MARMO CLASSIC, MUMBAI V. ACIT CIR 23(1), MUMBAI

ITA 3370/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1274 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 17-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 21-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR SRIVASTAVA
• Assessee Lawyers: V C SHAH
• Section: 143(3); 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI D.K. AGARWAL, J.M AND SHRI A.L. GEHLOT , A.M. ITA NO. 3370/M/2009 ASSESSMENT YEAR: 2005-06 M/S MARMO CLASSIC APPELLANT 15, BHANDUP VILLAGE ROAD, NEXT TO CEAT TYRE FACTORY, SUBHASH NAGAR, BHANDUP (WEST), MUMBAI 400 079. (PAN AAEFM7253P) VS. ASSTT. COMMISSIONER OF INCOME TAX, RESPONDENT C-10, 3RD FLOOR, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 APPELLANT BY : MR. V.C. SHAH RESPONDENT BY : MR. AJAY KUMAR SRIVASTAVA ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT-23, MUMBAI, PASSED ON 30.03.2009 FOR THE A SSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED 7 GROUNDS OF APPEAL, THE SUM AND SUBSTANCE OF WHICH IS THAT THE CIT ERRED IN PASSING AN ORDER U/S 263 OF THE ACT AND IN SETTING ASIDE THE ASSESSMENT AND IN DIRECTING TO PASS A FRESH ORDER OF ASSESSMENT AFTER WITHDRAWI NG THE DEDUCTION GRANTED U/S 80IB. 3. ON PERUSAL OF RECORD, THE CIT FOUND THAT THE ASS ESSEE HAS CLAIMED DEDUCTION U/S 80IB OF THE ACT, WHICH HAS BE EN ALLOWED BY THE AO WHILE MAKING ASSESSMENT U/S 143(3) OF THE AC T. THE CIT NOTED THAT THE ACTIVITY OF THE ASSESSEE IS OF CUTTI NG AND PROCESSING OF MARBLE BLOCKS TO MAKE TILES/SLABS. THE CIT(A) WA S OF THE VIEW THAT THE ACTIVITY OF THE ASSESSEE DID NOT AMOUNT TO MANUFACTURING ITA NO. 3370/M/09 M/S MARMO CLASSIC 2 OF PRODUCTION. THEREFORE, IN VIEW OF THE JUDGMENT O F THE APEX COURT IN THE CASE OF LUCKY MINMAT PVT. LTD. VS. CIT[2000] 245 ITR 830 (SC) THE CIT HELD THAT ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 80IB. THEREFORE, THE CIT HELD THAT THE ASSESSMENT O RDER OF ASSESSEE IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF TH E REVENUE. THE CIT DIRECTED THE AO TO PASS A FRESH ORDER AFTER WIT HDRAWING THE DEDUCTION U/S 80IB. 4. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE J UDGMENT OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ARIHAN T TILES & MARBLES (P) LTD., [2007] 295 ITR 148 (RAJ), WHICH W AS AFFIRMED BY THE HONBLE SUPREME COURT IN THE CASE OF ITO VS. AR IHANT TILES AND MARBLES P. LTD., [2010] 320 ITR 79(SC). THE LEARNED AR SUBMITTED THAT THE CIT(A) IN AY 2006-07 HAS FOLLOWED THE SAID JUDGMENT OF THE APEX COURT AND ALLOWED THE CLAIM OF THE ASSESSEE. H E FURTHER SUBMITTED THAT IN AY 2007-08, THE AO HIMSELF ALLOWE D DEDUCTION U/S 80IB FOLLOWING THE JUDGMENT OF SUPREME COURT. I T IS ALSO THE SUBMISSION OF THE LEARNED AR THAT THE ASSESSMENT FO R AY 2003-04, 2003-04 AND 2004-05 WERE REOPENED AND THE PROCEEDI NGS OF REOPENING WERE DROPPED AFTER CONSIDERING THE SAID J UDGMENT OF THE SUPREME COURT. 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. FOR INVOKING SECTION 263 THERE ARE TWO BASIC CONDITIONS TO BE SATISFIED, NAMELY, I) THAT THE ORD ER OF THE AO SHOULD BE ERRONEOUS AND II) PREJUDICIAL TO THE INTE RESTS OF THE REVENUE. THE APEX COURT IN THE CASE OF ARIHANT TILE S & MARBLES PVT. LTD. CITED SUPRA HELD AS UNDER:- AFFIRMING THE DECISION OF THE HIGH COURT, THAT THIS WAS NOT A CASE OF MERELY CUTTING MARBLE BLOCKS INTO SLABS. T HERE WAS THE FURTHER ACTIVITY OF POLISHING AND ULTIMATE CONVERSI ON OF THE BLOCKS INTO POLISHED SLABS AND TILES. THERE WERE VA RIOUS STAGES THROUGH WHICH THE BLOCKS HAD TO GO THROUGH BEFORE T HEY BECAME POLISHED SLABS AND TILES. THE ORIGINAL BLOCK DID NOT REMAIN MARBLE BLOCK; IT BECAME A SLAB OR TILE. BLOC KS WERE CONVERTED INTO POLISHED SLABS AND TILES RESULTING I N THE EMERGENCE OF A NEW AND DISTINCT COMMODITY. SUCH AN ACTIVITY WAS SOMETHING BEYOND MANUFACTURE AND BROUGHT A NEW ITA NO. 3370/M/09 M/S MARMO CLASSIC 3 PRODUCT INTO EXISTENCE. THE STEPWISE ACTIVITY CONST ITUTED MANUFACTURE OR PRODUCTION IN TERMS OF SECTION 80I A. 6. IF WE CONSIDER THE FACTS OF THE CASE UNDER CONSI DERATION, WE FIND THAT THE ORDER OF THE AO IS IN ACCORDANCE WITH LAW A AND AS PER THE LAW LAID DOWN BY APEX COURT IN THE SAID CASE. THE VIEW OF THE CIT IS NOT IN ACCORDANCE WITH LAW, THEREFORE, WE SE T ASIDE THE ORDER OF THE CIT PASSED U/S 263 AND THAT OF THE ORDER OF AO IS RESTORED ON THIS ISSUE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF JUNE, 2010. SD/- SD/- (D.K. AGARWAL) (A.L. GEHLO T) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 25 TH JUNE, 2010. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, I BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 17.6.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 18.6.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO. 3370/M/09 M/S MARMO CLASSIC 4