Pravin Air Products Pvt.Ltd., Baroda V. The Income tax Officer,Ward-4(2), Baroda

ITA 346/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67724 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER PRAVAN AIR PRODUCTS PVT LTD., POST BOX NO. 740, MAKARPURA GIDC, VADSAR ROAD, BARODA-390001 PAN: AABCP2661G (APPELLANT) VS ITO, WARD-4(2), BARODA (RESPONDENT) ASSESSEE BY: SRI SUNIL TALATI, A.R. REVENUE BY: SRI O.P. BATHEJA, SR.D.R. DATE OF HEARING : 19-09-2013 DATE OF PRONOUNCEMENT : 27-09-20 13 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THESE ARE THE ASSESSEES APPEALS AGAINST THE SEPAR ATE ORDERS OF LD. CIT(A)-III, BARODA DATED 04-12-2012. ITA NOS.345 & 346 /AHD/2013 ASSESSMENT YEAR 2004-05 &2006-07 I.T.A NOS.345 & 346/AHD/2013 A.Y. 2004-05 & 2006-07 PAGE NO PRAVAN AIR PRODUCTS PVT LTD VS. ITO 2 2. THE ONLY ISSUE INVOLVED IN BOTH THE APPEALS IS I N RESPECT OF DEDUCTION U/S. 80IB OF THE ACT. WE ARE DECIDING THESE APPEAL S TOGETHER BY TAKING THE FACTS OF ASSESSMENT YEAR 2004-05. 3. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS.37,66,430/-, WHICH WAS PROCESSED U/S. 143(1) OF THE ACT AND ASSESSMENT U/S. 143(3) WAS COMPLETED ON 23.10.2006 DETERMINING TOTAL INCOME AT RS.43,69,589/-. ASSESS EE FILED APPEAL BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. ASSESSEE FILED SECOND APPEAL BEFORE THE HON'BLE 1TA T, AHMEDABAD, WHO VIDE ORDER IN ITA NO.2L68/AHD/2017 DATED 12.2.2010 HAS SET ASIDE THE ISSUE REGARDING DISALLOWANCE OF DEDUCTION OF RS.6,03,164/ - U/S. 80IB TO THE FILE OF A.O. TO DECIDE THE SAME AFRESH. WHILE FINALIZING TH E ASSESSMENT U/S.143(3) DATED 23.10.2006, THE A.O. HAS DISALLOWED THE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT OF RS. 6,03,164/- IN RESPECT OF KARJAN U NIT, WHICH WAS CLAIMED BY THE ASSESSEE @ 30% OF RS.20,10,545/- BEING THE PROP ORTIONATE PROFIT ALLOCATED TO KARJAN UNIT ON THE BASIS OF SALES. TH E DISALLOWANCE U/S. 80LB WAS MADE BY THE A.O. FOLLOWING THE DECISION OF LD. CIT(A) DATED 14.10.2005 FOR A.Y.2002-03. ON APPEAL, CIT(A) CONFI RMED THE FINDINGS OF THE A.O. AND DISMISSED THE APPEAL OF THE ASSESSEE. ON FURTHER APPEAL FILED BY THE ASSESSEE, THE HON'BLE ITAT VIDE ORDER DATED 12. 2.2010 SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED BACK TO THE FILE O F A.O. WITH A DIRECTION TO DECIDE THE MATTER AFRESH AFTER CONSIDERING THE DEFI NITION OF THE WORD 'MANUFACTURE' AS CONTAINED IN SECTION 2(29BA) AND A LSO THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF ARIHANT TILES & MARBLES PVT, LTD. ACCORDINGLY, A FRESH NOTICE WAS ISSUED TO THE ASSSESSEE BY THE AO REQUIRING TO FURNISH THE JUSTIFICATION FOR THE DEDU CTION CLAIMED U/S. 80IB OF I.T.A NOS.345 & 346/AHD/2013 A.Y. 2004-05 & 2006-07 PAGE NO PRAVAN AIR PRODUCTS PVT LTD VS. ITO 3 THE I.T. ACT 1961, IN RESPONSE TO WHICH, ASSESSEE V IDE LETTER DATED 20.10.2011 SIMPLY FURNISHED A COPY OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ARIHANT TILES & MARBLES PVT, L TD. AND ALSO THE DEFINITION OF THE WORD MANUFACTURING' AS CONTAINED IN SECTION 2(29BA) OF THE ACT. THE A.O. CONSIDERED THE SUBMISSION FURNISHED BY THE ASS ESSEE AND FOUND NOT ACCEPTABLE FOR THE DETAILED REASONS NARRATED IN PAR AS 1, 2, & 3 OF ASSESSMENT ORDER, WHICH ARE REPRODUCED AS UNDER: '1. IN THE CASE OF ARIHANT TILES AND MARBLES P. LT D., THE HON'BLE SUPREME COURT HAS OBSERVED THAT THE BLOCKS CONVERTE D INTO POLISHED SLABS AND TILES AFTER UNDERGOING THE PROCESS INDICA TED ABOVE CERTAINLY RESULTS IN EMERGENCE OF A NEW AND DISTINCT COMMODIT Y. HOWEVER, IN THE INSTANT CASE, THE ASSESSEE IS ONLY ENGAGED IN T HE BUSINESS OF CONVERSION OF LIQUID ARGON INTO GASES. THE ASSESSEE IS STORING THE ARGON IN CRYOGENIC STORAGE TANK AND IS REFITTING IN CYLINDERS FOR SALE IN THE RETAIL MARKET. THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE IS PERFORMING ANY PROCESS ON THE LIQUID ARGON SO AS TO CHANGE ITS COMPOSITION, CHARACTER OR USE OR EVEN ITS NAME IN C OMMERCIAL WORLD. THEREFORE, IT CANNOT BE SAID THAT THE BUSINESS OF T HE ASSESSEE IS MANUFACTURING OR PRODUCING ANY ARTICLE OR THING. 2. REGARDING THE DEFINITION OF THE WORD MANUFACTUR E' AS CONTAINED IN SECTION 2(293A) OF THE INCOME TAX ACT : 'MANUFAC TURE', WITH ITS GRAMMATICAL VARIATION, MEANS A CHANGE IN A NON-LIVI NG PHYSICAL OBJECT OR ARTICLE OR THING - (A) RESULTING IN TRANSFORMATION OF THE OBJEC T OR ARTICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING DIFFERENCE NAME, CHARACTER AND USE ; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTI NCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR INTE GRAL STRUCTURE; HERE IN THE INSTANT CASE, IN THE PROCESS OF REFILLI NG OF ARGON IN CYLINDERS FROM CRYOGENIC TANK, NEITHER MANUFACTURE NOR PRODUCTION IS INVOLVED NOR DOES A NEW PRODUCT EMERGE EVER' THOUGH THE ARGON IS HANDLED UNDER CONTROLLED PRESSURE AND TEMPERATURE. IT IS FURTHER IMPORTANT TO MENTION HERE THAT THIS SECTION WAS INS ERTED BY THE FINANCE (NO.2) ACT, 2009 W.R.E.F. 1.4.2009. THEREFO RE, THE SECTION I.T.A NOS.345 & 346/AHD/2013 A.Y. 2004-05 & 2006-07 PAGE NO PRAVAN AIR PRODUCTS PVT LTD VS. ITO 4 2(29BA) OF THE INCOME TAX ACT INSERTED BY THE FINAN CE ACT 2009 DOES NOT APPLICABLE FOR THIS ASSESSMENT YEAR. 3. FURTHER, THE HON'BTE ITAT VIDE ITA NO.1519 & 15 20/AHD/2008 DATED 8.8.2008 FOR A.Y. 2003-04 & 2005-06 AS WELL A S ITA NO.299/AHD.2003 DATED 11.7.2008 FOR A.Y. 1998-99 HA S VERY ELABORATELY DISCUSSED THE ISSUE AT LENGTH AND DECID ED IN FAVOUR OF THE DEPARTMENT. THE OBSERVATION OF THE HON'BLE ITAT FO R THE ABOVE ASSESSMENT YEARS AS UNDER:- 'FROM THE ABOVE GROUND NO.2, IT