WITHOUT ANY HOO K OR HOLE AND IT CANNOT BE WORN. ACCORDING TO THE GOVERNMENT APPROV ED VALUER, THE PENDANTS ARE CASUAL ORNAMENTAL WEAR IN JEWELLERY WH ICH CONTAIN A HOOK OR HOLE. THEREFORE, ACCORDING TO THE LD. D.R. , THE COMPOSITION OF MEDALLION AND PENDANT ARE TOTALLY DIFFERENT. CO IN, PENDANT AND MEDALLION ARE OF DIFFERENT AND DISTINCT PRODUCTS IN THE MANUFACTURING. THE LD. D.R. FURTHER SUBMITTED THAT THE PENDANTS CA NNOT BE MADE WITH 99.5% PURITY OF GOLD. ACCORDING TO THE LD. D. R., THE PENDANT HAS TO BE MANUFACTURED BY MIXING COPPER, USUALLY TH E PURITY OF PENDANT WOULD BE 91.6%. THE ASSESSEE MANUFACTURED MEDALLIONS 10 I.T.A. NOS.2311 & 2312/MDS/15 WHICH IS OF 99.5% PURITY, THEREFORE, THE MEDALLION MANUFACTURED BY THE ASSESSEE CANNOT BE CONSTRUED AS PENDANT. THEREF ORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FO UND THAT THE ASSESSEE HAS VIOLATED THE APPROVAL GRANTED BY THE S PECIAL ECONOMIC ZONE FOR MANUFACTURING GOLD BANGLES AND PE NDANTS. SINCE GOLD BANGLES AND PENDANTS WERE NOT MANUFACTUR ED AS PER THE APPROVAL GRANTED BY SPECIAL ECONOMIC ZONE, THE CIT( APPEALS) HAS RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. SECTION 10AA OF THE ACT PROVIDES FOR DEDUCTION OF DEDUCTION OF 100% OF PROFITS AND GAINS DERIVED FROM THE EXPORT OF ARTICLES OR THINGS OR FROM SERVICES FOR A PERIOD OF FIVE CONSECUTIVE ASSESSMENT YEARS B EGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH THE UNIT BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR T HINGS OR PROVIDE SERVICES, AS THE CASE MAY BE. IT ALSO PROVIDES FOR FURTHER 50% OF SUCH PROFITS AND GAINS FOR FURTHER FIVE ASSESSMENT YEARS THEREAFTER. THE FIRST CONDITION IS THAT THE ASSESSEE SHALL BE A N ENTREPRENEUR WITHIN THE MEANING OF SECTION 2(J) OF SPECIAL ECONO MIC ZONE ACT, 2005. WE HAVE CAREFULLY GONE THROUGH THE PROVISION S OF SPECIAL 11 I.T.A. NOS.2311 & 2312/MDS/15 ECONOMIC ZONE ACT, 2005, MORE PARTICULARLY, SECTION 2(J) WHICH READS AS FOLLOWS:- 2(J) ENTREPRENEUR MEANS A PERSON WHO HAS BEEN GRANTED A LETTER OF APPROVAL BY THE DEVELOPMENT COMMISSIONER UNDER SUB-SECTION (9) OF SECTION 15 . THEREFORE, ENTREPRENEUR MEANS A PERSON WHO HAS BE EN GRANTED A LETTER OF APPROVAL BY THE DEVELOPMENT COMMISSIONER UNDER SECTION 15(9) OF THE SPECIAL ECONOMIC ZONE ACT, 2005. IN T HIS CASE, THE ASSESSEE WAS ADMITTEDLY GRANTED APPROVAL UNDER SECT ION 15(9) OF THE SPECIAL ECONOMIC ZONE ACT, 2005. THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER UNDER SPECIAL ECONOMIC ZON E ACT, 2005 WAS NOT CANCELLED SO FAR AND IT CONTINUES. TH EREFORE, THE ASSESSEE IS AN ENTREPRENEUR UNDER SECTION 2(J) OF T HE SPECIAL ECONOMIC ZONE ACT, 2005. 8. NOW COMING TO THE PRODUCT MANUFACTURED BY THE AS SESSEE, ADMITTEDLY, THE DEVELOPMENT COMMISSIONER GRANTED AP PROVAL FOR MANUFACTURING OF GOLD BANGLES AND PENDANTS. THE AS SESSEE CLAIMS THAT WHAT WAS MANUFACTURED BY IT IS PENDANT. HOWEV ER, THE REVENUE CLAIMS THAT WHAT WAS MANUFACTURED BY THE AS SESSEE IS MEDALLION. THEREFORE, WE HAVE TO UNDERSTAND WHAT I S MEANT BY 12 I.T.A. NOS.2311 & 2312/MDS/15 PENDANT AND WHAT IS MEANT BY MEDALLION. THE WO RDS PENDANT AND MEDALLION ARE NOT DEFINED IN INCOME-TAX ACT O R IN THE SPECIAL ECONOMIC ZONE ACT. THEREFORE, WE HAVE TO GO FOR ME ANING IN THE COMMON PARLANCE. THE CONCISE OXFORD ENGLISH DICTIO NARY, TWELFTH EDITION, DESCRIBES THESE WORDS AS FOLLOWS:- PENDANT : A PIECE OF JEWELLERY THAT HANGS FROM A NECKLACE CHAIN. MEDALLION : A PIECE OF JEWELLERY IN THE SHAPE OF A MEDAL WORN AS PENDANT. IN VIEW OF THE MEANING GIVEN IN CONCISE OXFORD ENGL ISH DICTIONARY, THE WORDS MEDALLION AND PENDANT ARE INTERCHANGE D. PENDANT IS USED AS HANGS FROM NECKLACE OR CHAIN; MEDALLION IS ALSO USED AS HANGS EITHER FROM NECKLACE OR CHAIN. 9. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES BELOW. THE CIT(APPEALS) FOUND THAT WHA T WAS MANUFACTURED BY THE ASSESSEE IS 24 CARAT GOLD MEDAL LION. THE CIT(APPEALS) HAS ALSO FOUND THAT THE GIFTS PRESENTE D ON SPECIAL OCCASIONS WOULD BE CONSIDERED AS MEDALLIONS WHICH A RE NOT MEANT AS ORNAMENTS BUT WOULD BE TREATED AS TREASURE OF MO MENTOS OR ITEMS OF VALUABLE INVESTMENT. THE QUESTION ARISES FOR CONSIDERATION IS: IS THERE ANY DIFFERENCE BETWEEN PENDANT AND ME DALLION? THE 13 I.T.A. NOS.2311 & 2312/MDS/15 MEANING OF THE WORD PENDANT AND MEDALLION HAS T O BE CONSTRUED IN THE INDIAN CONTEXT. NORMALLY, THE PENDANT WOULD BE WORN AS AN ORNAMENT ALONG WITH CHAIN OR NECKLACE. THE PENDANT IN COMMON PARLANCE MAY ALSO BE CALLED AS MEDALLION. THE MEDA LLION HAS TO BE WORN AS AN ORNAMENT ALONG WITH CHAIN OR NECKLACE. SIMILARLY, PENDANT IS ALSO TO BE WORN AS ORNAMENT ALONG WITH C HAIN OR NECKLACE. THEREFORE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE WORDS PENDANT AND MEDALLION HAVE THE SAME M EANING AND USAGE IN COMMON PARLANCE. BY TAKING INTO CONSIDERA TION OF THE USAGE OF PENDANT OR MEDALLION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PENDANT AND MEDALLION HAVE THE SAM E CHARACTERISTICS AND VALUE IN THE COMMON PARLANCE. WHEN THE ASSESSEE CLAIMS THAT IT IS MANUFACTURING PENDANTS A ND THE SAME WERE EXPORTED, MERELY BECAUSE THE FOREIGN NATIONALS CALL THIS AS MEDALLION, IT DOES NOT MEAN THAT WHAT WAS MANUFACTU RED BY THE ASSESSEE IS ONLY MEDALLION. THE PRODUCT MANUFACTUR ED BY THE ASSESSEE EVEN THOUGH CALLED AS MEDALLION, IT IS P ENDANT IN THE INDIAN CONTEXT. IT IS AN ORNAMENT WORN BY HANGING IN THE CHAIN OR NECKLACE. IT IS COMMON KNOWLEDGE THAT THE AWARD / MEDAL CONFERRED ON SPECIAL AND CEREMONIAL OCCASIONS WOULD BE NORMAL LY KNOWN AS MEDALLIONS. IT DOES NOT MEAN THAT THE MEDALLIONS COULD NOT BE 14 I.T.A. NOS.2311 & 2312/MDS/15 WORN AS ORNAMENT/JEWELLERY IN THE NORMAL COURSE. I N OUR OPINION, THE PENDANT AND MEDALLION CAN BE USED AS ORNAMENT/J EWELLERY ALONG WITH CHAIN AND NECKLACE. AT THE BEST, ONE MA Y SAY THAT PENDANT AND MEDALLION ARE NOTHING BUT A DESIGNERY J EWELLERY TO BE WORN ALONG WITH CHAIN OR NECKLACE. BY TAKING INT O CONSIDERATION OF THE UTILITY OF THE MEDALLIONS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MEDALLION IS ALSO A PENDANT. THEREFOR E, MERELY BECAUSE THE PRODUCT MANUFACTURED BY THE ASSESSEE WA S DESCRIBED AS MEDALLION, IT CANNOT BE SAID THAT THERE WAS ANY VIOLATION OF APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER, S PECIAL ECONOMIC ZONE. IRRESPECTIVE OF NOMENCLATURE USED B Y THE ASSESSEE OR THE SPECIAL ECONOMIC ZONE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT WHAT WAS MANUFACTURED BY TH E ASSESSEE IS PENDANT. THEREFORE, THERE IS NO VIOLATION OF CONDI TIONS IMPOSED BY THE DEVELOPMENT COMMISSIONER. 10. NOW COMING TO QUALITY/PURITY OF THE GOLD, THE C ONTENTION OF THE REVENUE IS THAT THE PURITY OF GOLD IS 99.5% IN THE PRODUCT MANUFACTURED BY THE ASSESSEE. THE PENDANTS USUALLY HAVE THE PURITY OF 91.6%. NO DOUBT, THE PURITY OF THE GOLD WOULD DEPEND UPON THE PRODUCT MANUFACTURED BY THE ASSESSEE. WHEN THE PRODUCT IS 15 I.T.A. NOS.2311 & 2312/MDS/15 MANUFACTURED WITH DIAMOND AS A DESIGNERY STONE, THE PURITY IS NORMALLY LESS THAN 90%. IN OTHER WORDS, THE PENDAN T OR MEDALLION WITH DIAMOND WOULD HAVE THE PURITY OF GOLD AT 18 CA RAT. IN CASE, THE ORDINARY STONES ARE USED, THE PURITY WOULD BE NORMA LLY 20 TO 22 CARATS. IF THE PENDANT OR MEDALLION IS MADE WITHOU T ANY NATURAL OR ARTIFICIAL STONE, THEN IT CAN HAVE THE PURITY OF 99 .5% OR 24 CARAT. THEREFORE, THE PURITY WOULD DEPEND UPON THE DESIGN AND STONES IMPLANTED ON THE PENDANT OR MEDALLION. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE P ENDANT / MEDALLION IS OF 99.5% PURITY, IT WOULD NOT LOSE ITS CHARACTER AS PENDANT. AS ALREADY OBSERVED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHAT WAS MANUFACTURED BY THE ASSESSEE IS PENDANT AND IT CAN ALSO BE KNOWN AS MEDALLION. 11. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD T HE ORDERS OF THE LOWER AUTHORITIES AND ACCORDINGLY, THE SAME ARE SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO GRANT DEDUCTION UN DER SECTION 10AA OF THE ACT. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 16 I.T.A. NOS.2311 & 2312/MDS/15 ORDER PRONOUNCED ON 19 TH FEBRUARY, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 19 TH FEBRUARY, 2016. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-2, COIMBATORE 4. PRINCIPAL CIT-1, COIMBATORE 5. 69 ,1 /DR 6. :' ; /GF.
Mehul