ACIT, Jaipur V. GALAXY IMPEX, Jaipur

ITA 358/JPR/2013

• Counselvise Citation: 35823114 RSA 2013
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: NK JAIN
• Section: 80IB; 10B

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 358/JP/2013 (A.Y. 2009-10) ACIT, CIRCLE-6, VS. M/S. GALAXY IMPEX, JAIPUR. 45, MALVIYA NAGAR, GEM ENCLAVE, MALVIYA NAGAR, JAIPUR. PAN NO. AABFG 9397 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.K. JAIN. DEPARTMENT BY : SHRI D.C. SHARMA - D.R. DATE OF HEARING : 27/01/2014. DATE OF PRONOUNCEMENT : 27/01/2014. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 28/01/2013 OF CIT(A)-II, JAIPUR. THE ONLY GROUND R AISED IN THIS APPEAL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN ALLOWING EXEMPTION U/S 10B AMOU NTING TO RS.2,75,59,798/- TO THE ASSESSEE WITHOUT APPRECIATI NG THE FACT THAT THE ASSESSEE WAS NOT FULFILLING THE PRIMARY CO NDITION OF MANUFACTURING AND PRODUCTION OF ANY ARTICLE OR THIN G. 2 2 DURING THE COURSE OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 30/01/2012 IN I.T.A.NO. 748/JP/2011 FOR THE A.Y. 2008-09 IN THE A SSESSEES OWN CASE . COPY OF THE SAID ORDER WAS FURNISHED. 3. IN HIS RIVAL SUBMISSIONS, LD. D.R., ALTHOUGH, SUP PORTED THE ORDER OF THE LD. CIT(A), BUT COULD NOT CONTROVERT T HE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE PERTAINING TO EXEMPTION UNDER SECTION 10B OF THE I.T. ACT 1961 (HEREINAFTER REFERRED TO AS ACT, IN SHORT) WAS A SUBJECT MATTE R OF THE DEPARTMENTAL APPEAL IN ASSESSEES OWN CASE IN I.T.A .NO. 748/JP/2011 FOR THE A.Y. 2008-09 BEFORE THE ITAT, J AIPUR BENCH B, JAIPUR WHEREIN THE APPEAL OF THE DEPARTMENT WA S DISMISSED AND THE ORDER OF LD. CIT(A) WAS UPHELD. THE RELEVA NT FINDING HAS BEEN GIVEN IN PARA 5 OF THE SAID ORDER, WHICH IS RE PRODUCED VERBATIM AS UNDER:- 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE ORDERS OF AUTHORITIES BELOW AND THE TRIBUNAL, WE FI ND THAT ISSUE IS SQUARELY COVERED BY THE DECISION OF TRIBUNAL IN CASE OF ASSESSEE ITSELF. THE A.O. HAS DISALLOWED THE EXEMP TION UNDER 3 SECTION 10B BY OBSERVING THAT ASSESSEE HAS NOT FULF ILLED THE PRIMARY CONDITION OF MANUFACTURING AND PRODUCTION O F ANY ARTICLE OR THING. THEREFORE, ASSESSEE IS NOT ENTITL ED EXEMPTION UNDER SECTION 10B OF THE ACT. FOR THE ASSESSMENT Y EARS 2003-04 TO 06-07 ON SIMILAR REASONING THE CLAIM OF EXEMPTIO N UNDER SECTION 10B WAS DENIED. MATTER REACHED UPTO THE ST AGE OF TRIBUNAL AND THE TRIBUNAL HAS ALLOWED THE EXEMPTION . THEREAFTER, FOLLOWING THE EARLIER ORDERS OF THE TRI BUNAL, THE TRIBUNAL CONFIRMED THE ORDER OF LD. CIT (A) FOR ASS ESSMENT YEAR 2007-08 ALSO. THE FINDING OF TRIBUNAL IN ITA NO. 1 231/JP/2010 FOR THE ASSESSMENT YEAR 2007-08 HAS BEEN RECORDED I N PARA 2.3 IN ITS ORDER AT PAGES 2 TO 4 ARE AS UNDER :- 2.3 WE HAVE HEARD BOTH THE PARTIES. THE TRIBUNAL WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 HAS REPRODUCED THE PARAGRAP H FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF THE A SSESSEE FOR THE ASSESSMENT YEARS 2003-04 TO 2004-05. IT WIL L BE USEFUL TO REPRODUCE THE FOLLOWING PARAGRAPH FROM TH E ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2003-04 TO 2005-06. 7. AFTER CONSIDERING THE ABOVE SUBMISSIONS, WE FIN D THAT THE ISSUE RAISED IN THE GROUND IS FULLY COVERE D WITH THE DECISION OF JAIPUR BENCH OF THE TRIBUNAL IN THE CASES OF SURAJ MARBLES PVT. LTD. ITA NOS. 512 TO 514/JP/03 ORDER DATED 18.8.2006 AND M/S. AGARWAL MARBLE & INDUSTRIES LTD. ITA NO. 676/JP/04 DATED 22.12.06 WHEREIN AFTER HAVING GONE THROUGH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LU CKY MINMAT PVT. LTD. AND SESA GOA LTD., THE TRIBUNAL HA S COME TO THE CONCLUSION THAT THE ACTIVITIES OF CUTTI NG OF MARBLE BLOCKS INTO USABLE SLABS/TILES IS A MANUFACTURING ACTIVITY. IN THIS REGARD WE ALSO FIN D SUPPORT FROM THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN A RECENT JUDGMENT DATED 30.5.2007 IN THE CASE ARIHANT TILES AND MARBLES LTD. VS. ITO (SU PRA) HOLDING THAT CUTTING OF GRANITE/MARBLE BLOCKS INTO USABLE SLABS IS A MANUFACTURING ACTIVITY BECAUSE TH E MARBLE BLOCKS AS A MINERAL PRODUCE FROM EARTH BY ITSELF IS NOT USABLE FOR ANY PURPOSES AND, THEREFOR E, TO MAKE IT USABLE VARIOUS PROCESSES WHICH COULD BE 4 APPLIED TO BRING IT TO THAT STAGE WOULD AMOUNT TO MANUFACTURING. 8. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF AKASH STONE INDUSTRIES LTD. VS. ACIT, 13 SOT 15 (MUMBAI) HAS HELD THAT WHERE ASSESSEE USED TO TRANSFORM ROUGH RAW MARBLE BLOCKS INTO FINISHED POLISHED SLABS BY SUBJECTING TO RAW BLOCKS TO SEVER AL PROCESSES, LIKE PEELING, DRESSING, CORRECTING NATUR AL FLAWS, PADDING, SORTING, GRADING , SHAPING, SIZING, POLISHING ETC. TO PRODUCE FINISHED PRODUCTS LIKE POLISHED MARBLE SLABS/TILES/TABLE TOP WHICH WAS A COMMERCIAL DISTINCT COMMODITY HAVING DISTINCTIVE NAME AND USE, IT COULD BE SAID THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING/PRODUCTION OF POLISHED MARBLES, SLABS, TILES, TABLE TOPS ETC. AND IN SUCH CASE THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 80IB OF THE ACT. SECTION 10B IS A SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED 100% EXPO RT ORIENTED UNDERTAKING. THIS SECTION APPLIES TO ANY UNDERTAKING WHICH FULFILLS THE CONDITIONS BESIDES O THERS THAT IT MANUFACTURES OR PRODUCE ANY ARTICLE OR THIN G. UNDISPUTEDLY, THE ASSESSEE IS A 100% EOU. THE EARL IER SECTION 10B HAS BEEN SUBSTITUTED BY FINANCE ACT, 20 00 WITH EFFECT FROM 1.4.2001 I.E. IN RESPECT OF SUCH E OU WHICH COMMENCES PRODUCTION ON 1.4.2000 IN THE MANNER PROVIDED THEREIN. THE EXPLANATION BELOW SECTION 10B OF THE ACT DEFINES MANUFACTURING WHIC H IS WIDER IN ITS APPLICATION AND LEGISLATURE IN HIS WIS DOM LOOKING TO SCHEME AND THE REGISTRATION GRANTED TO T HE EOU HAS INCLUDED THE WORD PROCESS. IT ALSO EXPL AINS THE EXPRESSION PRODUCE ANY ARTICLE OR THING IN EXPANDED AND WIDER SENSE AND FURTHER EXTEND IT TO INCLUDE PRODUCTION ON COMPUTER PROGRAMME. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE FIRST APPELLATE ORDER IN THIS R EGARD WHICH IS ALSO SUPPORTED BY THE DECISIONS OF HONBLE SUPREME COURT AND HONBLE JURISDICTIONAL HIGH COURT . THE SAME IS UPHELD. THE GROUND IS THUS REJECTED. 5 THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH C OURT IN THE CASE OF ARIHANT TILES AND MARBLES (P) LTD. HAS BEEN AFFIRMED BY THE HON'BLE APEX COURT IN THE CASE OF ITO VS. ARIHANT TILES AND MARBLES (P) LTD , 320 ITR 79. THI S ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS ON THE BASIS OF THE DEC ISION OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT, WHICH HAS BEEN AFFIRMED BY THE HON'BLE APEX COURT, WHILE DECI DING THE APPEAL IN THE CASE OF THE ASSESSEE FOR THE EARL IER ASSESSMENT YEAR AND THEREFORE, THE ISSUE IS DECIDED AGAINST THE REVENUE FOR THE ASSESSMENT YEAR UNDER CONSIDERA TION ON SIMILAR LINES. FOLLOWING THE DECISION OF THE TRIBUNAL FOR PRECEDIN G YEAR, WE HOLD THAT LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE ORDER OF TRIBUNAL FOR ASSESSMENT YEAR 2007-08. WE CONFIRM HIS ORDER. 5. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE OF DCIT, CIRCLE-6, JAIPUR VS. M/S. GALAXY IMPEX, JAIPUR FOR THE A.Y. 2008-09 , SO, BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO OR DER DATED 30/01/2012 IN ASSESSEES OWN CASE IN I.T.A.NO. 748/ JP/2011, WE DO NOT SEE ANY MERIT IN THIS DEPARTMENTAL APPEAL. 6 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMIS SED. (ORDER PRONOUNCED IN THE COURT ON 27 TH JANUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH JANUARY, 2014. VR/- 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R BY ORDER ASSISTANT REGISTRAR, ITAT, JAIPUR.