STEELFAB BLDG SYSTEMS, MUMBAI V. ITO 24(3)(3), MUMBAI

ITA 5296/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54935 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 28-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V V SHASTRI
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, H BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER I.T.A NO.5296/ MUM/2010 ASSESSMENT YEAR: 2007-08 STEELFAB BUILDING SYSTEMS, .. APPELLANT C-8, LAGHU UDYOG KENDRA, I.P.PATEL ROAD, GOREGOAN(E), MUMBAI-063 PA NO.AAXFS 5995 B VS INCOME TAX OFFICER 24(3)(3) .. RESPONDEN T C-11, BUILDING, 7 TH FLOOR, AAYAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E). MUMBAI. APPEARANCES: ARVIND SONDE, FOR THE APPELLANT V.V.SHASTRI, , FOR THE RESPONDENT DATE OF HEARING : 23.8.2011 DATE OF PRONOUNCEMENT : 26 -08-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED I NTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 28 TH APRIL, , 2010, IN THE MATTER OF ASSESSMENT UNDER S ECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESS MENT YEAR 2007-08. I.T.A NO.5296/ MUM/2010 ASSESSMENT YEAR: 2007-08 2 2. THE ONLY GRIEVANCE RAISED BY THE ASSESSEE IS THA T THE CIT(A) ERRED IN NOT ALLOWING THE CLAIM OF DEDUCTION U/S. 80-IB OF THE I NCOME TAX ACT, 1961 AMOUNTING TO RS.7,98,06,825. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF VARIOUS TYPES OF SHEETS AND PRE-ENGINEERED BUILDINGS FOR BU SINESS AND COMMERCIAL PURPOSE AT ITS FACTORY PREMISES AT DADRA & NAGAR HAVELI. T HE ASSESSEE HAS CLAIMED DEDUCTION OF RS.7,97,52,097 UNDER SECTION 80-IB OF THE INCOME TAX ACT, ON ITS PROFIT DERIVED FROM ITS MANUFACTURING. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER RELYING UPON HIS FINDINGS FOR THE ASSESSMEN T YEARS 2005-06 AND 2006-07, DECLINED THE DEDUCTION. WHILE DOING SO, THE AO DID NOT SET OUT ANY SPECIFIC REASONS BEYOND STATING THAT THE MATERIAL FACTS OF THE PRESE NT YEAR WAS THE SAME AS FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 AND, THEREFORE , CONSISTENT WITH HIS DECISION OF ADMISSIBILITY OF DEDUCTION UNDER SECTION 80IB FO R THOSE YEARS, THE DEDUCTION IS DECLINED IN THIS YEAR ALSO. AGGRIEVED, THE ASSES SEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE C IT(A) ALSO REFERRED TO HIS ORDER FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07, WHEREIN, SIMILAR ACTION OF THE ASSESSMENT YEAR WAS UPHELD. 4. THE ASSESSEE IS NOT SATISFIED BY THE STAND TAKEN BY THE CIT(A) AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 6 WE FIND THAT, IN THE MEANTIME, THE ASSESSEES SI MILAR GRIEVANCE FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07, HAD COME UP F OR CONSIDERATION BEFORE A COORDINATE BENCH OF THIS TRIBUNAL AND BY WAY OF ORD ER DATED 30.7.2010, THE COORDINATE BENCH AFTER A DETAILED ANALYSIS OF THE F ACTS OF THE CASE AND ERUDITE DISCUSSION ON THE LEGAL POSITION, HAS UPHELD THE GR IEVANCE BY, INTER ALIA, OBSERVING AS FOLLOWS: I.T.A NO.5296/ MUM/2010 ASSESSMENT YEAR: 2007-08 3 23. IN OUR VIEW THE PROCESS CARRIED OUT BY THE A SSESSEE (WHICH WE HAVE EXPLAINED IN DETAIL IN THE EARLIER PARAGRAPHS) AND THE FACT THAT THE FABRICATED STEEL CANNOT BE USED IN THE INDUSTRY TO WHICH THE AS SESSEE CATERS WITHOUT ITS PROCESS AND THE FACT THAT THEY HAVE A DISTINCT NAME IN THE TRADE ALL GO TO SHOW THAT THE ASSESSEE WAS MANUFACTURING AN ARTICLE OR T HING. THE ASSESSEE HAS GIVEN AN EXPERT OPINION, WHICH HAS NOT BEEN COUNTERE D BY THE CIT(A). WE HAVE ALREADY EXPLAINED THE VARIOUS PRODUCTS WHICH WERE M ANUFACTURED. THESE PRODUCTS ARE KNOWN IN THE TRADE OF DISTINCT NAME AN D ACTIVITY. THE ASSESSEE IS NOT FABRICATING ANY READYMADE STEEL BUILDING. WE HAVE PERUSED THE PHOTOGRAPHS OF VARIOUS PRODUCTS MANUFACTURED BY THE ASSESSEE. THEY ARE AT PAGE NO. 31 TO 39 OF THE ASSESSEES PAPER BOOK. PHO TOGRAPHS GIVE RAW MATERIAL FORM OF THE PRODUCT AND FINISHED GOODS FORM OF THE PRODUCT. IN OUR OPINION, INPUT AND OUTPUT ARE CERTAINLY DIFFERENT AND THE AR GUMENTS OF LEARNED DR THAT INPUT IS STEEL AND OUT PUT IS ALSO STEEL, CANNOT BE ACCEPTED. IT IS PERTINENT TO MENTION THAT THE ASSESSEE DESIGNS THE PRODUCTS ACCO RDING TO REQUIREMENT OF ITS CLIENTS. THE ASSESSEE ALSO TAKES INTO CONSIDERATION FUNCTIONAL FORCE LIKE RESISTANCE TO TEMPERATURES, PRESENCE OF CORROSIVE G ASES, VAPOUR AND LIQUID RADIATION AND WEATHER CONDITIONS. THE ASSESSEE MAKE S PRODUCTS MADE DEPENDING UPON THE LOAD THAT THE END PRODUCT HAS TO ULTIMATELY CARRY. THE END PRODUCTS OF THE ASSESSEE ARE USED IN SUPPORTING STR UCTURE FOR FACTORY SHED, FOUNDATION PILLAR OF CRANE, SUPPORT TO VARIOUS ITEM S OF PLANT AND MACHINERY, CHEMICAL VESSEL, HOUSING OF GENERATOR, COMPRESSOR, COOLING TOWERS, WIND BRACING, CABLE HOUSINGS, ROOF TOPS OF SPECIAL PURPOSE S ROOFS TO WITHSTAND HEAVY RAINS, SNOW, FOOT TRAFFIC MOVEMENT ETC. BUILDING AND COMPOUND GATES AND MANY OTHER SUCH USES. THE VISUAL PICTURE OF RAW MATERIAL AND END PRODUCT CLEARLY SHOWS THAT THERE IS A SEA CHANGE FROM RAW MATERIAL TO FINISHED PRODUCT. SUCH CHANGE IS AS A RESULT FOR FABRICATION, MECHANICAL AN D OTHER ENGINEERING OPERATIONS. THE ASSESSEES PRODUCT LIKE COLUMN, BEAM S, Z AND C PURLINS, GIRTS, TRAPEZOIDAL PROFILE SHEETS, RAFTER, WIND BRACING, VE NTILATING SYSTEM ETC. ARE KNOW IN THE TRADE BY ITS NAMES LIKE COLUMNS, BEAMS, PURLINS, VENTILATING SYSTEM ETC. THERE IS A MAJOR TECHNICAL INPUT INTO ASSESSE ES PRODUCTS FOR EG. COLUMNS, BEAMS, Z PURLINS AND RAFTER ARE MAINLY USED FOR LOA D BEARING STRUCTURES, PLATFORMS AND OTHER DEPLOYMENT INCLUDING THAT OF EM PLOYING HEAVY CRANES FOR MOVEMENT OF HEAVY LOADS IN INDUSTRIES. SIMILARLY, A SSESSEES PRODUCTS ARE USED FOR MAKING INDUSTRIAL STRUCTURE, AND FOR HEAVY DUTY RACKS, FOUNDATION OF CERTAIN MACHINERY AND ALSO TO MAKE AND ALSO TO MAKE LOAD BEA RING STRUCTURES FOR HEAVY DUTY PIPELINES, CHEMICAL VESSELS, BOILERS ETC AND BECOME A PART OF OTHER ITEMS OF PLANT AND MACHINERY. THERE IS A MAJOR TECH NICAL INPUT WHILE MANUFACTURING THE PRODUCTS. FURTHER TECHNICAL INPUT IN ASSESSEES PRODUCTS LIKE PURLINS, ROOFING SHEETS AND WALL CLADDING, GIVE IT HIGH TENSILE STRENGTH DURABILITY AND TO WITHSTAND DIFFERENT WEATHER CONDITION ETC. A ND BY SPECIFIC DESIGN AND ROLL FORMING TECHNIQUE AND THE TECHNICAL INPUT IN I TS DESIGN IN SUCH A WAY TO TAKE STATIC AND DYNAMIC LOADS AND THEREFORE IT IS BE ST SUITED FOR HEAVY RAINS, SNOW FALLING AND FOOT TRAFFIC MOVEMENT. SIMILARLY, IN ROOFING SHEETS WHAT ASSESSEE MANUFACTURE IS DIFFERENT TECHNICALLY THAN OTHER NORMAL AND TRADITIONAL USED SIMPLE GALVANIZED SHEETS. THE TECHNICAL INPUT IN RESPECT OF LIGHT REFLECTION I.T.A NO.5296/ MUM/2010 ASSESSMENT YEAR: 2007-08 4 (SOLAR HEAT) GIVES MORE EFFICIENCY AND ADIABATIC LOA D CAN BE REDUCED SINCE THE SURFACE TEMPERATURE AND INDOOR TEMPERATURE IS LESS SUSCEPTIBLE TO BE RAISED. FURTHER, EVEN IN PAINT THERE IS A TECHNICAL INPUT W HILE GIVING IT COATING LAYER OF HIGH HEAT RESISTANCE OBTAINED DUE TO A MASS RATIO O F 55% AND VOLUME RATIO 80% OF THE PRODUCT HAS HIGH HEAT RESISTANCE. FURTH ER, ASSESSEES PRODUCT WRINKLE CURVED ROOF TOP SHEET IS ALSO TECHNICALLY S UITABLE TO MAKE SUITABLE SLOPE AS REQUIRED FOR A DIFFERENT USAGE AND WEATHER AND M ONSOON CONDITION OF THE REGION. THIS REQUIRES A TECHNICAL INPUT IN RESPECT OF STUDY AND TEST AND THEN STANDARDIZATION OF PROCESS TO MEET THE PARAMETER OF BUREAU OF INDIAN STANDARDS. THE ASSESSEES ROOF TOPS ARE DIFFERENT T HAN THE SIMPLE CORRUGATED SHEET. FURTHER, ASSESSEE HAS BEEN EMPLOYING HIGH-TEC H SOPHISTICATED MACHINERY FOR EG. FOR MAKING THE ROOF TOP, IT BUY PLAIN SHEETS AND GIVE THEM CURVE AND DESIRED SHAPE ON COLD ROLLED MILL AND THEREAFTER DI FFERENT ENGINEERING OPERATIONS AND THUS ULTIMATELY ASSESSEE GIVE TECHNI CAL INPUTS IN RESPECT OF TENSILE STRENGTH, LONG DURABLE SERVICE LIFE AND STRU CTURAL QUALITY KEEPING FACTORS IN MIND LIKE HEAT RESISTANCE, OPERATIONAL REQUIREME NT, ENERGY CONSUMPTION AND ENVIRONMENTAL FACTORS. SIMILARLY FOR BEAMS, COLUMNS AND RAFTERS, ASSESSEE HAVE HIGH DUTY SHEARING MACHINE AS AGAINST SIMPLE FABRICA TION TOOLS EMPLOYED BY OTHERS. IT HAS AUTO WELDING MACHINES WHICH GIVE UNI FORM WELDING AND MAKES ALL PARTS UNIFORM JOINING AND BECOMES ONE STATIC BODY AND ULTIMATELY IMPROVES ITS TENSILE STRENGTH. 24. IN THE LIGHT OF THE LAW ON THIS SUBJECT AS EXPL AINED IN SEVERAL JUDICIAL PRONOUNCEMENTS REFERRED TO ABOVE AND IN THE LIGHT OF THE ACTIVITY CARRIED ON BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE ASSESSEE WAS ENGAGED IN THE PRODUCTION OR MANUFACTURE OF AN ARTICLE OR THING; A ND WAS THEREFORE, ENTITLED TO CLAIM DEDUCTION U/S. 80IB OF THE ACT. THE AO IS DI RECTED TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IB OF THE ACT AS CLAIMED BY THE ASSESSEE. 7. LEARNED REPRESENTATIVES AGREE THAT WHATEVER IS D ECIDED FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 WILL ALSO APPLY MUTATIS-M UTANDIS IN THIS ASSESSMENT YEAR AS WELL. IN THESE CIRCUMSTANCES, WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY OUR ESTEEMED COLLE AGUES. IN ANY CASE, WE FIND THAT THE ASSESSING OFFICER HAS ALLOWED THE IMPUGNED DEDU CTION IN ASSESSMENT YEAR 2008- 09, AND, THUS, ACCEPTED ASSESSEES STAND. A COPY O F THE ASSESSMENT ORDER FOR A.Y. 2008-09 HAS BEEN PLACED BEFORE US AT PAGES 22-25 OF PAPER BOOK. ONCE THE ASSESSING OFFICER HIMSELF ACCEPTS THE ADMISSIBILITY OF CLAIM FOR A SUBSEQUENT ASSESSMENT YEAR ON MATERIALLY IDENTICAL FACTS, THER E IS NO GOOD REASON FOR HIM TO RAISE THIS GRIEVANCE BEFORE US IN THIS ASSESSMENT YEAR. IT IS A MEANINGLESS RITUAL, RATHER I.T.A NO.5296/ MUM/2010 ASSESSMENT YEAR: 2007-08 5 THAN A GENUINE GRIEVANCE. FOR THIS REASON ALSO, WE SEE NO MERITS IN THE GRIEVANCE OF THE ASSESSING OFFICER. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2011 SD/- (R.S.PADVEKAR) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 26 TH AUGUST, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),34, MUMBAI 4. COMMISSIONER OF INCOME TAX, 24 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH H MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI