ITO 25(3)(2), MUMBAI V. DEEPALI J SHAH, MUMBAI

ITA 3499/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0246 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA J MENON
• Keywords: Rule of consistency; Additional evidence
• Section: 143(3); 80IB

Judgement Text

P A G E | 1 ITA NO. 3499 A.Y. 2007 - 08 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI R.C.SHARMA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO.3499/MUM/2014 ( / ASSESSMENT YEAR: 2007 - 08) INCOME TAX OFFICER - 25(3)(2), C - 11, R. NO. 306, PRATYAKSH KAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 / VS. SMT. DEEPALI J . SHAH 42, TANAY SKY BUILD VILLAGE BEHIND BHATIA SCHOOL, SAIBABA NAGAR, KANDIVALI (W), MUMBAI - 400067 ./ ./ PAN/GIR NO. AWPPS2195B ( / REVENUE ) : ( / ASSESSEE ) / REVENUE BY : SMT. VINITA J. MENON , ADDL.CIT / ASSESSEE BY : SHRI DR. K. SHIVARAM SHRI RAHUL K. HAKANI SHRI SHAHZAD M. PANT / DATE OF HEARING : 03/04 /201 7 / DATE OF PRONOUNCEMENT : 22 /06/2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 35, MUMBAI, DATED 26.02.2013, WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O U/S. 143(3) R.W.S. 254 OF THE INCOME TAX ACT 1961, DATED 01.03.2013. THE REVENUE ASSAILING THE P A G E | 2 ITA NO. 3499 A.Y. 2007 - 08 ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING G ROUNDS OF APPEAL BEFORE US: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) ERRED IN ALLOWING THE CLAIM OF DEDUCTION U/S. 80IB(4) OF RS 35,77,971/ - WITHOUT APPRECIATING THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE FACT THAT MANUFACTURING ACTIVITY WAS COMMENCED ON OR BEFORE 31.03.2004 BEING ONE OF THE CRITERIA FOR THE DEDUCTION U/S.80I B(4) OF THE I. T . ACT. 2. ON THE FACTS OF THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PRODUCE DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CLAIM REGARDING THE NUMBER OF WORKERS EMPLOYED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46A WITHOUT ALLOWING AN OPPORTUNITY TO EXAMINE THE E VIDENCES IN REMAND PROCEEDINGS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) ERRED IN APPRECIATING THE FACT THAT THE BILLS PRODUCED BY THE ASSESSEE DID NOT SUBSTANTIATE WHETHER THE MACHINERY PURCHASED WAS NEW OR OLD . 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE ISSUE RAISED BY THE A . O IN THE REMAND REPORT I.E. THE INDUSTRIAL UNDERTAKING SHOULD NOT BE FORMED BY THE TRANSFER OF P A G E | 3 ITA NO. 3499 A.Y. 2007 - 08 MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE WHICH IS A MANDATOR Y CONDITION FOR ALLOWABILITY OF DEDUCTION U/S 801B OF THE I. T . ACT. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A . O BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCOME OF RS.1,65,929/ - FOR THE A.Y. 2007 - 08, WHICH WAS PROCESSED AS SUCH U/S. 143(1) OF THE ACT . THE CASE OF THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASSESSMENT U/S. 143(2), WHEREIN THE A.O AFTER DISALLOWING THE CLAIM OF THE ASSESSEE TOWARDS DEDUCTION U/S. 80IB(4) OF RS.35,77,971/ - THEREIN ASSESSED HER TOTAL INCOME AT RS.37,43,900/ - , VIDE HIS ORDER DATE D. 24.12.2009. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), WHO VIDE HIS ORDER DATED 19.03.2010 ALLOWED THE CLAIM OF THE ASSESSEE TOWARDS DEDUCTION U/S. 80IB(4). THE ORDER OF THE CIT(A) WAS ASSAILED BY THE REVENUE BEFORE THE INCOME TAX APPE LLATE TRIBUNAL, WHICH THEREIN VIDE ITS ORDER DATED 25.01.2012 PASSED IN ITA NO. 502 8 /MUM/2010 RESTORED THE MATTER TO THE FILE OF A.O. FOR FRESH ADJUDICATION. 3. THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IN COMPLIANCE TO THE DIRECTIONS OF THE TRIBUNAL CALLED UPON THE ASSESSEE TO FURNISH NECESSARY EVIDENCE AND EXPLANATION TO JUSTIFY ITS CLAIM OF DEDUCTION U/S. 80IB(4). THAT DURING THE COURSE OF THE SET ASIDE ASSESSMENT PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE TO FURNISH EVIDENCE OF PURCHASE OF GOODS, DELIVERY CHALLANS FOR GOODS, DETAILS OF MACHINERY PURCHASED ALONG WITH DELIVERY CHALLANS, DETAILS OF WORKERS ETC., IN RESPECT OF ITS BUSINESS OF FABRICATING AND ASSEMBLING P A G E | 4 ITA NO. 3499 A.Y. 2007 - 08 ENGINEERING PRODUCTS AS A SOLE PROPRIETOR UNDER THE NAME AND STYLE OF M/S . DEEPALI ENTERPRISES AT SILVASSA. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD CLAIMED EXPENSES ON ACCOUNT OF ELECTRICITY OF ONLY RS.14,967/ - AND VALUE OF MACHINERY AS ON 01.04.2005 WAS SHOWN AT ONL Y RS. 1,09,007 / - (W.D.V). THE A.O IN THE BACKDROP OF THE AFORESAID FACTS, THEREIN HOLDING DOUBTS AS REGARDS THE GENUINENESS OF THE MANUFACTURING ACTIVITY OF THE ASSESSEE, THEREIN CALLED UPON THE LATTER TO SUBSTANTIATE THE SAME. THE ASSESSEE DULY DEMONSTRATED BEFORE THE A.O THE ENTIRE PROCESS PERTAINING TO MANUFACTURING OF STAINLESS STEEL PARTS , NAMELY C ASSEROLE CONTAINERS FOR USE IN RAILWAY COACH PANTRY AND TABULATED THE FOUR STAGES INVOLVED IN THE MANUFACTURING PROCESS OF THE AFORESAID ITEMS, AS UNDER : - ST . MATERIAL PROCESS ITEM PRODUCED MACHINE USED 1 S.S. SHEET CUTTING S.S. CUT PIECE SHEARING MACHINE 2 S.S. CUT PIECE MARKING & CUTTING CUT PIECE WITH CUT CORNERS HAND SCISSOR 3 CUT PIECE WITH CUT CORNERS DRILLING OF HOLES CUT PIECE WITH CUT CORNERS AND HOLES ELECTRIC DRILL MACHINE 4 CUT PIECE WITH CUT CORNERS & HOLES BENDING S.S. FABRICATED PART NAMELY CASSEROLE CONTAINER HAND PRESS 4. THAT IN THE COURSE OF EXPLAINING THE AFORESAID MANUFACTURING PROCESS THE ASSESSEE SUBMITTED BEFORE THE A.O BILLS OF M/S. ROSHNI ELECTRICALS FOR PURCHASE OF PLANT AND MACHINERY BEING DRILLING MACHINE, GRINDING/BUFFING MACHINE, HAND PRESS, SHEARING MACHINE, HAND SCISSOR AND ACCESSORIES, AS WELL AS BILLS OF M/S. VIKAS ELECTRICALS P A G E | 5 ITA NO. 3499 A.Y. 2007 - 08 FOR PURCHASE OF WELDING MACHINE WITH ACCESSORIES, SET OF WORK ING TOOLS AND MEASURING INSTRUMENTS. THE A.O HOWEVER NOT BEING INSPIRED BY THE CONTENTION OF THE ASSESSEE AS WELL AS THE D OCUMENTARY EVIDENCE FURNISHED BY HER IN SUPPORT THEREOF, THEREIN DREW ADVERSE INFERENCES AS REGARDS THE SAME , AND HOLDING A CONVICTION THAT THE ASSESSEE HAD NOT CARRIED ANY MANUFACTURING ACTIVITY AT H ER FACTORY AT SIL V AS S A , EITHER DURING THE YEAR UNDER C ONSIDERATION OR IN THE EARLIER PREVIOUS YEARS, THEREFORE CONCLUDED THAT IT WAS NOT ENTITLED FOR CLAIM OF DEDUCTION U/S. 80IB(4 ) OF RS. 35,77,971 / - , AND THUS DETERMINED ITS TOTAL INCOME U/S. 143(3) R.W.S. 254 AT RS. 37,43,900 / - . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). DURING THE COURSE OF THE APPELLATE PROCEEDINGS THE ASSESSEE FILED AN AFFIDAVIT/DECLARATION FROM BOTH M/S. VIKAS ELECTRICALS AND M/S. ROSHNI ELECTRICALS , ALONGWITH THE RESPECTIVE P AN NO S . AND OTHER DETAILS OF THE SELLERS BY WAY OF ADDITIONAL EVIDENCE UNDER RULE 46A, WHICH IN THE ABSENCE OF ANY SERIOUS OBJECTION BY THE A.O WAS ADMITTED BY THE CIT(A). THE ASSESSEE FURTHER DURING THE COURSE OF THE APPELLATE PROCEEDINGS AGAIN SUBMITTED TH E INVOICE OF M/S. ROSHNI ELECTRICALS , DATED 15.03.2004, INVOICE OF M/S. VIKAS ELECTRICALS , DATED 15.03.2004 AND INVOICE OF M/S. MONARCH ENTERPRISES , DATED 25.03.2004. THAT IN SUPPORT OF THE GENUINENESS OF ITS MANUFACTURING PROCESS , THE ASSESSEE ALSO PLACE D ON RECORD OF THE A.O THE COPY OF THE STATEMENT OF PURCHASE OF MACHINERY , ALONG WITH A LETTER DATED 26.03.2004 FROM THE ELECTRICITY DEPARTMENT FOR SANCTION OF POWER INCLUDING THE ELECTRICITY BILLS FOR THE MONTH OF MARCH,2004 TO MAY, 2004, WHICH REVEALED C ONSUMPTION OF 320 UNITS BY THE ASSESSEE CONCERN. THE CIT(A) CALLED FOR THE OBJECTIONS OF THE A.O AS REGARDS THE ADMISSIBILITY OF THE AFORESAID DOCUMENTS , ALONG WITH HIS COMMEN TS ON THE MERITS OF THE CASE . THE A.O. OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE, AND FURTHER REFERRING TO THE PROVISIONS OF SUB - P A G E | 6 ITA NO. 3499 A.Y. 2007 - 08 SECTION 2(II) OF SECTION 80IB, THEREIN SUBMITTED BEFORE THE CIT(A) THAT IT WAS A REQUISITE CONDITION THAT THE INDUSTRIAL UNDERTAKING SHOULD NOT BE FORMED BY THE TRANSFER OF MACHINERY OR PL ANT PREVIOUSLY USED FOR ANY PURPOSE, THEREFORE, AS IN THE CASE OF T H E PRESENT ASSESSEE THE EXACT DESCRIPTION OF MACHINERY AND CORRESPONDING NUMBER OF MACHINES SOLD BY THE AFORESAID PARTIES, VIZ. M/S. ROSHNI ELECTRICALS AND M/S. VIKAS ELECTRICALS WERE NOT MENTIONED ON THE BILLS, THUS IT WAS NOT CLEAR AS TO EXACTLY WHICH MACHINERY AND IN WHAT QUANTITY THE MACHINES HAD BEEN SUPPLIED TO THE ASSESSEE. IT WAS THUS SUBMITTED BY THE A.O THAT AS IT COULD NOT BE GATHERED FROM THE BILLS AS TO WHETHER THE MACHINES SUP PLIED TO THE ASSESSEE WERE NEW OR OLD, WHICH BEING A MANDATORY CONDITION TO BE CONSIDERED FOR ADMISSIBILITY OF ASSESSES CLAIM TOWARDS DEDUCTION U/S. 80IB THEREFORE SUBMITTED THAT DUE TO NON - SATISFACTION OF THE SAID REQUIREMENT, THE ASSESSEE WAS NOT ENTITLE D TOWARDS THE CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION. THE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE BEFORE HIM, THEREIN BEING OF THE CONSIDERED VIEW THAT AS THE MATTER HAD BEEN RESTORED BY THE TRIBUNAL WITH A CLEAR DIRECTION TH AT MORE INQUIRIES WERE REQUIRED TO BE DONE, THEREFORE ADMITTED THE ADDITIONAL EVIDENCE. 5 . THE CIT(A) THEREAFTER REFERRING TO THE TWO FOLD CRITERIA LAID DOWN FOR ENTITLING THE ASSESSEE TOWARDS CLAIM OF DEDUCTION U/S. 80IB(4), THEREIN OBSERVED THAT THE SAM E REQUIRED SATISFACTION OF TWO CONDITIONS, VIZ. (I) THERE SHOULD BE MANUFACTURE OF PRODUCTION OF ANY ARTICLE OR THING ;AND (II) THE UNDERTAKING SHOULD EMPLOY 10 OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER, OR EMPLOY 20 OR M ORE WORKER IN A MANUFACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. THUS IN THE BACKDROP OF THE AFORESAID STATUTORY REQUIREMENT S WHICH WERE REQUIRED TO BE SATISFIED FOR ENABLING AN ASSESSEE TO RAISE ITS CLAIM TOWARDS DEDUCTION U/S. 80IB(4), THE CIT (A) AFTER DELIBERATING ON DEFINITION OF THE TERM MANUFACTURE, IN THE P A G E | 7 ITA NO. 3499 A.Y. 2007 - 08 BACKDROP OF THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF TATA TEA LTD. VS. ACIT (ITA NO. 87 OF 2009, DATED 25.01.2010) AND THE DEFINITION OF THE SAID TERM AS HAD BEEN CONTEMPLATED IN CHAPTER IX OF THE EXPORT IMPORT POLICY, 2002 - 2007, THUS AFTER VETTING THE NATURE OF BUSINESS AND THE PROCESSES INVOLVED IN THE CASE OF THE ASSESSEE, THEREIN OBSERVED THAT THE ASSESSEE WAS INTO MANUFACTURING OF S.S. FABRICATED PARTS FROM S.S. SHEETS WITH THE USE OF POWER. IT WAS OBSERVED BY THE CIT(A) THAT THE ENTIRE MANUFACTURING PROCESS CARRIED OUT BY THE ASSESSEE INVOLVED VARIOUS PROCESSES WHICH WERE CARRIED ON THE S.S. SHEETS BEFORE THE SAME WERE CONVERTED INTO S.S. FABRICATED PARTS, AS UNDER: - I. MAKING AND CUTTING SS SHEET II. BENDING OF SHEET THROUGH HAND PRESS III. WELDING, GRINDING AND DRILLING OPERATION IV. FITTING OF SEPARATE SHEET METAL PARTS TO FORM DOUBLE WALLED CABINET/FABRICATED PANEL. V. INSULATING THE CABINET. 6 . THE CIT(A) THUS DELIBERATING ON THE AFORESAID PROCESS ES LEADING TO THE MANUFACTURING OF THE FINAL PRODUCT, VIZ. S.S. FABRICATED PARTS, THEREIN CONCLUDED THAT IT COULD SAFELY BE HELD THAT THE FABRICATED PARTS WERE THE RESULT OF TRANSFORMATION FROM S.S. SHE ETS WHICH WAS A COMMERCIALLY DIFFERENT PRODUCT DISTINCT FROM THE RAW MATERIALS. THE CIT(A) AFTER REFERRING TO THE MATERIAL PLACED ON RECORD BY THE ASSESSEE, THEREIN OBSERVED THAT THE LATTER HAD DURING THE YEAR UNDER CONSIDERATION PRODUCED MODULAR INTEGRAT ED PANTRY UNITY FROM S.S. SHEETS AND OTHER MATERIALS. THUS IN THE BACKDROP OF THE AFORESAID FACTS, THE CIT(A) DID NOT FIND FAVOUR WITH THE OBSERVATION OF THE A.O P A G E | 8 ITA NO. 3499 A.Y. 2007 - 08 THAT THE S.S. FABRICATED PARTS MANUFACTURED BY THE ASSESSEE AND THE S.S. SHEETS WERE THE SAME COMMODITY. THE CIT(A) THUS ON THE BASIS OF HIS AFORESAID OBSERVATIONS, THEREIN DID FIND FAVOUR WITH THE CONTENTIONS OF THE ASSESSEE THAT IN THE PROCESS OF USING THE S.S. SHEETS TO MAKE IN TO TRAYS FOR THE RAILWAY PANTRY, THE NATURE AND CHARACTER OF THE OR IGINAL SHEETS WAS SUBSTANTIALLY ALTERED, AND THUS IT COULD SAFELY BE HELD THAT A NEW PRODUCT CAME INTO EXISTENCE. THE CIT(A) TAKING COGNIZANCE OF THE FACT THAT THE FINAL PRODUCT WAS MANUFACTURED ON THE BASIS OF TECHNICAL DESIGNS, DRAWINGS AND SPECIFICATION , AS PER WHICH THE ORIGINAL SHEETS WERE ALTERED INTO SHAPES AND INVOLVED DRILLING OF HOLES ETC, THUS CONCLUDED THAT THE SAME LED TO CREATION OF A NEW PRODUCT. THE CIT(A) IN ORDER TO DRIVE HOME HER AFORESAID VIEW, THEREIN TOOK SUPPORT OF THE JUDGMENT OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. ZAINAB TRADING PVT. LTD. (2011) 333 ITR 144 (MAD), WHEREIN ON A SIMILAR FOOTING THE HONBLE HIGH COURT HAD CONCLUDED THAT THE CONVERSION OF COR RUGATED SHEETS INTO BOXES CONSTITUTED MANUFACTURING OF A PRODUCT. 7 . THE CIT(A) FURTHER DELIBERATING ON THE SATISFACTION OF THE SECOND CONDITION CONTEMPLATED U/S. 80IB(4), AS PER WHICH AN UNDERTAKING WHICH WAS CARRYING ON MANUFACTURING PROCESS WITH THE AI D OF POWER IS REQUIRED TO EMPLOY 10 OR MORE WORKERS, THEREIN OBSERVED THAT AS THE ASSESSEE HAD FILED A WAGE REGISTER OF 11 WORKERS EMPLOYED, PLACED ON RECORD THE MONTHLY MUSTER BOOK, AS WELL AS FORTIFIED THE SAID FACTUAL POSITION BY REFERRING TO THE FIELD REPORT DATED 17.12.2007 GIVEN BY THE INCOME - TAX INSPECTOR , WHO AFTER VISITING THE PREMISES OF THE ASSESSEE IN THE COURSE OF THE PROCEEDINGS FOR A.Y 2006 - 07 HAD OBSERVED THAT THOUGH IT WAS A HOLIDAY, STILL MOST OF THE WORKERS NUMBERING ABOUT 12 WERE AVAILAB LE AT THE PREMISES. THE CIT(A) THUS CONCLUDED THAT THE ASSESSEE COULD SAFELY BE HELD TO HAVE EMPLOYED MORE THAN 10 WORKERS P A G E | 9 ITA NO. 3499 A.Y. 2007 - 08 AT HIS UNIT, AND THUS DULY SATISFIED THE SECOND LIMB CONTEMPLATED U/S. 80IB(4). 8 . THE CIT(A) THUS DELIBERATING ON THE CONTENTIONS O F THE ASSESSEE BEFORE HIM IN THE BACKDROP OF THE MATERIAL AVAILABLE ON RECORD, THEREIN CONCLUDED THAT THE ASSESSEE WHICH WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF S.S. CASSEROLE CONTAINERS BY SUBJECTING THE S.S. SHEETS TO VARIOUS PROCESSES OF MARKING AND CUTTING S . S SHE E TS, BENDING OF SHEETS THROUGH HAND PRESS, WELDING, GRINDING AND DRILLING, FITTING OF SEPARATE SHEET METAL PARTS TO FORM DOUBLE WALLED CABINET/FABRICATED PANEL AND INSULATING THE CABINET, THUS COULD SAFELY BE HELD TO BE IN THE BUSINESS OF MANUFACTURING OF A NEW PRODUCT. THAT IN RESPECT OF THE ADVERSE INFERENCES DRAWN BY THE A.O AS REGARDS THE POOR CORRELATION BETWEEN THE PERCENTAGE OF POWER AND THE MANUFACTURING ACTIVITY OF THE ASSESSEE, IT WAS OBSERVED BY THE CIT(A) THAT AS THE PROCESS OF MANUFACTURING OF THE ASSESSEE WAS NOT A POWER INTENSIVE PROCESS, THEREFORE NO FEASIBLE RESULTS COULD BE ARRIVED AT BY MAKING SUCH A COMPARISON. THE CIT(A) FURTHER BEING INSPIRED BY THE AFFIDAVITS FILED BY THE PROPRIETORS OF M/S. ROSHNI ELECTRICALS AND M/S. VIKAS ELECTRICALS, AS WELL AS FIELD REPORT OF THE INCOME - TAX INSPECTOR, WHICH CLEARLY POINTED OUT THAT THE MACHINERY AND TOOLS EXISTED AT THE PREMISES OF THE ASSESSES UNIT, THUS CONCLUDED THAT THE SAID FACTS FURTHER DID GO TO SUBSTANTIATE BEYOND ANY SCOPE OF DOUBT THE GENUINENESS AND VERACITY OF THE MANUFACTURING PROCESS CARRIED OUT BY THE ASSESSEE. 9 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY OUTSET OF THE HEARING OF THE AP PEAL, IT WAS AVERRED BY THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R.) THAT AS HELD BY THE A.O THE ASSESSEE WAS NOT IN THE BUSINESS OF MANUFACTURING, BUT RATHER IN A BUSINESS OF P A G E | 10 ITA NO. 3499 A.Y. 2007 - 08 FABRICATION AND ASSEMBLING OF ENGINEERING PRODUCTS. THE LD. D.R IN THE B ACKDROP OF THE AFORESAID FACTS, THEREIN DREW OUR ATTENTION TO THE OBSERVATION S OF THE A.O. RECORDED AT PAGE 4 - PARA 6 OF THE ASSESSMENT ORDER IN SUPPORT OF HIS CONTENTION THAT AS THE ASSESSEE HAD NOT CARRIED OUT ANY MANUFACTURING ACTIVITY AT HIS FACTORY AT SILVASSA, EITHER DURING THE YEAR UNDER CONSIDERATION OR IN THE EARLIER PREVIOUS YEARS, THEREFORE IT WAS NOT ENTITLED FOR CLAIM OF DEDUCTION U/S. 80IB(4) OF RS. 35,77,971/ - .PER CONTRA, IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE (FOR SHORT A.R.) FOR T HE ASSESSEE THAT THE CIT(A) DURING THE COURSE OF THE APPELLATE PROCEEDINGS HAD CALLED FOR A REMAND REPORT FROM THE A.O. , AND ONLY AFTER APPRECIATING THE FACTS OF THE CASE IN THE BACKDROP OF THE SETTLED POSITION OF LAW HAD ALLOWED THE CLAIM OF THE ASSESSEE TOWARDS DEDUCTION U/S 80IB(4). THE LD. A.R DRAWING OUR ATTENTION TO THE COPY OF THE ASSESSMENT ORDER PASSED UNDER SEC. 1 43(3) IN THE CASE OF THE ASSESSEE FOR A.Y. 2005 - 06 ( PAGE 41 - 42 OF APB), THEREIN SUBMITTED THAT ITS CLAIM TOWARDS DEDUCTION U/S. 80IB(4) OF RS. 8,22,063 / - IN THE SAID YEAR WAS ALLOWED BY THE A.O ONLY AFTER THOROUGH VETTING IN THE COURSE OF THE ASSESSMENT FRA MED U/S. 143(3). THE LD. A.R. FURTHER SUBMITTED THAT THE ENTITLEMENT OF THE ASSESSEE TOWARDS CLAIM OF DEDUCTION U/S. 80IB(4) HAD THEREAFTER HAD BEEN TESTED IN APPEALS FILED BY THE ASSESSEE AND REVENUE, IN THE CASE OF THE ASSESSEE FOR A.Y. 2005 - 06 AND 2006 - 07, RESPECTIVELY, WHEREIN THE TRIBUNAL AFTER DELIBERATING ON THE FACTS INVOLVED IN THE AFOREMENTIONED YEARS, HAD THEREIN UPHELD THE CLAIM OF THE ASSESSEE TOWARDS DEDUCTION U/S. 80IB(4). THE LD. A.R. FURTHER SUBMITTED THAT THE COPY OF THE SCRUTINY REPORT OBTAINED BY THE ASSESSEE BY WAY OF AN APPLICATION FILED UNDER THE RIGHT TO INFORMATION ACT ( PAGE 37 - 37A OF APB) , THEREIN REVEALED THAT THE A.O HIMSELF HAD ADVISED TO THE CIT THAT NO SECOND APPEAL MAY BE FILED IN THE CASE OF THE CAPTIONED ASSESSEE IN RESP ECT OF ITS ENTITLEMENT TOWARDS CLAIM OF DEDUCTION U/S. 80IB(4) FOR A.Y. 2006 - P A G E | 11 ITA NO. 3499 A.Y. 2007 - 08 07, FOR THE REASON THAT THE DEPARTMENT ITSELF HAD ACCEPTED THE ASSESSEES CLAIM FOR DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION IN A.Y(S). 2004 - 05 AND 2005 - 06. THE LD. A.R. FURTHER TO SUBSTANTIATE THE FACT THAT THE ASSESSEE CONCERN HAD EMPLOYED MORE THAN 10 EMPLOYEES DURING THE YEAR UNDER CONSIDERATION, AS WELL AS IN THE PRECEDING YEARS, VIZ. A.Y(S).2004 - 05, 2005 - 06 AND 2006 - 07, THEREIN SUBMITTED THAT THE ASSESSEE HAD FILED A WAGE REGISTER OF 11 WORKERS EMPLOYED, PLACED ON RECORD THE MONTHLY MUSTER BOOK, AS WELL AS FORTIFIED THE SAID FACTUAL POSITION BY REFERRING TO THE FIELD REPORT DATED 17.12.2007 GIVEN BY THE INCOME - TAX INSPECTOR AFTER VISITING THE PREMISES OF THE ASSESSE E IN THE COURSE OF THE PROCEEDINGS FOR A.Y 2006 - 07, WHEREIN THE LATTER HAD OBSERVED THAT THOUGH IT WAS A HOLIDAY, STILL MOST OF THE WORKERS NUMBERING ABOUT 12 WERE AVAILABLE AT THE PREMISES. THE LD. A.R FURTHER SUBMITTED THAT THE SALES REFLECTED BY THE UNI T AT SILVASSA FOR THE F.Y. 2004 - 05 HAD DULY BEEN ACCEPTED AND ASSESSED UNDER THE CENTRAL SALES TAX ACT, 1956, AND IN ORDER TO FORTIFY HIS SAID CONTENTION, THEREIN TOOK US THROUGH PAGE 1 46 - 149 OF APB . IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT NOW WHEN TH E CLAIM OF THE ASSESSEE U/S. 80IB(4) HAD BEEN ALLOWED IN THE PRECEDING YEARS, THEREFORE IN THE ABSENCE OF THERE BEING ANY CHANGE IN FACTS, THERE WAS NO REASON TO TAKE A DIFFERENT VIEW AND THEREIN HOLD THAT THE ASSESSEE STOOD DISENTITLED TOWARDS THE CLAIM O F DEDUCTION UNDER THE AFORE SAID STATUTORY PROVISION DURING THE YEAR UNDER CONSIDERATION . THE LD. A.R. IN SUPPORT OF HIS AFORESAID CONTENTION SUBMITTED THAT IN LIGHT OF THE RULE OF CONSISTENCY, A DIFFERENT VIEW ON THE BASIS OF SAME FACTS IN RESPECT OF THE E NTITLEMENT OF THE ASSESSEE TOWARDS CLAIM OF DEDUCTION U/S. 80IB(4) WAS NOT PERMISSIBLE IN THE EYES OF LAW, THEREIN TOOK SUPPORT OF THE FOLLOWING JUDICIAL PRONOUNCEMENT S : - 1. CIT VS. PAUL BROTHERS (1995)216 ITR 548 (BOM) P A G E | 12 ITA NO. 3499 A.Y. 2007 - 08 2. CIT VS. WESTERN OUT FLOOR INTERACTIVE P. LTD. (2012)349 ITR 309 (BOM) 3. RADHASOAMI SATSANG VS. CIT (1992)193 ITR 321(SC) 4. DCIT VS. JINDAL PHOTOFILMS LTD. (2008) 113 ITD 0624 (TM). 1 0 . THAT IT WAS SUBMITTED BY THE LD. A.R THAT AS HAD BEEN APPRECIATED AT LENGTH BY THE CIT(A), IT STOOD ESTABLISHED BEYOND ANY SCOPE OF DOUBT THAT THE ASSESSEE WAS INVOLVED IN MANUFA CTURING OF S.S. CASSEROLE CONTAINERS FROM THE S.S. S HEETS, THEREFORE , IN THE BACKDROP OF DUE COMPLIANCE BY THE ASSESSEE OF THE REQUISITE CONDITIONS CONTEMPLATED U/S. 80IB(4) NO ADVERSE INFERENCES AS REGARDS THE LATTERS ENTITLEMENT TOWARDS THE CLAIM OF A DE DUCTION UNDER THE SAID STATUTORY PROVISION WAS LIABLE TO BE DRAWN. IT WAS THUS SUBMITTED BY THE LD. A.R THAT THE CIT(A) AFTER DULY APPRECIATING THE FACTS OF THE CASE IN LIGHT OF THE SETTLED POSITION OF LAW HAD RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND HELD THAT THE LATTER WAS DULY ENTITLED TOWARDS CLAIM OF DEDUCTION U/S. 80IB(4). 1 1 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE HAVE GIVEN A THOU GHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE MANUFACTURING PROCESS INVOLVED IN CONVERTING THE S.S. SHEETS INTO S.S. CASSEROLE CONTAINERS CLEARLY ESTABLISHES BRINGING INTO EXISTENCE A NEW PRODUCT HAVING A DISTINCTIVE NAME, CHARACTER, AND USE. WE ARE PERSUADED TO SUBSCRIBE TO THE OBSERVATIONS OF THE CIT(A) THAT THE S.S. FABRICATED PARTS WHICH ARE MADE BY THE ASSESSEE FROM THE S.S. SHEETS, ARE THE RESULT OF TRANSFORMATION FROM S.S. SHEETS WHICH IS DIFFERENT IN P A G E | 13 ITA NO. 3499 A.Y. 2007 - 08 SIZE, S HAPE, CONTOUR AND UTILITY, AND IS ENTIRELY A DIFFERENT COMMERCIAL PRODUCT WHICH IS DISTINCT FROM THE RAW MATERIAL, THUS CAN SAFELY BE HELD TO BE A PRODUCT MANUFACTURED BY THE ASSESSEE. THAT STILL FURTHER ON THE BASIS OF THE MATERIAL MADE AVAILABLE ON THE RECORD BY THE ASSESSEE, WE FIND THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD EMPLOYED MORE THAN 10 WORKERS IN THE PROCESS OF MANUFACTURING CARRIED ON BY H ER WITH THE AID OF POWER. WE ARE THUS OF THE CONSIDERED VIEW, THAT AS THE ASSESSEE HAD C UMULATIVELY SATISFIED BOTH OF THE REQUISITE CONDITIONS CONTEMPLATED U/S. 80IB(4), THEREFORE THE CIT(A) HAD RIGHTLY OBSERVED THAT THE ASSESSEE STOOD DULY ENTITLED TOWARDS CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION. WE FURTHER FIND THAT IT ALSO REMAINS AS A MATTER OF FACT THAT THE ASSESSEE SINCE INCEPTION HAD CLAIMED DEDUCTION U/S. 80IB(4), WHICH HAD BEEN ALLOWED TO HER AS SUCH. WE THUS FURTHER FIND OURSELVES TO BE IN AGREEMENT WITH THE LD. A.R. THAT IN LIGHT OF THE SETTLED POSITION OF LAW, NOW WHEN THE ASSESSEE HAD BEEN HELD AS ELIGIBLE AND THEREIN ENTITLED TOWARDS CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION FOR THE PRECEDING YEARS, VIZ. A.Y. 2005 - 06 AND A.Y. 2006 - 07, THEREFORE UNLESS THE SAID RELIEF GRANTED IN THE SAID PRECED ING YEARS IN WHICH SUCH CLAIM WAS MADE AND ACCEPTED IS WITHDRAWN OR SET ASIDE, THE A.O CANNOT BE ALLOWED TO HOLD A DIFFERENT VIEW AND DISENTITLE THE ASSESSEE FROM CLAIM OF THE DEDUCTION UNDER THE SAME STATUTORY PROVISION DURING THE YEAR UNDER CONSIDERATION . WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS FINDING NO REASON TO TAKE A DIFFERENT VIEW, P A G E | 14 ITA NO. 3499 A.Y. 2007 - 08 THEREFORE , UPHOLD THE ORDER OF THE CIT(A) THAT THE ASSESSEE STOOD DULY ENTITLED FOR CLAIM OF DEDUCTION OF RS. 35,77,971/ - U/S. 80IB(4). 1 2 . THE APPEAL OF THE REVENUE IS THUS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 22 .06.2017 SD/ - SD/ - ( R.C. SHARMA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 22 .06.2017 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 15 ITA NO. 3499 A.Y. 2007 - 08 SR. NO . DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/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.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER