Assistant Commissioner of Income Tax, Jammu V. M/s Padma Ornament industries, Jammu

ITA 33/ASR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5577 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 16-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K GUPTA LD
• Assessee Lawyers: RAHUL DHAWANLD
• Section: 142(1); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO.33(ASR)/2017 ASSESSMENT YEAR: 2012-13 ACIT, CIRCLE-2, RAIL HEAD COMPLEX, PANAMA CHOWK, JAMMU. VS. M/S. PADMA ORNAMENT INDUSTRIES, SHOP NO.100, 1 ST FLOOR, JAIN BAZAR, JAMMU. PAN:AAKFP-7250P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAHUL DHAWAN (LD. DR) RESPONDENT BY: SH. R.K. GUPTA (LD.CA) DATE OF HEARING:06.06.2017 DATE OF PRONOUNCE MENT:14.07.2017 ORDER PER N. K. CHOUDHRY (JM): THE INSTANT APPEAL HAS BEEN FILED BY THE REVENUE DEPA RTMENT FEELING AGGRIEVED AGAINST THE ORDER DATED 29.08.201 6 PASSED IN APPEAL NO.17/15-, BY LD. CIT(A)-J&K, JAMMU. 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL. WHETHER THE LD. CIT(A) WAS RIGHT IN LAW AND FACT IN ALLOWING THE DEDUCTION OF RS.95,99,778/- U/S 80IB OF THE ACT BY RELYING ON ITAT ORDER NO. ITA-407/ASR/2012 DATED 19.02.2013. WHETHER THE LD. CIT(A) WAS RIGHT IN LAW AND FACT IN IGNORING THE SUPREME COURTS ORDER IN CASE OF TUNGABHADRA INDUSTRIES LTD . V/S CTO[1960] II STC 827 WHICH IS SQUARELY APPLICABLE IN THIS CASE. WHETHER THE LD. CIT(A) WAS CORRECT IN LAW AND FACT IN IGNORING THE FACT THAT THE CASE OF PUNEET SEHDEV V/S ITO WARD-2(2), J AMMU IS STILL PENDING WITH ITAT AMRITSAR IN WHICH SIMILAR ISSUE I S INVOLVED. I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 2 WHETHER THE LD. CIT(A) WAS CORRECT IN LAW & FACT IN IGNORING THE APPEAL IN CASE OF SMT. SHIFALI SEHDEV V/S ITO WARD-2(3), JAMM U FOR THE A.Y. 2013- 14 WHICH IS STILL PENDING WITH HIM. 3. THE FACTUAL MATRIX OF THE CASE AS EMERGED FROM ASSESSMENT ORDER ARE AS UNDER: THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS E-FILED BY THE ASSESSEE ON 28.09.2012 VI DE ACKNOWLEDGEMENT NUMBER 499193971280912 DECLARING INCOM E NIL AFTER CLAIMING DEDUCTION OF RS.95,99,778/- UNDER SE CTION 80IB OF THE INCOME TAX ACT, 1961. THE ASSESSEE IS A PARTNERSHIP FIRM WHICH HAS BEEN FORMED ON 09.04.2009 BETWEEN SH. PARJAN KUMAR JAIN S/O LAT E SH. MUNI LAL JAIN AND SH. DEEPAK KUMAR JAIN S/O SH. MUNI LAL JAIN R/O 2 ND MANDA HOUSE, PALACE ROAD, JAMMU. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. FRESH NOTICE U/S 142(1) OF THE ACT AND QUESTIONNAIRES WAS ISSUED BY THE A.O. ON 25.11.2014 AND FURTHER PROCEEDINGS WERE CONDUCTED. SH. DEEPAK JAIN, P ARTNER, FILED REPLY TO THE QUESTIONNAIRE ISSUED AND FURNISHED O THER DETAILS AS CALLED DURING THE COURSE OF SUBSEQUENT ASSESSMENT PROCEEDINGS. THE A.O. OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 OF RS.95,99,778/- SHOWING ITS ACTIVITY AS MANUFACTURE OF GO LD ORNAMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN AND SHOW CAUSED AS TO HOW DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 HAS BEEN CLAIMED ON CONVERSION OF GOLD INTO ORNAMENTS AND WHY SA ME MAY NOT BE DISALLOWED. IN RESPONSE ASSESSEE FILED A WRITTE N REPLY ON 15.01.2015 WHICH IS REPRODUCED AS UNDER: I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 3 ------------------- ------------------- IN REPLY TO YOUR LETTER AS STATED ABOVE, WE ARE EN CLOSING THE COPY OF CIT APPEALS ORDER DATED: 24.12.2014 FOR THE ASSESSMENT YEAR 2010-11. IN THIS CASE, OUR CLAIM FOR DEDUCTION U/S 80IB HAS BEE N ALLOWED AND FURTHER CASE OF SH. PUNEET SAHDEV PROP. MS PUNEET B ANGLE HOUSE, JAIN BAZAR, JAMMU VIDE ORDER NO.440/11-12 DATED 10.10.20 12 HAS BEEN ALSO CONSIDERED AND FACTS THEREOF HAS BEEN HELD AS DIFFERENT. MOREOVER, CIT(A) HAS FOLLOWED AMRITSAR BENCH OF ITAT AND DELH I HIGH COURT. THE A.O. GONE THROUGH WITH THE CONTENTION RAISED BY T HE ASSESSEE AND THE CASE LAWS CITED BY HIM, HOWEVER, IN THE CA SE OF SH. PUNEET SAHDEV APPEAL OF THE DEPARTMENT IS PENDIN G WITH HONBLE ITAT, AMRITSAR. THE SECOND CONTENTION OF THE AS SESSEE THAT CIT(A) JAMMU HAS ALLOWED RELIEF TO ASSESSEE, HOWEVE R, DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE LD. CIT (A) AND HAS ALREADY FILED SECOND APPEAL WITH HON,BLE ITAT, AM RITSAR IN OWN CASE OF THE ASSESSEE. THE A.O. FURTHER OBSERVED THAT WHAT AMOUNTS TO MANUFACTURE HAS BEEN DEFINED IN PARAGRAPHS FROM AN AM ERICAN JUDGMENT WHICH HAS BEEN QUOTED BY APPROVAL BY VARIOU S JUDGMENTS OF THE HONBLE SUPREME COURT AS ALSO IN THE CASE OF DELHI CLOTH & GENERAL MILLS CO. LTD. THE PARAGRAPHS Q UOTED IN PARA 14 ON PAGE 795 OF THE REPORT READS AS FOLLOWS: MANUFACTURE IMPLIES A CHANGE BUT EVERY CHARGE IS N OT MANUFACTURE AND YET EVERY CHANGE OF AN ARTICLE IS THE RESULT OF TREATMENT LABOUR AND MANIPULATION. THUS FOR INFORMATION MERE CHANGE FROM ONE FORM OF STAT E TO ANOTHER IS NOT SUFFICIENT. FINALLY, THE A.O. DETERMINING THE LIABILITY BY HOLD ING AS UNDER: THUS, KEEPING IN VIEW THE FACTS OF THE CASE AND AB OVE JUDICIAL PRONOUNCEMENTS, IT IS EVIDENT THAT CONVERSION OF 24 KT. GOLD INTO 22 KT. GOLD DOES NOT AMOUNTS TO MANUFACTURE AND AS SUC H IS NOT ENTITLED TO DEDUCTION U/S 80IB OF THE INCOME TAX AC T, 1961. ACCORDINGLY, 80IB CLAIMED BY ASSESSEE TO THE TUNE O F I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 4 RS.95,99,778/- IS DISALLOWED AND AN AMOUNT OF RS.95 ,99,778/- IS SUBJECTED TO TAX. SINCE THE ASSESSEE HAS WRONGLY CL AIMED DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961, PENALTY PROCE EDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, IS INITIATED FOR F URNISHING INACCURATE PARTICULARS OF INCOME. RETURNED INCOME NIL ADDITION AS DISCUSSED ABOVE IN PARA 7 RS.95,99,778/- TOTAL TAXABLE INCOME RS.95,99,778/- (FIG IN RS.) INCOME TAX SURCHARGE & CESS TOTAL TAX INTEREST U/S 234 A 234 B 234C GROSS TAX DEMAND TAX LIABILITY 2879934 86398 2966332 1067868 20305 4054505 TAX PAID/ CHARGED NIL NIL NIL NIL NIL NIL NIL NET DEMAND 2879934 86398 2966332 1067868 20305 4054505 PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ARE BEING INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME ASSESSED TO TAX: INTEREST U/S 234 OF THE INCOME TAX ACT, 1961 CHARGED. NOTICE OF DEMAND AND A COPY OF T HIS ORDER ARE ISSUED TO THE ASSESSEE. 4. FEELING AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED THE FIRST APPEAL BEFORE THE LD. CIT(A), WH O REVERSED THE ASSESSMENT ORDER AND DELETED THE ADDITION BY HOLDING AS UNDER: 5. DETERMINATION: I HAVE CONSIDERED THE FACTS OF T HE CASE AND THE ORDER OF THE HONBLE TRIBUNAL (SUPRA). THE HONBLE ITAT H AS HELD AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE INVOLVED IN THE P RESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF THIS BENCH OF THE TRIBUNAL IN ITA NO. 407(ASR)/2012, DATED 19.02.2013, IN THE CASE OF ITO WARDS 2(3), JAMMU VS. SH. SANJAY JAIN, JAMMU (SUPRA). THE LD. CIT(A) HAS ALSO FOLLOWED THE AFORESAID ORDER OF THE TRIBUNAL. THE RELEVANT FINDI NGS OF THE TRIBUNAL ARE AS FOLLOWS: 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT RECORD AVAILABLE WITH US. WE ARE OF THE VIEW THAT THE LD. FIRST APPELLATE AUTHORITY HAS DECIDED THE ISSUE IN DISPUTE IN FAVOUR OF THE ASSES SEE BY RESPECTFULLY FOLLOWING THE VARIOUS DECISIONS RENDERED BY THE VAR IOUS BENCHES OF THE I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 5 TRIBUNAL AND THE HON'BLE HIGH COURTS. FOR THE SAKE OF CONVENIENCE, THE FINDINGS OF THE LD. CIT (A) GIVEN AT PAGES 3 & 4 OF THE ORDER ARE REPRODUCED AS UNDER: 4.'I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE AND FIND THAT ASSESSEE IS TO SUCCEED. EVEN BEFORE THE DEFINITION OF MANUFACTURING WAS NOT ON THE STATUTE THE DIRECT DECISION OF HON'B LE DELHI HIGH COURT AND HON'BLE ITAT MUMBAI AS REFERRED ABOVE HELD THAT CONVERSION OF GOLD INTO ORNAMENTS AMOUNTED TO 'MANUFACTURE.' IN T HE CASE OF M/S LOVLESH JAIN AND ORS. 204, TAXMAN 134 THE ISSUE WAS ELABORATELY DISCUSSED BY THE HON'BLE HIGH COURT AS UNDER:- 'THE ACTIVITY FOR CONVERTING GOLD BRICKS, BISCUITS OR BARS, INTO JEWELLERY AMOUNTS TO 'PRODUCTION OR MANUFACTURE OF A NEW ARTICLE. THE GOLD, SILVER OR PLATINUM IN BAR, BISCUITS OR BRICK FORM, IS CONV ERTED BY MANUAL LABOUR AND BY THE USE OF IMPLEMENTS TOOLS OR BY MACHINERY, CULMINATING INTO AN ENTIRELY NEW ARTICLE OR THING CALLED JEWELLERY O R ORNAMENTS. JEWELLERY IS A WEARABLE ITEM AND IS USED BY BOTH MEN AND WOME N. THIS PROCESS HAS BEEN REFERRED TO ABOVE IN PARAGRAPH 6.4, WHILE ADVERTING TO THE FACTUAL MATRIX IN THE CASE OF SHASHI KANT MITTAL. J EWELLERY OR ORNAMENTS IN COMMON PARLANCE OR IN COMMERCIAL TERMS AS DISTIN CT IDENTITY, TREATED AS NEW ARTICLE AND NOT THE SAME AS RAW OR STANDARD GOLD IN THE FORM OF BRICKS ,BISCUITS OR BARS. AS A RESULT OF THE SAID PROCESSING A COMMERCIALLY DIFFERENT SALEABLE PRODUCT COMES INTO EXISTENCE. JEWELLERY HAS A DISTINCTIVE NAME, CHARACTER AND USE. IT CAN N O LONGER BE REGARDED AS THE ORIGINAL COMMODITY. THE ACTIVITY OF THE RESP ONDENT ASSESSEE AMOUNT TO 'MANUFACTURE OR PRODUCTION AND THEREFORE, QUALIFY FOR DEDUCTION U/S 10A/1OB.' 4 . 1 . ALSO, IN THE CASE OF M/S TRIBUWAN DASS BHIMJEE JHAV ERI 110TTJ 942, THE HON'BIE ITAT, MUMBAI HAS HELD AS UNDER: 'DEDUCTION U/S 80 IB - ALLOWABILITY - INDUSTRIAL UN DERTAKING OR BRANCH OFFICE - ASSESSEE'S UNIT AT HYDERABAD IS GETTING TH E JEWELLERY MADE FROM KARIGARS AT MUMBAI UNDER THE SUPERVISION AND CONTRO L OF ITS EMPLOYEES WITH THE HELP OF MUMBAI OFFICE (HEAD OFFICE OF THE ASSESSEE)-OPERATIONS CARRIED OUT BY THE HYDERABAD UNIT CANNOT BE IGNORED MERELY BECAUSE THE MUMBAI OFFICE FACILITATING ITS ACTIVITIES-THERE FORE, ASSESSEE IS ENTITLED TO DEDUCTION U/S 80 IB IN RESPECT OF HYDER ABAD UNIT.' 4 . 2 . IN THE CASE OF PUNEET SACHDEVA IN APPEAL NO.253/10- 11 DATED 29/02/2012, I HAVE ALSO HELD THAT THE CONVERSION OF GOLD INTO GOLD ORNAMENTS WAS MANUFACTURING RELYING ON THE ORDER OF HON'BLE HIGH COURT AND HON'BLE ITAT, MUMBAI AS REFERRED ABOVE. 4 . 3 . FURTHER, THE DEFINITION OF 'MANUFACTURE' IS INSERTE D W.E.F 01.04.2009 IN SECTION 2 (24BA) OF I. T. ACT AS UNDE R:- 'MANUFACTURE' WITH ITS GRAMMATICAL VARIATIONS MEANS A CHANGE IN NON LIVING PHYSICAL OBJECT OR ARTICLE OR THING: I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 6 A) RESULTING IN TRANSFORMATION OF THE OBJECT OR ART ICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DI FFERENT NAME, CHARACTER AND USE, OR B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OB JECT OR ARTICLE OR THING WITH DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STR UCTURE. 4.4. THE CONDITIONS ARE ALTERNATE TO EACH OTHER AND ON SATISFYING ANY ONE OF THE TWO THE ACTIVITY WOULD BE TREATED AS MANUFACTURE'. IN THE PRESENT CASE 2 ( 29BA)( A ) OF I. T.A ACT IS CLEARL Y SATISFIED AS THERE IS TRANSFORMATION OF 24K GOLD INTO NEW AND DISTINCT OB JECT AS ORNAMENT WHICH HAS DIFFERENT NAME , CHARACTER IN THE USAGE. 4.5. THE AO HAS NOT COMMENTED IN HIS ORDER AS TO HO W THE ACTIVITY OF ASSESSEE IS NOT COVERED BY THE DEFINITION OF MANUFACTURE. HIS RELIANCE IS ON CASE LAWS WHICH ARE NOT DIRECT ON THE ISSUE W HEREAS THE DECISION OF HON'BLE DELHI HIGH COURT AND HON'BLE ITAT, MUMBA I ARE DIRECT ON THE ISSUE WHICH ARE RELIED BY ME IN CASE OF PUNEET SACH DEV IN APPEAL NO. 253/10-11 DATED 29/02/2012. FOLLOWING THE ABOVE, I HOLD THAT ASSESSEE WAS ENGAGED IN 'MANUFACTURE' AND WAS ENTIT LED TO DEDUCTION U/S. 80IB OF THE INCOME TAX ACT. I AM NOT GOING INT O THE ISSUE OF CONSISTENCY AS RAISED BY THE LD. REPRESENTATIVE ASS ESSEE AS THE MATTER STANDS DECIDED ON MERITS . GROUND NO. 1 TO 6 STANDS DISCLOSED'. 4 . KEEPING IN VIEW THE AFORESAID FINDINGS , WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORD ER PASSED BY LD. FIRST APPELLATE AUTHORITY, WHO HAS DECIDED THE ISSUE IN DISPUTE IN FAVOUR OF THE ASSESSEE, BY RESPECTFULLY FOLLOWING DECISIONS OF THE HON'BLE HIGH COURT AS WELL AS ITAT, MUMBAI BENCH. THEREFORE, WE UPHOLD THE IMPUGNED ORDER BY DISMISSING THE APPEAL FILED BY TH E REVENUE.' 5. THE SAID TRIBUNAL ORDER HAS NOT BEEN SHOWN TO HAVE BEEN EITHER UPSET, OR EVEN STAYED ON APPEAL. THE FACTS THEREIN HAVE ALSO NOT BEEN STATED TO BE ANY DIFFERENT FROM THOSE BEFORE US. 6. THUS, RESPECTFULLY FOLLOWING THE AFORESAID ORDER O F THE TRIBUNAL IN THE CASE OF 'ITO, WARD -2(3), JAMMU VS. SANJAY JAIN , JAMMU' (SUPRA) WHICH HAS ALSO BEEN FOLLOWED BY THE LD.CIT(A), AND IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE, WE DISMISS THE APPEAL OF THE REVENUE.' SINCE THE ISSUE UNDER CONSIDERATION HAS ALREADY BEE N DECIDED BY THE HON'BLE INCOME TAX APPELLATE TRIBUNA L, AMRITSAR IN THE CASE CITED ABOVE, NO ADVERSE INFERE NCE CAN BE DRAWN IN THE PRESENT CASE AS THE FACTS OF TWO APPEA LS ARE IDENTICAL. THUS, RESPECTFULLY FOLLOWING THE ABOVE D ECISIONS OF HON'BLE ITAT, AMRITSAR BENCH, AMRITSAR, I DELETE TH E ADDITION OF RS.95,99,778/- MADE ON ACCOUNT OF DISALLOWANCE O F CLAIM OF THE APPELLANT U/S 80IB OF THE INCOME TAX ACT, 1961. I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 7 5. FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE LD. CIT(A), THE REVENUE/DEPARTMENT PREFERRED THE INSTANT APPEAL WHICH IS UNDER CONSIDERATION. IN SUPPORT OF REVENUES CASE, THE LD. DR SUBMITTED THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT MANUFA CTURING OF GOLD SILVER ORNAMENTS FROM PURE GOLDEN/SILVER DOES NOT COME W ITHIN THE DEFINITION OF MANUFACTURE AS DEFINED IN INCOME TAX ACT AND FURTHER ARGUED THAT THE LD. CIT(A) FAILED TO CONSIDER THE JUD GMENT PASSED BY THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. JAM INDUSTRIES INDIA MANUFACTURING COMPANY, 2001 IT R 0307 IN WHICH IT WAS HELD THAT MANUFACTURE OF PRODUCTION CUTTING AND POLISHING OF DIAMONDS IN ABSENCE OF ANY MATERIAL ON RECORD CANNOT BE HELD THAT POLISHED DIAMOND IS A NEW ARTICLE AND THE CUTTING AND POLISHING OF RAW AND UNCUT DIAMONDS IS NOT ENTITLED TO DEDUCTION U/S 80I. THE LD. DR FURTHER RELIED UPON JUDGMENT PASSED BY THE APEX COURT IN THE CASE OF M/S TUNGABHADRA INDUSTRIES LTD. VS. THE COMMERCIAL TAX OFFICER, KURNOOL, 1961 AIR 412 IN WHICH IT WAS HELD THAT THE APPELLANT PURCHASED GROUNDNUTS OUT OF WHICH IT MANUFACTURED GROU NDNUT OIL, IT ALSO REFINED THE OIL AND HYDROGENATED IT CONVERTING I T INTO VANASPATI. IT SOLD THE OIL IN ALL THE THREE STATES, UNDER THE MADRAS GENERAL SALES TAX ACT, 1939, AND THE TURNOVER AND ASSESSMENT RULES FOR DET ERMINING THE TAXABLE TURNOVER, THE APPELLANT WAS ENTITLED TO DEDU CT THE PURCHASE PRICE OF THE GROUNDNUTS FROM THE PROCEEDS OF THE SALE OF ALL GROUNDNUT OIL. THE HIGH COURT HELD THAT THE APPELLANT WAS ENTIT LED TO THE I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 8 DEDUCTION IN RESPECT OF THE SALES OF UNREFINED AND REFIN ED GROUNDNUT OIL BUT NOT IN RESPECT OF THE SALES OF HYDROGENATED OIL ON THE GROUND THAT VANASPATI WAS NOT GROUNDNUT BUT A PRODUCT OF GROUNDNUT OIL. HELD, THAT THE APPELLANT WAS ENTITLED TO THE DEDUCTION IN RESPECT OF THE SALES OF HYDROGENATED GROUNDNUT OIL ALSO. THE H YDROGENATED GROUNDNUT OIL CONTINUED TO BE GROUNDNUT OIL NOTWIT HSTANDING THE PROCESSING WHICH WAS MERELY FOR THE PURPOSE OF RENDERING THE OIL MORE STABLE. TO BE GROUNDNUT OIL TWO CONDITIONS HAD TO BE SA TISFIED IT MUST BE FROM GROUNDNUT AND IT MUST BE OIL. THE HYDROGE NATED OIL WAS FROM GROUNDNUT AND IN ITS ESSENTIAL NATURE IT REMAINED AN OIL. IT CONTINUED TO BE USED FOR THE SAME PURPOSES AS GROUNDNUT OIL WHICH HA D NOT UNDERGONE THE PROCESS. A LIQUID STATE WAS NOT AN ESSENTIAL CHARACTERISTIC OF A VEGETABLE OIL; THE MERE FACT THAT H YDROGENATION MADE IT SEMISOLID DID NOT ALTER ITS CHARACTER AS AN OIL. FINALLY, THE LD. DR SUBMITTED THAT IF WE COMPARE THE AFORESAID JUDGMENT THEN THE CONVERSION OF AN ORNAMENTS FROM THE 24 CARAT GOLD DOES NOT CAUSE MUCH EFFECTS AND IN CONCLUSION THE ORDER PASSE D BY THE LD. CIT(A) IS ILLOGICAL, UNREASONED AND THEREFORE UNSUST AINABLE. 6. ON THE OTHER HAND, THE LD. AR RELIED UPON THE JUDGM ENT PASSED BY THE LD. CIT(A) AND SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) IS LOGICAL, REASONABLE AND BASED ON CONSIDERATION OF THE RELEVANT CASE LAWS WHICH ARE DIRECT TO THE SUBJECT MATTER OF THE INSTANT I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 9 CASE AS WELL AS THE CIT(A) APPLY ITS INDEPENDENT MIND W HILE DECIDING THE ISSUE UNDER CONSIDERATION. FURTHER IT WAS SUBMITTED B Y LD. AR THAT ONCE THERE IS A DIRECT JUDGMENTS COVERING THE SUBJECT MATT ER THEN THERE IS NO IOTA OF DOUBT THAT THE FUTILE EXERCISE BE NOT CARRIED ON. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND RIVAL SUBMISSIONS OF THE PARTIES AND THE CASES RELIE D UPON. AT THE OUTSET, WE WOULD LIKE TO GO THROUGH WITH THE DEF INITION OF MANUFACTURE AS DEFINED U/S 2(24BA) OF THE I.T. ACT. MANUFACTURE WITH ITS GRAMMATICAL VARIATIONS MEANS A CHANGE IN NON LIVING PHYSICAL OBJECT OR ARTICLE OR THING: A) RESULTING IN TRANSFORMATION OF THE OBJECT OR A RTICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DI FFERENT NAME, CHARACTER AND USE, OR B) BRINING INTO EXISTENCE OF A NEW AND DISTINCT OB JECT OR ARTICLE OR THING WITH DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STR UCTURE. IN THE INSTANT CASE, THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE OF GOLD AND SILVER ORNAMENTS FROM PURE GO LD AND SILVER AND MANUFACTURING ORNAMENTS FROM THE RAW MATERIAL. FR OM OUR MIND, RESULTING IN TRANSFORMATION OF THE OBJECT THAT IS RAW G OLD INTO A NEW AND DISTINCT OBJECT THAT IS THE ORNAMENT HAVING A DIFF ERENT NAME, CHARACTER AND ITS USE. WE REALIZE THAT DEFINITION ITSELF IS VERY MUCH CLEAR AND THERE IS NO AMBIGUITY IN ITS INTERPRETATION CONTRARY TO ITS OBJECT. 8. EVEN OTHERWISE THE HON'BLE DELHI HIGH COURT IN THE CA SE OF M/S LOVLESH JAIN & ORS. 204, TAXMANN 134, CLEARLY AND ELAB ORATELY I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 10 DISCUSSED THE INSTANT ISSUE AND WAS PLEASED TO HELD THAT T HE ACTIVITY OF THE ASSESSEE DEALING WITH THE MANUFACTURING OF ORNAMENT S AMOUNT TO MANUFACTURE OR PRODUCTION AND THEREFORE, QUALIFY FOR DEDUCTION U/S 10A/10B OF THE I.T. ACT AND FURTHER THE COORDINATION BENCH OF AMRITSAR BENCH ITSELF ANALYZE THE INSTANT ISSUE IN THE CASE OF I TO, WARD-2(3), JAMMU VS. SANJAY JAIN, JAMMU ITA NO. 407/ASR/2012 O RDER DATED 19 TH FEB. 2013, WHILE RELYING UPON THE JUDGMENT PASSED BY THE HONBLE DELHI HIGH COURT (SUPRA) AS WELL AS MUMBAI IN THE CASE OF M/S TRIBUWAN DASS BHIMJEE JHAVERI 110TTJ 942 ALSO HELD THE SAME AS WE DETERMINED INDEPENDENTLY BY APPLYING OUR INDEPENDEN T MIND. 9. IN RESPECT OF THE JUDGMENT REFERRED BY THE LD. DR, WE HAVE GONE THROUGH WITH THE JUDGMENTS AND WE ARE OF THE CONSIDER ED VIEW THAT JUDGMENT DOES NOT DIRECTLY DEAL WITH THE SUBJECT IN ISSUE AND FACTS ARE DISSIMILAR. 10. HENCE, IN CUMULATIVE EFFECT, THE ORDER PASSED BY THE LD. CIT(A) IS LIABLE TO BE UPHELD, HENCE, THE APPEAL FILED BY TH E DEPARTMENT STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.07.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUD HRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14.07.2017. /PK/ PS. I TA NO.33(ASR)/2017 A SST. YEAR: 2012-13 11 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A) (4) THE CIT, ASR. (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER