ITO, JODHPUR V. Shri Krishna Kumar Vishnoi, JODHPUR

ITA 38/JODH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5201 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MOURYA
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 38 / JODH /201 5 (ASST. YEAR : 200 5 - 0 6 ) ITO, WARD - 1( 2 ), JODHPUR . VS. SHRI KRISHNA KUMAR VISHNOI, 32, VIDHYA PARK, JODHPUR . PAN NO. AFUPK 8766 N (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE. DEPARTMENT BY : S HRI S.L. MOURYA - DR DATE OF HEARING : 1 4 / 0 3 /201 6 . DATE OF PRONOUNCEMENT : 1 4 / 03 /201 6 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , JODHPUR , DATED 2 5 / 11 /201 4 . 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ID. CIT(A) ERRED ON FACTS & CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 37,59,094/ - U/S 10B BY IGNORING THE FOLLOWING DECISIONS OF HON'BLE SUPREME COURT: (I) DY. CIT VS. PIO FOOD PACKERS, (1980) 46 STC 63. (II) INDIA HOTELS CO. LTD. & OTHER CASES (245 ITR 538)(162 CTR 310). (III) LUCKY MINMAT PVT. LTD. VS. CIT (245 ITR 830) (162 CTR 404) (IV) GEM INDIA MANUFACTURING PVT. LTD. VS. CIT (2001) 249 ITR 307 (SC) 2. THE CIT (A) HAS ERRED IN ALLOWING ASSESSEE'S CLAIM FOR DEDUCTION U/S 10B OF THE ACT WITHOUT APPRECIATING THE FACTS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. 2 ITA NO. 38 / JODH /201 5 3. THE CIT(A) HAS ERRED IN ALLOWING ASSESSEE'S CLAIM FOR DEDUCTION U/S 10B OF THE ACT IGNORING THE FACT THAT THE ASSESSEE IN FACT SOLD THE SAME ITEM WHICH HE HAD PURCHASED AS BORNE OUT FROM THE FACTS DISCUSSED AT PARA 6 OF THE ASSESSMENT ORDER DATED 29.12.2011 AND FROM HIS BOOKS OF ACCOUNT ITSELF. 4. THE CIT(A) HAS ERRED IN ACCEPTING THE DECISION OF THE I TAT FOR A.Y. 2006 - 07 AS FINAL DECISION AND THEREFORE RELYING THE SAME WHEREAS THE DECISION OF THE ITAT HAS BEEN FURTHER CHALLENGED BEFORE THE HON'BLE HIGH COURT AND THE MATTER HAS BECOME SUBJUDICE. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OR ALL THE GROUNDS OF APPEAL ON OR BEFORE THE DATE THE APPEAL IS FINALLY HEARD FOR DISPOSAL. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A MANUFACTURER AND EXPORTERS OF HANDICRAFT ITEMS. DURING THE YEAR UNDER APPEAL, THE ASSESSEE FILED HIS RETURN OF INCOME AT RS. 3,13,140/ - AFTER CLAIMING DEDUCTI O N UNDER SEC. 10B OF THE ACT OF RS. 37,59,094/ - . THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION UNDER SEC. 10B OF THE ACT TO THE ASSESSEE ON THE GROUND T H A T FROM PERUSAL OF THE PURCHASE BILLS, IT IS FOUND THAT THE ASSESSEE PURCHASED F I N I S H E D AS WELL AS SEMI - F I N I S H E D GOODS AND AS SUCH THE ASSESSEE CANNOT BE CONSIDERED AS PRODUCER OR MANUFACTURER FOR THE PURPOSE OF EXEMPTION UNDER SEC. 10B OF THE ACT. 4 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) ALLOW E D THE CLAIM OF THE ASSESSEE , AND WHILE DOING SO, HELD AS UNDER: - 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND ORDER OF THE ASSESSING OFFICER AND I FIND THAT THE ISSUE IN DISPUTE WHETHER THE ASSESSEES CLAIM QUALIFIES U/S 10B, WAS EXTENSIVELY EXAMINED BY MY PREDECESSOR IN AY 2006 - 07, WHO EVENTUALLY DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - THE ASSESSING OFFICER HAS FINALLY CONCLUDED THAT THE ASSESSEE HAD SIMPLY CARRIED OUT TRADING OF MANUFACTURED ITEMS PURCHASED FROM THE LOCAL PERSONS ON WHICH SOME POLISHING AND GRINDING HAD BEEN DONE. THE REASON ADVANCED BY THE ASSESSING OFFICER WAS THAT T HE TABLES CHAIRS ETC. PURCHASED BY THE ASSESSEE WERE NOT TRANSFORMED INTO NEW ARTICLES EVEN AFTER POLISHING AND GRINDING AND THERE WAS NO CHANGE IN BASIC IDENTITY OF THE PRODUCTS AND THAT THE ASSESSEE HAD SOLD THE SAME ITEMS AS PURCHASED, AS IS EVIDENT FRO M THE PURCHASE AND SALE BILLS. HOWEVER, FROM THE ASSESSMENT ORDER, I FIND THAT WHILE THE ASSESSING OFFICER HAS CONSIDERED AND DISCUSSED THE SUBMISSIONS MADE BY THE ASSESSEE 3 ITA NO. 38 / JODH /201 5 BUT HAS NOT DISCUSSED THE ASSESSEES SUBMISSION THAT THE ASSESSEE USED TO PLACE ORD ERS TO THE SUPPLIERS FOR SUPPLY OF RAW STRUCTURES STRICTLY AS PER HIS SPECIFICATIONS AND DESIGNS AND DRAWINGS FINALIZED BY HIS BUYERS AND ASSESSEES SUPERVISOR CHECK THE SAME FROM TIME TO TIME AT THE SUPPLIERS PLACE. AS HAS BEEN POINTED OUT ABOVE, IN CASES WHERE ARTICLES ARE MANUFACTURED BY PARTIES OTHER THAN THE ASSESSEE, THE TEST WHETHER THE ASSESSEE IS CARRYING ON THE ACTIVITY OF THE MANUFACTURING IS WHETHER SUCH ACTIVITIES CARRIED ON BY THE PARTIES OTHER THAN THE ASSESSEE WERE UNDER CLOSE SUPERVISION AN D DIRECTION OF THE ASSESSEE AND AT THE RISK OF THE ASSESSEE. IN THE INSTANT CASE, THE FACT BORNE OUT FROM THE ASSESSMENT ORDER IS THAT THE ASSESSEE WAS GETTING THE GOODS MANUFACTURED BY OUTSIDE PARTIES AS PER HIS OWN SPECIFICATIONS AND DESIGNS AND DIRECTIO NS. UNDER THESE CIRCUMSTANCES, IT HAS TO BE CONCLUDED THAT THE ASSESSEE IS A MANUFACTURER AND NOT A TRADER AS HAS BEEN WRONGLY CONCLUDED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE ASSESSEE WAS ENGAGED IN MANUFACTURING ACTIVI TIES AND THEREFORE, WAS ELIGIBLE FOR DEDUCTION U/S 10B. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO ALLOW DEDUCTION U/S 10B TO THE ASSESSEE. THE APPEAL OF THE ASSESSEE IN THIS REGARD IS ALLOWED. 5.1. THIS ORDER HAS FURTHER BEEN CONFIRMED BY THE HON'B LE ITAT VIDE ORDER DATED 29 - 8 - 2013 IN ABOVE MENTIONED ITA NOS. I FURTHER FIND THAT THE ASSESSING OFFICER FAILED TO POINT THAT THE FACTS IN THE PRESENT CASE ARE ANY DIFFERENT FROM THOSE WHICH EXISTED IN AY 2004 - 05 AND 2006 - 07. THE APPELLANT IS CARRYING ON H IS BUSINESS IN SAME STYLE AND FASHION AS WERE CARRIED OUT IN EARLIER YEARS. UNDER THESE CIRCUMSTANCES, IT HAS TO BE CONCLUDED THAT THE ASSESSEE IS A MANUFACTURER AND NOT A TRADER AS HAS BEEN WRONGLY CONCLUDED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE DISCUSSION AND RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT, I HOLD THAT THE ASSESSEE WAS ENGAGED IN MANUFACTURING ACTIVITIES AND THEREFORE, WAS ELIGIBLE FOR DEDUCTION U/S 10B. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO ALLOW DEDUCTION U/S 10B TO THE ASSESSEE. THE GROUND OF APPEAL IS ALLOWED. 5. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER , WHEREAS NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE OF HEARING ISSUED TO THE ASSESSEE. 6 . WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE CASE OF ASSESSEE ITSELF IN ITA NO 565/JODH/2009 AND 525/JODH/2009 & 526/JODH/2009 ORDER DATED 29/08/2013 . FURTHER, 4 ITA NO. 38 / JODH /201 5 FROM A READING OF GROUNDS OF APPEAL OF THE REVENUE, IT IS OBSERVED THAT SINCE THE ORDER OF THE TRIBUNAL WAS NOT ACCEPTED BY THE REVENUE, THEREFORE, THE DISALLOWANCE OF DEDUCTION UNDER SEC. 10B OF THE ACT WAS REPEATED IN THE YEAR UNDER APPEAL , TO KEEP THE I SSUE ALIVE . THUS, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GR O UND OF APPEAL OF THE REVE N UE IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 1 4 TH DAY OF MARCH , 201 6 AT JODHPUR . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 1 4 TH MARCH , 201 6 . VR/ - COPY TO: 1. THE ASSESS E E. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER .