The ACIT,Vapi Circle, Vapi V. M/s. Natasha Industries, Nani Daman

ITA 2471/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6601 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Section: 143(3); 80IB

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI G.D. AGRAWAL, V.P. AND M.K. SHRAWAT, JM. ASSTT. CIT,VAPI CIRCLE, VAPI. VS. M/S NATASHA INDUSTRIES, G- 5/F-5, CHIRAG UDHYOG BHAVAN, 8/9, GOLDEN INDUSTRIAL ESTATE, DABHEL, NANI DAMAN. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI O.P. BATHEJA, SR.DR RESPONDENT BY:- NONE (WRITTEN SUBMISSION) O R D E R PER M.K. SHRAWAT, JUDICIAL MEMBER . THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHI CH HAS EMANATED FROM THE ORDER OF CIT(A). VALSAD DATED 25.05.2010 A ND THE ONLY GROUND RAISED BY THE REVENUE IS REPRODUCED BELOW:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ACTIVITY OF AS SESSEE IS MANUFACTURING ACTIVITY WITHIN THE MEANING OF SECTIO N 80IB(2)(III) AND NOT ASSEMBLING AND DIRECTING TO ALLOW DEDUCTION U/S 80IB AMOUNTING TO RS.49,96,792/-. 2. THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB VIDE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) ON 23.12.2009. THE ITA NO.2471/AHD/2010 ASST. YEAR 2007-08 ITA NO.2471/AHD/2010 ASST. YEAR 2007-08 2 ASSESSEE FIRM HAS CLAIMED THAT FOR THE YEAR UNDER C ONSIDERATION IT WAS ENGAGED IN THE BUSINESS OF ALLEGED MANUFACTURING, A SSEMBLING AND TRADING OF COMPUTER SYSTEM AND ALLIED PRODUCTS. AN UNDISPUT ED FACT IS THAT THE MANUFACTURING UNIT OF THE ASSESSEE IS LOCATED IN TH E UNION TERRITORY OF DAMAN SAID TO BE INDUSTRIALLY BACKWARD UNION TERRIT ORY AS PRESCRIBED BY THE STATUTE. THE SAID DISALLOWANCE WAS CHALLENGED A ND THE LD. CIT(A) HAS HELD THAT THE ACTIVITY UNDERTAKEN BY THE ASSESSEE C OULD BE CHARACTERIZED AS MANUFACTURING BECAUSE THE ASSESSEE HAS TRANSFORME D THE RAW MATERIAL INTO A DISTINCT COMMERCIALLY VIABLE PRODUCT. THE LD . CIT(A) HAS FOLLOWED A DECISION OF THE TRIBUNAL DECIDED IN ASSESSEES OW N CASE FOR ASST. YEAR 2005-06 VIDE ORDER DATED 5.6.2009. 3. FROM THE SIDE OF THE ASSESSEE A SHORT SUBMISSION BEFORE US IS THAT ONCE A VIEW HAS ALREADY BEEN TAKEN IN THE PAST IN A SSESSEES OWN CASE BY THE RESPECTED TRIBUNAL. THEREFORE, IN IDENTICAL MAT TER FOR THIS YEAR AS WELL, THE ISSUE OF CLAIM OF DEDUCTION U/S 80IB DESERVES T O BE ALLOWED IN ITS FAVOUR. FOR REFERENCE RELEVANT PARA 7 OF TRIBUNALS ORDER DATED 5.6.2009 IN ITA NO.3351/AHD/2008 ASST. YEAR 2005-06 IN THE C ASE OF DCIT VS. NATASHA INDUSTRIES, IS REPRODUCED BELOW :- 7. WE FIND THAT THE CLAIM OF THE ASSESSEE IS BASED ON DOCUMENTARY EVIDENCES, WHICH IS DULY SUPPORTED LICENSES AND REG ISTRATIONS OBTAINED BY THEM UNDER DIFFERENT STATUTES SUCH AS CENTRAL EXCIS E, SALES TAX, DIRECTORATE OF INDUSTRIES ETC., COPIES WHEREOF WERE ALREADY FUR NISHED AND AVAILABLE WITH THE ASSESSING OFFICER. A PERUSAL OF THE PROCESS DE SCRIBED IN THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE ASSESSEE GIVI NG DETAILS OF THE COMPONENT AND THE PROCESS OF MANUFACTURE CARRIED OU T BY THE ASSESSEE, ITA NO.2471/AHD/2010 ASST. YEAR 2007-08 3 REVEALS THAT MANUFACTURING PROCESS INVOLVES VARIOUS STEPS I.E. ASSEMBLING BY FIXING CPU, MEMORY, HARD DRIVE, OPTICAL DISK DRIVE, WIRELESS CARD ETC. IN A LOP TOP BARE BONE, THEN TESTING THE SAME AND PACKING. W E FIND THAT, WHAT IS TO BE SEEN IS THE END RESULT OF THE CUMULATIVE PROCESS CA RRIED OUT BY AN ASSESSEE AND NOT THE INDIVIDUAL PROCESS SEPARATELY. THE ENT IRE PROCESS OF MANUFACTURE IS TO BE CONSIDERED AS A WHOLE IN TOTALITY AND IND IVIDUAL PROCESS IS NOT TO BE VIEWED AS SEPARATE PROCESS. CONSIDERING THE LEGAL POSITION ON THE SUBJECT, WE ARE IN AGREEMENT THAT THE PROCESS OF MANUFACTURE HAS TO BE SEEN IN ITS ENTIRETY AND THE MANUFACTURING PROCESS CANNOT BE VI VISECTED INTO INDIVIDUAL PROCESS TO ASCERTAIN WHETHER THE ACTIVITIES CARRIED OUT BY THE AS ARE MANUFACTURING ACTIVITIES OR NOT. IN ORDER TO BE CON SIDERED AS MANUFACTURE, IT IS NOT NECESSARY THAT EACH AND EVERY INDIVIDUAL PRO CESS CARRIED OUT BY AN ASSESSEE SHOULD BE A PROCESS OF MANUFACTURE. IF A T THE END OF THE SERIES OF PROCESSES, THERE IS A TRANSFORMATION IN THE MATERIA LS, RESULTING INTO EMERGENCE OF NEW COMMERCIALLY DISTINCT PRODUCT THEN THE ENTIR E ACTIVITY CONSISTING OF VARIOUS PROCESSES ARE TO BE REGARDED AS PROCESS OF MANUFACTURE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ACTIVITY O F THE ASSESSEE IS THAT OF MANUFACTURING AND THE ASSESSEE IS ELIGIBLE FOR DE DUCTION U/S.80-IB OF THE ACT. THE ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD AND THE REVENUES GROUND IS DISMISSED. 4. AFTER HEARING THE LD. DR AND GOING THROUGH THE M ATERIAL ON RECORD, WE FIND THAT THE LD. CIT(A) HAS SIMPLY FOLLOWED THE AFOREMENTIONED VIEW OF THE RESPECTED TRIBUNAL. WE SEE NO FALLACY IN THE ORDER OF LD. CIT(A), HENCE CONFIRM THE SAME. ACCORDINGLY THE GROUND OF T HE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 20 TH MAY 2011 SD/- SD/- (G.D.AGRAWAL) (M.K. SHRAWAT) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD, DATED : 20 TH MAY 2011 ITA NO.2471/AHD/2010 ASST. YEAR 2007-08 4 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, //TRUE COPY// DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 20/5/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 20/5/2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 20/5/2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 20/5/2011 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..