ACIT, Pondicherry V. M/s. Sri Adinath Stampings, Pondicherry

ITA 338/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4671 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-08-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: V D GOPAL
• Keywords: Depreciation; Opportunity of being heard
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS.338 TO 341/MDS/2011 (ASSESSMENT YEARS : 2003-04 TO 2006-07) THE ASSISTANT COMMISSIONER OF VS. M/S. SRI ADIN ATH STAMPINGS, INCOME TAX, CIRCLE-I, 88, BHAJANAI MADAM STR EET, D.P.THOTTAM, M.G.ROAD, MUTHIRAPALAYAM, PUDUCHERRY-605 003. PUDUCHERRY-605 009. PAN:AARFS2443N APPELLANT BY : MR. S.DAS GUPTA, JCIT RESPONDENT BY : MR. V.D.GOPAL, ADVOCATE DATE OF HEARING : 28 TH AUGUST, 2013 DATE OF PRONOUNCEMENT : 29 TH AUGUST, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : ALL THESE APPEALS ARE FILED BY THE REVENUE AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XII, CHENNAI DATED 14.12.2010 FOR THE ASS ESSMENT YEARS 2003-04 TO 2006-07. THE ONLY ISSUE IN ALL TH ESE APPEALS IS THAT THE COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW T HE CLAIM UNDER SECTION 80IB OF THE ACT. ITA NOS. 338 TO 341/MDS//2011 2 2. BRIEF FACTS ARE THAT THE ASSESSEE IS A PARTNERSH IP FIRM ENGAGED IN THE MANUFACTURE OF LAMINATION BLADES FR OM STEEL ROLLS. THE ASSESSEE FILED RETURNS FOR ALL THESE ASS ESSMENT YEARS CLAIMING DEDUCTION UNDER SECTION 80IB OF THE ACT. THE ASSESSMENTS WERE COMPLETED DENYING THE DEDUCTION UN DER SECTION 80IB OF THE ACT ON THE GROUND THAT THE ASSE SSEE DID NOT CARRY ON MANUFACTURING ACTIVITY AND THERE WERE NO REQUISITE NUMBER OF EMPLOYEES EMPLOYED AND CERTAIN CONDITIONS SPECIFIED IN SECTION 80IB WERE NOT FULFI LLED. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) AL LOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB OF THE ACT AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 3. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE OR DER OF THE ASSESSING OFFICER AND SUBMITS THAT THE ASSES SEE NEVER USED ANY ELECTRICITY FOR ITS MANUFACTURING ACTIVITI ES AND NOT EMPLOYED REQUIRED NUMBER OF EMPLOYEES AS SPECIFIED UNDER THE PROVISIONS OF SECTION 80IB OF THE ACT. THE DEP ARTMENTAL REPRESENTATIVE SUBMITS THAT AS THERE WAS NO POWER ITA NOS. 338 TO 341/MDS//2011 3 CONSUMPTION BY THE ASSESSEE, THE ASSESSEE COULD NO T HAVE MANUFACTURED ANY ARTICLE OR THING SO AS TO ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. THE DEPART MENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. THE COUNSEL FOR THE ASSESSEE RELIED ON THE ORDE RS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REITER ATED THE SUBMISSIONS MADE BEFORE HIM. 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. THE COMMISSIONER OF INCOME TAX (APPEAL S) AFTER CONSIDERING VARIOUS SUBMISSIONS OF THE ASSESSEE AND THE EVIDENCE ON RECORD HELD THAT THE ASSESSEE IS ELIGIB LE FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. THE COMMIS SIONER OF INCOME TAX (APPEALS) CAME TO THE CONCLUSION THAT THE ASSESSEE HAD IN FACT USED 0.25 HP SINGLE PHASE MOTO R WHICH CONSUMES ELECTRICITY AT 0.186 UNITS PER HOUR AND TH EREFORE, CONCLUDED THAT THE ASSESSEE HAD BEEN INVOLVED IN TH E ITA NOS. 338 TO 341/MDS//2011 4 MANUFACTURING ACTIVITY BY EMPLOYING POWER. THIS C ONCLUSION WAS ARRIVED AT BY THE COMMISSIONER OF INCOME TAX (A PPEALS) BASED ON THE FINDINGS OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.163/MDS/2 007 DATED 8.6.2007. THE COMMISSIONER OF INCOME TAX (AP PEALS) ALSO HAS GIVEN A FINDING THAT THE ASSESSEE HAD EMPL OYED REQUISITE NUMBER OF EMPLOYEES IN THE PROCESS OF MANUFACTURING OF LAMINATION BLADES. ON EXAMINING TH E ATTENDANCE REGISTER, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VIEW THAT THE ASSESSEE HAD BE EN ENGAGING MORE THAN REQUIRED NUMBER OF EMPLOYEES (I. E. 10) AT ANY GIVEN POINT OF TIME. THE COMMISSIONER OF IN COME TAX (APPEALS) ALSO NOTED THAT THE ASSESSEE IS PAYING CE NTRAL EXCISE DUTY AND SALES TAX REGULARLY. THE COMMISSION ER OF INCOME TAX (APPEALS) ELABORATELY DISCUSSED VARIOUS ISSUES AND CONTENTIONS AND CAME TO THE CONCLUSION THAT TH E ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80I B OF THE ACT OBSERVING AS UNDER:- ITA NOS. 338 TO 341/MDS//2011 5 THE MAIN ISSUE OF THE APPEAL IS WHETHER THE APPE L LANT IS ELIGIBLE FOR THE CLA I M OF DEDUCTION U/S 80 IB OF THE INCOME-TAX ACT, 1961 OR NOT. THE ASSESSING OFF I CER DISALLOWED THE CLAIM OF DEDUCTION U/S 80 IB OF THE INCOME-TAX ACT, 1961 OF THE APPELLANT FOR THE REASONS THAT (1) THE MANUFACTURING PROCESS WAS DONE WITHOUT THE AID O F POWER; (2) THAT THE NUMBER OF EMPLOYEES WERE NOT MORE THAN 10 PERSONS; (3) THAT NOT MORE THAN SINGLE SHIFT WAS IN OPERATION ; (4) THAT NO CASUAL LABOURERS OR DAILY WAGE EMPLOYEES EXISTED IN ADDITION TO THE REGULAR EMPLOYEES; AND (5) NO FAC I LITIES LIKE ESI, EPF ETC. WERE PROVIDED TO THE WORKERS. THE ASSESSING OFFICER HAD ALSO MENT I ONED THAT THE APPELLANT FIRM WAS NOT R E GISTERED UNDER THE FACTORIES ACT, 1948 . IN REGARD TO THE ISSUES POINTED OUT BY THE ASSESSIN G OFFICER IN THE I MPUGNED ORDER, DURING THE COURSE OF APPELLATE PROCEEDINGS, A LETTER, DT.14.9.10 WAS ADDRESSED TO THE ASSESSING OFFICER, CALLING FOR A REMAND REPORT IN THIS CASE. THE ASSESSING OFFICER WAS SPECIFICALLY ASKED TO GIVE AN OPPORTUNITY TO TH E APPELLANT TO CROSS EXAMINE THE ALLEGED MANAGER AND AUTHORISED SIGNATORY, SHRI D. KANAGARAJ, IN REGARD TO THE POINTS - ( 1 ) AND (2) ABOVE. FURTHER, THE ASSESSING OFFICER WAS . ALSO DIRECTED TO OFFER HIS COMMENTS ON THE CONTENTION OF THE APPELLA NT THAT THE APPELLANT WAS CONSTANTLY MONITORED BY VARIOUS GOVERNMENTAL AGENC IE S I . E. THE APPELLANT F I RM IS REGISTERED WITH T HE CENTRAL EXCISE DEPARTMENT AND I S ASSESSED TO TAX BY THE STATE COMMERCIAL TAXES DEPARTMENT AND EVIDENCES FOR PAYMENT OF EXCISE DUTY (BY WAY OF CHALLANS) AND COMMERCIAL TAX DEPARTMENT ORDER DT. 27.08.03 WAS ALSO FORWARDED TO THE ASS E SSING OFFICER. IN THIS CONNECTION, THE ASSESSING OFFICER WAS DIREC TED TO GIVE AN OPPORTUNITY OF BEING HEARD TO THE APPEL L ANT BEFORE FINALIZING H I S REMAND REPORT AND FORWARDING THE ITA NOS. 338 TO 341/MDS//2011 6 SAME TO THIS OFFICE. IN SO FAR AS THE ISSUE OF MANUFACTURING PROCESS DON E WITHOUT THE AID OF POWER RAISED BY THE ASSESSING OFFICER , T H E ARS OF THE APPELLANT FILED A CERTIFICATE FROM THE OWNER OF THE PROPERTY FROM WHERE THE APPELLANT FIRM IS FUNCTIONING TO THE EFFECT THAT THE RENT PAID BY THE APPELLANT FIRM WAS INCLUSIVE OF CONSUMPTION OF ELECTRICITY AND WATER, FOR WH I CH BILLS WERE PA I D BY THE OWNER. IT IS PERTINENT TO POINT OUT THAT IT HAD BEEN BROUGHT OUT BY THE 'C' BENCH OF TH E JURISDICTIONAL ITAT, IN ITS ORDER IN THE APPELLANT' S OWN CASE, FOR THE ASSESSMENT YEAR 2004-05, IN ITA NO.163/MDS/2007 DT. 08.06.07, THAT IN THE PRODUCTION PROCESS OF THE APPELLANT, THE MACHINERY UTILISED FOR REMOVING THE OXIDES HAVE 0.25 HP SINGL E PHASE MOTOR WHICH CONSUMES ELECTRICITY AT 0.I86 UN I TS PER HOUR. THUS, IT HAD BEEN MADE CLE A R THAT THE APPELLANT HAD BEEN INVOLVED IN THE MANUFACTURING ACTIVITY BY EMPLOYING POWER (ELECTRICITY). IN SO FAR AS THE ISSUE OF NUMBER OF PERSONS ENGAGED IN THE MANUFACTURING ACTIVITY OF THE APPELLANT'S INDUSTRIAL UNDERTAKING, IT IS SEEN FROM THE ATTENDANCE REGISTER THAT THE APPELLANT HAD BEEN ENGAGING MORE THAN 10 EMPLOYEES IN ITS UNDERTAKING AT ANY GIVEN POINT OF TIME. FURTHER, AS COULD BE SE EN FROM THE REMAND REPORT DT. 28.09.2010, THE ASSESSIN G OFFICER COULD NOT SUMMON SHRI D. KANAGARAJ, ALLEGED MANAGER AND AUTHORISED SIGNATORY OF THE APPELLANT FIRM, AS REQUESTED BY THE AUTHORISED REPRESENTATIVES FOR CROSS EXAMINATION REGARDING THE NUMBER OF EMP L OYEES ENGAGED BY THE APPELLANT IN ITS PRODUCTION PROCESS FOR THE REASON THAT THE ALLE GED MANGER-CUM-AUTHORISED SIGNATORY WAS NOT FOUND IN THE ADDRESS GIVEN BY HIM WHILE RECORDING A SWORN STATEMENT BY THE ASSESSING OFFICER ON 05.12.2005. MOREOVER, THE ASSESSING OFFICER HAD FAILED TO TAKE INTO ACCOUNT THE NUMBER OF CASUAL EMPLOYEES ENGAGED BY THE APPELLANT IN ITS PRODUCTION PROCESS. AS COULD BE SEEN FROM THE REMAND REPORTS DT. ITA NOS. 338 TO 341/MDS//2011 7 28.09.10 AND 29.09.10 OF THE ASSESSING OFFICER, HE HAD REMAINED SILENT ON THE ISSUE OF VE R IFICATION BY THE ASSESSING OFFICER THAT THE APPELLANT WAS MONITORED BY OTHER GOVERNMENTAL AGENCIES LIKE COMMERCIAL TAXES DEPARTMENT, PONDICHERRY AND CENTRAL EXCISE DEPARTMENT. THE DETAILS FILED BY THE ARS OF THE APPELLANT GOES TO PROVE THAT THE APPELL ANT WAS REGULARLY REMITTING EXCISE DUTY AS COULD BE SEEN FROM THE BANK CHALLANS AND ALSO THAT THE APPELLANT FIRM IS ASSESSED TO SALES TAX AS COULD B E SEEN FROM THE COMMERCIAL TAX DEPARTMENT ORDER. FURTHER, REGARDING THE TAKING UP THE ISSUE OF THE APPELLANT FIRM NOT REGISTERED WITH THE REGISTRA R OF FACTORIES AS PER THE FACTO R IES ACT, 1948, IN THE REMAND REPORT OF THE ASSESSING OFFICER DT. 29.09.10 , NOWHERE IN THE ACT IT HAS BEEN MENTIONED THAT THE APPELLANT FIRM WAS REQUIRED TO BE REGISTERED AS PER THE FACTORIES ACT, 1948. MOREOVER, THE ISSUE OF REGISTRATION AS PER THE FACTORIES ACT SHOULD BE TAK EN UP BY THE RESPECTIVE AUTHORITY WITH THE APPELLANT F IRM. IN THIS CONNECTION, IT IS PERTINENT TO REPRODUCE SE C. 80 IB(2) AND ITS PROVISIONS, WHICH ARE AS UNDER:- 80IB. DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERTAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUS INESS REFERRED TO IN SUB-SECTIONS (3) TO (11), (L1A) AND (L1B) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED , IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAK ING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY: --- (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONS TRUCTION, OF A BUSINESS ALREADY IN EXISTENCE: ITA NOS. 338 TO 341/MDS//2011 8 PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN INDUSTRIAL UNDERTAKING WHICH IS FORMED AS A RESU LT OF THE RE-ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH INDUSTRIAL UNDERTAKING AS IS REFERRED TO IN SECTION 33B, IN TH E C IRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE ; (III) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR TH ING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST I N THE ELEVENTH SCHEDULE, OR OPERATES ONE OR MORE COLD STO RAGE PLANT OR PLANTS, IN ANY PART OF INDIA: PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL, I N RELATION TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDU STRIAL UNDERTAKING REFERRED TO IN SUB-SECTION (4) SHALL A PPLY AS IF THE WORDS 'NOT BEING ANY ARTICLE OR THING SPECIF IED IN THE LIST IN THE ELEVENTH SCHEDULE' HAD BEEN OMITTED. EXPLANATION L , ---FOR THE PURPOSES OF CLAUSE (II), ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGARD ED AS MACHINERY, OR PLANT PREVIOUSLY USED FOR ANY PURPOSE , IF THE FOLLOWING CONDITIONS ARE FULFILLED, NAMELY:-- - (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME PR EVIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, US ED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESP ECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLO WABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE T OTAL INCOME OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DA TE OF THE INSTALLATION OF THE MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2.---WHERE IN THE CASE OF AN INDUSTRIAL UNDERTAKING, ANY MACHINERY OR PLANT OR ANY PART TH EREOF PREVIOUSLY USED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TOTAL VALUE OF THE MACHINERY OR PL ANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CEN T. OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE BUSINESS, THEN , FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB- ITA NOS. 338 TO 341/MDS//2011 9 SECTION, THE CONDITION SPECIFIED THEREIN SHALL BE D EEMED TO HAVE BEEN COMPLIED WITH; (IV) IN A CASE WHERE THE INDUSTRIAL UNDERTAKING MANUFACTURES OR PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOYS TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF PO WER, OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUFACTURIN G PROCESS CARRIED ON WITHOUT THE AID OF POWER. FROM A READING OF THE ABOVE SEC TI ON AND FROM THE D I SCUSSIONS M A D E ABOVE, IT IS C L EAR THAT THE APPE LL ANT WAS I NVOLVED IN M ANUFACTURING ACTIVIT Y IN ITS PRODUCTION P R OCESS BY EMPLOYI N G THE R EQU I SITE NUMBE R OF E M P L OYEES W ITH THE U T ILIZA T ION OF ELECTRIC I TY (POWER) DU RI NG THE IMPUGNED YEAR. F U RT H ER, THE APPE L LAN T WAS REGULA R LY MONITO R ED B Y CENTRAL AND STATE GOVER N MENT DEPARTMEN T S LI KE EXCISE AND COMMERCIAL TAXES DEPARTMENT RESPECT I VELY, MAKING IT ELIGIBLE FOR THE C L AIM OF DEDUCT I ON U/S 80IB OF THE INCOME - TAX ACT, 1961 THE MERITS OF THE CASE THAT THE APPELLANT - F I RM IN IT S INDUSTRIAL UNDERTAKING, BY VIRTUE OF UTILIZING POWE R AND BY ENGAGING THE REQ UI SITE NUMBER OF PERSONS IN ITS PAY ROLL PRODUCES ELECTRICAL TRANSFO R MERS BY STAMPING THE RAW MATERIALS (CRGO/CRNGO AND STEEL SHEETS), IS INVOLVED IN THE M A NUFACTURE OF ARTIC L E OR THING THUS MAKING IT ELIGIBLE FO R THE C L A IM OF D E DUCT I ON U/S 8 0 IB OF THE I NCO M E-TA X ACT, 196 1 BY T HE DETAILED P R OCESS AS BROUGHT OUT BY THE AUTHORISED REP R E S ENTATIVES I N THEIR WRI T T EN SUB M I SSIONS. THE SA M E IS REPRODUCED AS UNDER: - 1. THE RAW MATERIAL R EQUIRED FOR THE MANUFACTURE OF LAMINATION W H I C H IS USED IN THE MANUFACTURE OF ELEC T RIC TRANSFORMERS IS EITHER CRGO (COLD ROLL GRAIN ORIENTED SILICON ELECTRICAL STEEL) OR CRNGO (COLD ROLL NON GRAIN ORIENTED SILICON STEEL). IT IS AN ITA NOS. 338 TO 341/MDS//2011 10 UNDISPUTED AND INDISPUTABLE FACT THAT T HE APPELLANT PU R CHASE BOTH CRGO SILICON ELECTRICAL STEEL AND CRNGO SILICON ELECTRICAL STEEL WHICH ARE THE BASIC RAW MATERIALS. WHILE CRGO IS PURCHASED BY IMPORTING IT FROM OUTSIDE INDIA, CRNGO IS LOCALLY PURCHASED. II) THE SECOND STAGE IS THE CRGO OR CRNGO AS THE CASE MAY BE ARE GRADED AS PER THICKNESS/CORE LOSSES/INSU L ATION AND COAT I NG TO ENSURE THE OPTIMUM MAGNETIC PROPERTIES OF THE END PRODUCT TO BE MANUFACTURED. ILL. THE NEXT STEP INVOLVED IN THE PROCESS OF MANUFACTURE IS SLITTING THE SHEETS INTO DESIRED WIDTH. IV. THEREAFTER THE SLIT T ED COILS (PROCESS OF S L ITTING) A R E SUBJECTED TO THE PROCESS OF SHEARING TO VARIOUS SHAPES AS PER THE REQUIREMENTS OF T HE C U STOMERS NAMELY THE MANUFACTURERS OF TRANSFORMERS . V. THE NEXT STAGE IS WHAT IS CALLED 'V' NOTCHING AND HOLE PUNCHING OF D I FFERENT DIAMETERS BY MEANS OF PRECISION TOOLS AND DYES. VI . THE SIXTH STAGE IS THE STAGE OF DE - BU R RING THE LAMINATIONS ALONG THE EDGES FOR ENSURING STACKING AND NOISE REDUCTION WHICH IS A VERY VITAL AND QUALITY REQUIREMENT. VII, A F TER THE DE - BURRING PROCESS VER Y STR I N GE N T QUALITY CONTROL PROCESS IS RESORTED TO, TO ENSURE DIMENSIONAL ACCURACIES AND PROPER SURFACE I NSULATION / COATING. ONCE THE ABOVE P R O CESSES ARE PUT THROUGH THE END P RODUCT MANUFACTURED IS VERT I CALL Y ITA NOS. 338 TO 341/MDS//2011 11 STACKED IN WOODEN SKIDS/PALLETS. THIS STEP I S ESSENTIALL Y A STEP TO ENSURE THE PACKING IS CARRIED OUT THAT THE LAMINATIONS MANUFACTURED ARE NOT AFFECTED BY ANY LOADING AND UNLOADING SETBACKS. THIS VIEW IS SUPPORTED BY THE DECIS I ON OF THE HON'BLE JURISDICTIONAL HIG H COURT, IN THE CASES OF M/S. ESQUIRE TRANSL A M INDUSTR I ES , METTUPALAYAM, PONDICHER R Y AND M/S. NEXUS TRANSCORE INDUSTR I ES, METTUPALAYAM, PONDICHERRY, THE HON'BLE J URISDICTIONAL HIGH COURT HAD HELD THAT THE PROCESS I NVOLVED IN THE AB O VE TWO ENTITIES TANTAMOUNT TO MANUFACTURE AND ARE ELIGIBLE FOR THE CLAIM OF DE D UCTION U/S 80 IB OF THE INCOME-TAX ACT, 1961, VIDE THE HON'BLE HIGH COURT'S ORDER IN TAX CASE (APPEAL) NOS.546 AND 547 OF 2010 DT. 27.07.2010 FOR THE REASON THAT THE MANUFACTURING ACTIVITY CARRIED ON BY THE ABOVE TWO ENT I TIES INVOLVE CRGO AND CRNGO SILICON (ELECTRICAL/NON- ELECTRICAL) STEEL SHEETS, AS DONE BY THE APPELLANT FIRM. IN VIEW OF THE DETAILED DISCUSSIONS AS ABOVE AND IN CONSONANCE WIT H THE VIEW OF THE HON'BLE JURISDICTIONAL HIGH COURT, CITED SUPRA, IT IS HELD THAT THE APPELLANT IS ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 80 IB OF THE INCOME-TAX ACT, 1961 AS ENVISAGED IN THE SAID PROVISIONS AND THE ASSESSING OFF I CER IS HEREBY DIRECTED TO DELETE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S 80 IB OF THE INCOME-TA X ACT, 1961 IN THE IMPUGNED ORDER AND REVISE THE IMPUGNED ORDER ACCORDINGLY A N D IN THE PROCESS APPELLANT SUCCEEDS IN THE APPEAL . 6. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), WE FIND THAT THERE IS NO GOOD REASON TO ITA NOS. 338 TO 341/MDS//2011 12 INTERFERE WITH THE CONCLUSIONS DRAWN BY THE COMMISS IONER OF INCOME TAX (APPEALS) ESPECIALLY WHEN THE DEPARTMENT COULD NOT PRODUCE ANY MATERIAL EVIDENCE TO CONTROVERT THE FINDINGS AND CONCLUSIONS OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE CIRCUMSTANCES, WE SUSTAIN THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING DE DUCTION UNDER SECTION 80IB TO THE ASSESSEE FOR THE ASSESSME NT YEARS 2003-04 TO 2006-07. THE GROUNDS OF APPEAL RAISED B Y THE REVENUE ARE REJECTED. 7. IN THE RESULT, ALL THE FOUR APPEALS OF THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, T HE 29 TH DAY OF AUGUST, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (CHALLA NA GENDRA PRASAD) ACCOUNTANT MEMBER J UDICIAL MEMBER CHENNAI, DATED THE 29 TH AUGUST, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6 ) G.F.