A.C.I.T., Circle-1, Gwalior V. M/s Khajuraho Minerals, Chhatarpur

ITA 543/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0620 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 5 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Assessment record; Set aside
• Section: 143(3); 80IB; 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 543/AGRA/2012 ASSTT. YEAR : 2009-10 A.C.I.T., CIRCLE 1, VS. M/S. KHAJURAHO MINERALS , GWALIOR. 6, K.M. SAGAR ROAD, DHADRI, CHHATARPUR. (PAN: AACFK 0741 J) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI ASHISH GOYAL, ADVOCATE DATE OF HEARING : 19.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.06.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GWALIOR DATED 07.09.2012 FOR THE ASSESSMENT YEAR 20 09-10, CHALLENGING THE DELETION OF ADDITION OF RS.24,67,430/- ON ACCOUNT O F DISALLOWANCE OF DEDUCTION U/S. 80IB(4) OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,40,94,560/-. HOWEVER , THE ASSESSMENT HAS BEEN MADE ON A TOTAL INCOME OF RS.1,65,61,980/- BY MAKIN G ADDITION OF RS.24,67,420/- ITA NO. 543/AGRA/2012 2 ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 80IB I N RESPECT OF UNIT III, IV AND V. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MINING AND MANUFACTURING SINCE 1985. I T IS HAVING FIVE UNITS AND THE DEDUCTION U/S. 80IB(4) HAS BEEN CLAIMED IN RESPECT OF UNIT NO. III, IV AND V IN A SUM OF RS.5,75,533/-, RS.1,95,485/- AND RS.16,96,40 2/- (TOTAL RS.24,67,420/-) OF THE PROFIT EARNED ON THESE UNITS DURING THE YEAR AS PER RETURN. THE AO DISALLOWED THE CLAIM OF ASSESSEE. THE ASSESSEE SUBMITTED BEFOR E THE AO THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MINING AND MANUFACTUR ING/PRODUCTION OF POWDER AND GITTI. THE ASSESSEE ALSO STATED VARIOUS STAGES OF M ANUFACTURING/PRODUCTION AS REPRODUCED IN THE ASSESSMENT ORDER AT PAGE 4 AND PA GE 2 OF THE APPELLATE ORDER WHICH CONSISTS OF DEVELOPMENT OF MINES, BLASTING, M INING/EXTRACTION, SORTING/GRADING, WASHING, CRUSHING/GRINDING. THE AS SESSEE IN RESPECT OF ALLOWABILITY OF DEDUCTION U/S. 80IB(4) RELIED UPON THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. SESA GOA LTD., 271 ITR 331 AND ALSO RELIED UPON THE DECISIONS IN THE CASE OF CIT VS. D.J. STONE CRUSHER, 229 CTR 195. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEES B USINESS ACTIVITIES SIMPLY INVOLVE PROCESS OF CRUSHING/GRINDING OF THE BOULDERS INTO G ITTI/POWDER. THEREFORE, THERE IS NO MANUFACTURING AND PRODUCTION OF ANY ARTICLE OR T HING. THE AO RELYING UPON THE DECISION OF HONBLE SUPRMEE COURT IN THE CASE OF LU CKY MINERAL PVT. LTD. 116 TAXMAN 1 (245 ITR 830) REJECTED THE CLAIM OF THE AS SESSEE. THE ADDITION WAS ITA NO. 543/AGRA/2012 3 CHALLENGED BEFORE THE LD. CIT(A) AND IT WAS SUBMITT ED THAT THE ASSESSEE HAS UNDERTAKEN ACTIVITIES OF MANUFACTURING AND PRODUCTI ON OF ARTICLES AND THING AND DETAILED NOTE IS SUBMITTED IN THE ASSESSMENT ORDER. THE AO HAS ACCEPTED THE ASSESSEES BUSINESS ACTIVITIES INVOLVING PROCESS OF CRUSHING/GRINDING OF BOULDERS INTO GITTI/POWDER. THEREFORE, THE DECISION IN THE C ASE OF LUCKY MINERAL PVT. LTD. (SUPRA) WOULD NOT APPLY. THE ASSESSEE HOLDS THE LIC ENSE TO CARRY OUT THE MINING AND IN ADDITION TO THAT THEY HAVE CRUSHER OF GRIT POWER S ETC. WHICH HAS BEEN ACCEPTED BY THE AO. IT WAS ALSO EXPLAINED THAT IN EARLIER AND S UBSEQUENT YEARS, SIMILAR CLAIM HAS BEEN ALLOWED BY THE AO. THEREFORE, THE ADDITION IS UNJUSTIFIED. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE, MATERI AL ON RECORD AND THE ORDERS OF THE DEPARTMENT ACCEPTING SIMILAR CLAIM OF ASSESSEE, SET ASIDE THE ORDER OF THE AO AND ALLOWED THE CLAIM OF ASSESSEE U/S. 80IB OF THE IT ACT. FINDINGS OF THE LD. CIT(A) IN PARA 4 & 5 OF THE APPELLATE ORDER ARE REP RODUCED AS UNDER : 4. APPELLANT'S SUBMISSIONS ALONGWITH ASSESSMENT OR DER HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS HAVE ALSO BEEN PERUSED. THERE IS NO DENYING THE FACT THAT THE APPE LLANT IS ENGAGED IN THE BUSINESS OF MINING AND MANUFACTURING/PRODUCTION OF POWDER AND GITTI. VARIOUS DETAILS, AS ASKED FOR BY THE A.O, HA VE ALSO BEEN SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS JUSTIFYING ITS CLAIM OF DEDUCTION U/S 8 0IB. A.O HAS REJECTED THE APPELLANT'S CLAIM BY HOLDING THAT BUSI NESS OF MINING AND PRODUCTION OF GITTI AND POWDER THEREFROM DOES NOT A MOUNT TO MANUFACTURING/PRODUCTION AND THUS APPELLANT'S BUSIN ESS ACTIVITIES ARE NOT COVERED WITHIN PROVISIONS OF SECTION 80IB A.O. HAS RELIED ON DECISIONS OF HON 'BLE SUPREME COURT IN CASE OF M/S LUCKY MINERALS PVT. LTD. VS. CIT(2001) 116 TAXMANN. ON THE PERUSAL OF RECORDS IT IS ITA NO. 543/AGRA/2012 4 SEEN THAT THE APPELLANT HAS BEEN ALLOWED DEDUCTION U/S 80IB ON THE BASIS OF SAME FACTS, AS PREVALENT DURING THE YEAR U NDER CONSIDERATION, FOR EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEARS AFTER DULY EXAMINING THEM DURING THE COURSE OF ASSESSMENT PROC EEDINGS AND PASSING ORDER U/S 143(3). FOR INSTANCE FOR THE A.Y. 2008-09 FOR WHICH ORDER U/S 143(3) HAS BEEN PASSED ON 5.5.2010. A.O H AS EXAMINED THE APPELLANT'S CLAIM ALONGWITH VARIOUS CASE LAWS AND H AS MENTIONED AS UNDER: - ASSESSEE IS CLAIMING DEDUCTION U/S. 80IB AS INDUST RIAL UNDERTAKING ENGAGED IN PRODUCTION OR MANUFACTURING IN THE INDUSTRIALLY BACKWARD DISTRICT FOR UNIT III, UNIT I V AND UNIT V. ASSESSEE HAS BEEN ASKED TO JUSTFY HIS CLAIM U/S' 80 LB WHETHER THE MINING AND CRUSHING OF BOULDERS CAN BE CONSIDER ED AS PRODUCTION OR MANUFACTURING. IN SUPPORT OF HIS CLAI M ASSESSEE HAS PRODUCED SOME RECENT DECISIONS OF THE SUPREME C OURT, HIGH COURT AND ITAT WHERE HONOURABLE ADJUDICATING A UTHORITY HAS CONSIDERED THE MINING AND CRUSHING OF BOULDERS AS MANUFACTURING OR PRODUCTION WITHIN THE MEANING OF S ECTION 80IB OF THE ACT: - I. D.J. STONE CRUSHER VS CIT(HIGH COURT OF HIMACHAL PRADESH) DATED 16 TH DECEMBER, 2009. II. WORLD WIDE STONES VS. ITO(ITAT JAIPUR BENCH) DATED 29 TH FEBRUARY 2001. III. CIT VIS G.S. ATWAL ND CO.(CULCUTTA HIGH COURT) DATED 21 ST FEBRUARY, 2001. IV. LUCKY MINMAT P. LTD. V/S CIT(SUPREME COURT, 2 000) CONSIDERING THESE RECENT DECISIONS, ASSESSEE'S CLAI M U/S 80IB IS NOT DISTURBED. ' SIMILARLY FOR A. Y. 2004-05 WHEREBY VIDE ORDER DATE D 16.12.2011 PASSED U/S 143(3)/148, APPELLANT'S CLAIM OF DEDUCTION HAS BEEN EXAMINED AND DISCUSSED IN DETAIL BY THE A.O. A .O HAS ACCEPTED THE RETURN INCOME OF THE APPELLANT BY RELYING ON IT S SUBMISSIONS AND DECISION OF HON'BLE APEX COURT IN CASE OF ITO, UDAI PUR VS. M/S ITA NO. 543/AGRA/2012 5 ARIHANT TILES AND MARBLES PVT. LTD. IN CIVIL APPEAL NO. 8036 OF 2009 VIDE ORDER DATED 2.12.2009 AND BY MENTIONING AS UND ER: - 'I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSIONS OF THE ASSESSEE. FROM THE ABOVE SUBMISSIONS, IT IS CLE AR THAT THE FACTS OF THE ASSESSEE'S CASE ARE SQUARELY COVERED U NDER THE HON 'BLE SUPREME COURT DECISION IN THE CASE OF INCOME T AX OFFICER, UDAIPUR VS M/S ARIHANT TILES & MARBLES PVT. LTD. IN CIVIL APPEAL NO. 8036/2009 PRONOUNCED ON 02.12.2009 AS TH E PROCESS OF MANUFACTURING FOLLOWED BY THE ASSESSEE I S ON THE SAME LINES AS HAVE BEEN ENUNCIATED BY THE HON 'BLE SUPREME COURT IN THE CASE OF M/S ARIHANT TILES & MARBLES PV T.LTD. WHEREIN MANUFACTURING PROCESS HAS BEEN INCORPORATED AS UNDER: - I). BOULDERS EXCAVATED/EXTRACTED FROM THE MINE BEIN G IN RAW UNEVEN SHAPES HAVE TO BE PROPERLY SORTED OUT AND MA RKED; II) SUCH BOULDERS ARE THEN PROCESSED MANUALLY FOR WASHI NG, SORTING, BREAKING; III) SMALL BOULDERS ARE THEN LOADED INTO CRUSHER DUG; IV) SMALL BOULDERS THEN CRUSHED BY CRUSHER PLANT FOR PRODUCING OF GITTI OF DESIRED SIZE; V! GITTI OF THE CRUSHER THEN PROCESSED INTO GRINDER FOR CONVERSION INTO POWERS; VI). POWDER AND GITTI ARE SEPARATED AND PACKED AN D DISPATCHED FOR SALE ' THEREFORE, RESPECTFULLY FOLLOWING THE HONBLE SUPRE ME COURT DECISION (SUPRA), THE CLAIM OF THE ASSESSEE OF RS.8,96,382/- U/S 80IB OF THE ACT IS HEREBY ALLOWED. FURTHER DURING PROCEEDINGS, VARIOUS DETAILS WERE CA LLED FOR. THE SUBMISSIONS FURNISHED BY THE ASSESSEE IN THIS R ESPECT WERE EXAMINED AND AFTER GOING THROUGH THE SAME AND VERIF YING THE AFFAIRS ITA NO. 543/AGRA/2012 6 OF THE ASSESSEE THE ASSESSED INCOME OF RS.37, 4, 95 0/- U/S 143(3) IS ACCEPTED. ' VIDE THE SAID ORDER, A.O HAS ALSO DULY CONSIDERED T HE CASE OF M/S LUCKY MINERALS (PVT.) LTD. 245 ITR 830(SC) ON W HICH A.O IN THE IMPUGNED ORDER UNDER APPEAL HAS RELIED ON AND HAS, IN FACT, FOUND THE FACTS OF THE APPELLANT'S CASE DISTINGUISHABLE FROM IT AND THUS NOT BEING APPLICABLE TO THE APPELLANT. SIMILAR IS THE POSITIO N FOR A. Y. 2005-06 WHEREBY AGAIN VIDE ORDER DATED 16.12.2011 PASSED U/ S 148/143(3) THE APPELLANT'S CLAIM FOR DEDUCTION U/S 8018 HAS BEEN A CCEPTED BY THE A.O ON THE BASIS OF APPELLANT'S SUBMISSIONS AND DEC ISION OF HON'BLE APEX COURT IN CASE OF M/S ARIHANT TILES AND MARBLES AND BY DISTINGUISHING IT FROM M/S LUCKY MINERALS PVT. LTD. THERE HAS BEEN NO CHANGE IN FACTS DURING THE YEAR UNDER CONSIDERATION AND BY RELYING ON DECISION OF HON'BLE APEX COURT IN CASE OF M/S ARIHA NT TILES AND MARBLES ALONGWITH HON'BLE HIMACHAL HIGH COURT IN CA SE OF D.J STONE CRUSHER VS CIT(2010) 229 CTR(HP) 195 AND IN ABSENCE OF ANY OTHER ADVERSE MATERIAL ON RECORD, A.O IS NOT FOUND JUSTIF IED IN MAKING DISALLOWANCE OF APPELLANT'S CLAIM OF DEDUCTION U/S 8018 WHEN PRESCRIBED CONDITIONS HAVE BEEN FULFILLED BY THE AP PELLANT. ADDITION OF RS.24,67,420/- IS, HEREBY, DELETED. 5. IN THE RESULT, APPEAL IS ALLOWED. 3. THE LD. DR RELIED UPON THE ORDER OF THE AO. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT IN PRECEDING ASSESSMENT YE AR, THE AO HAS ALLOWED SIMILAR CLAIM OF ASSESSEE ON IDENTICAL FACTS IN THE REGULAR ASSESSMENT ORDER U/S. 143(3) OF THE IT ACT. THEREFORE, FOLLOWING THE PRINCIPLE OF C ONSISTENCY, THE AO SHOULD NOT HAVE MADE ADDITION U/S. 80IB OF THE IT ACT. ITA NO. 543/AGRA/2012 7 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DENYING FACT THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MINING AND MANUFACTURING /PRODUCTION OF POWDER AND GITTI. THE ASSESSEE SUBMITTED COMPLETE DETAILS BEFORE THE AO TO JUSTIFY THE CLAIM OF DEDUCTION U/S. 80IB. HOWEVER, THE DETAILED WORKING OF THE ASSESSEE HAS N OT BEEN DISPUTED THAT THE ASSESSEE AT VARIOUS STAGES MADE MANUFACTURING AND P RODUCTION OF DIFFERENT ARTICLE OR THING. THE AO DENIED THE CLAIM OF ASSESSEE ON TH E BASIS OF DECISION IN THE CASE OF LUCKY MINERALS PVT. LTD. (SUPRA) IN WHICH IT WAS HELD THAT MINING OF LIMESTONE AND MARBLE BLOCKS AND CUTTING AND DESIGNING THEM IS NOT MANUFACTURING OR PRODUCTION OF ARTICLE. THE AFORESAID DECISION IS LA TER ON CONSIDERED BY HONBLE SUPREME COURT IN THE CASE OF ITO VS. ARIHANT TILES AND MARBLES PVT. LTD., 320 ITR 79, IN WHICH IT WAS HELD AS UNDER : HELD, AFFIRMING THE DECISION OF THE HIGH COURT, THAT THIS WAS NOT A CASE OF MERELY CUTTING MARBLE BLOCKS INTO SLA BS. THERE WAS THE FURTHER ACTIVITY OF POLISHING AND ULTIMATE CONVERSI ON OF THE BLOCKS INTO POLISHED SLABS AND TILES. THERE WERE VARIOUS STAGES THROUGH WHICH THE BLOCKS HAD TO GO THROUGH BEFORE THEY BECAME POLISHE D SLABS AND TILES. THE ORIGINAL BLOCK DID NOT REMAIN MARBLE BLOCK; IT BECAME A SLAB OR TILE. BLOCKS WERE CONVERTED INTO POLISHED SLABS AND TILES RESULTING IN THE EMERGENCE OF A NEW AND DISTINCT COMMODITY. SUCH AN ACTIVITY WAS SOMETHING BEYOND MANUFACTURE AND BROUGHT A NEW PROD UCT INTO EXISTENCE. THE STEPWISE ACTIVITY CONSTITUTED MANUF ACTURE OR PRODUCTION IN TERMS OF SECTION 80IA. THEREFORE, RELIANCE OF THE AO ON THE DECISION IN TH E CASE OF LUCKY MINERALS PVT. LTD. (SUPRA) (CORRECT NAME LUCKY MINMATE PVT. LTD.) IN DENYING EXEMPTION TO THE ITA NO. 543/AGRA/2012 8 ASSESSEE U/S. 80IB IS WHOLLY MISPLACED. THE ASSESSE E IS INDULGED IN VARIOUS ACTIVITIES AS EXPLAINED BEFORE THE AO AND AFTER VAR IOUS ACTIVITIES, BROUGHT A NEW PRODUCT INTO EXISTENCE. IT IS ALSO NOT IN DISPUTE T HAT ASSESSEE HAS BEEN ALLOWED SIMILAR DEDUCTION ON THE BASIS OF SAME FACTS IN EAR LIER YEAR AS WELL AS SUBSEQUENT YEARS U/S. 143(3) OF THE IT ACT AND THE LD. CIT(A) REPRODUCED THE SAME ORDERS IN THE APPELLATE ORDER. SINCE THE CLAIM OF THE ASSESSE E HAS BEEN ACCEPTED BY THE AO HIMSELF ON THE SAME FACTS IN EARLIER YEARS, THEREFO RE, UNLESS DIFFERENT FACTS ARE BROUGHT ON RECORD, THE AO IS BOUND TO FOLLOW THE PR INCIPLE OF CONSISTENCY AND SHOULD NOT HAVE DISALLOWED CLAIM OF ASSESSEE. IT IS WELL SETTLED THAT THOUGH PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME- TAX PROCEEDINGS, BUT THE RULE OF CONSISTENCY SHALL HAVE TO BE FOLLOWED BY THE INCOME -TAX AUTHORITIES. WE ARE FORTIFIED IN OUR VIEW BY THE JUDGMENT OF HONBLE SU PREME COURT IN THE CASE RADHASOAMI SATSANG VS. CIT, 193 ITR 321, DECISION O F M.P. HIGH COURT IN THE CASE OF GODAVARI CORPORATION LTD., 156 ITR 835 AND DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF PRAKASH INDUSTRIES LTD., 324 ITR 391. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ESCORTS LTD., 338 ITR 435 HELD THAT THE DECISION REGARDING NATURE OF TRANSACTION CONTINUED FOR NUMBE R OF YEARS CHANGE IN VIEW FOR A PARTICULAR YEAR WITHOUT ADEQUATE REASON NOT JUSTI FIED. SINCE IN THE CASE OF THE ASSESSEE, THE FACTS ARE IDENTICAL AS HAVE BEEN CONS IDERED IN THE EARLIER YEARS AND THE AO ACCEPTED THE SIMILAR CLAIM OF ASSESSEE OF DEDUCT ION U/S. 80IB OF THE IT ACT, ITA NO. 543/AGRA/2012 9 THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION BECAUSE NO CHANGE IN THE FACTS HAS BEEN BROUGHT ON RECORD. THE DEPART MENTAL APPEAL FAILS AND IS DISMISSED. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY