ITO, New Delhi V. M/s. GVC Systems (P) Ltd., New Delhi

ITA 6290/DEL/2012

• Counselvise Citation: 629020114 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: DILIP BHATIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO: 6290/DEL/2012 AY : - 2007-08 ITO VS. M/S. GVC SYSTEMS (P) LTD. WARD 12(3) R-203, AGGARWAL CHAMBER-IV NEW DELHI. 27, VEER SAVARKAR BLOCK, VIKAS MARG, NEW DELHI 110 092 (PAN AACCG0779K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.VASANTHAN, SR. DR RESPONDENT BY : SHRI DILIP BHATIA, CA DATE OF HEARING : 18.5.2015 DATE OF PRONOUNCEMENT : 02.0 6.2015 O R D E R PER G.C. GUPTA, VICE PRESIDENT THIS IS AN APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08 DIRECTED AGAINST THE ORDER OF LD. CIT(A). THE ONLY GROUND OF APPEAL OF THE REVENUE IS AS UNDER :- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DE LETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ASSESSEES CLAIM OF DE DUCTION U/S 80IC(2)A(II) AT RS. 10,45,816/-. 2. LD. DR SUBMITTED THAT THE BUSINESS OF ASSESSE E IS TO DESIGN AND PROVIDE SOFTWARE AND ELECTRONIC HARDWARE FOR INDUSTRIAL USE . HE SUBMITTED THAT THE BUSINESS OF PROVIDING TRAINING AND DESIGNING DO NOT COVER UN DER THE PROVISION OF SECTION 80-IC (2) (A) (II) OF THE ACT. HE SUBMITTED THAT THE ASSE SSEE WAS NOT IN THE BUSINESS OF ITA NO. 6290/DEL/2012 ITO VS. G VC SYSTEMS (P) LTD. 2 MANUFACTURING OR PRODUCING ANY ARTICLE OR THING. HE RELIED ON THE ORDER OF THE AO. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSEE WAS IN THE BUSINESS OF DESIGN AND PROVIDE IN CUSTOMIZED SOFTWARE AND ELECTRONIC HARDWARE FOR INDUSTRIAL USE AND THEREFORE WAS ELIGIBLE FOR DEDUCTION U/S 80 -IC (2) (A) (II) OF THE ACT. HE SUBMITTED THAT THE AO IN THE LAST PARA OF HIS ORDER HAS ADMITTED THAT ASSESSEE WAS OF THE BUSINESS OF CUSTOMIZED SOFTWARE. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE END PRODUCT IS DIFFERENT AND THE PURCHASES AND SALES ARE ALTOGETHER DIFFERENT AND THAT THE HARDWARE AND SOFTWARE WERE BEING DESIGNED ACCORDING TO THE NEEDS OF THE CUSTOMERS. THE SAME WERE INSTALLED IN THE PREMISES OF THE CUSTOMER AND ALSO TRAINS THEM REGARDING THE HUGE HARDWARE AND SOFTWARE WHICH HAS BEEN INSTALLED. HE REFERRED TO THE RELEVANT PORTION OF THE ORDER OF TH E CIT(A) WHEREIN DETAILED REASONS WERE GIVEN BY THE CIT(A) WHO ARRIVED AT THE CONCLUS ION THAT THE ACTIVITY OF THE ASSESSEE FALLS UNDER THE DEFINITION OF MANUFACTURE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND HAVE PERUSED THE ORDER OF THE AO AND CIT(A). WE FIND THAT THE ASSESSEE WAS ENGAGE D IN THE BUSINESS OF MANUFACTURING AND SALE OF CUSTOMIZED ELECTRONICS PA RTS ALONGWITH SOFTWARE AND FOR SALE. THE HUGE HARDWARE AND SOFTWARE WERE DESIGNED ACCORDING TO THE NEEDS OF THE CUSTOMERS. THE CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE AFTER DESIGNING THE REQUIRED SOFTWARE AND HARDWARE INSTALLED THE SAME I N THE PREMISES OF ITS CUSTOMERS AND ALSO TRAINS THEM REGARDING THE HUGE HARDWARE AN D SOFTWARE WHICH HAS BEEN INSTALLED. THE CIT(A) HAS FURTHER RECORDED THAT THE ASSESSEE WAS PURCHASING RAW MATERIAL IN THE FORM OF PCB, INTEGRATED CIRCUIT, MI CRO CONTROLLER AND OTHER ELECTRONICS PART WHICH ARE THEN DEVELOPED INTO A FINAL PRODUCT ACCORDING TO THE NEED OF THE CUSTOMERS. THE ASSESSEE HAS DEVELOPED AND SOLD THE PRODUCT WHICH CONTROLS THE ITA NO. 6290/DEL/2012 ITO VS. G VC SYSTEMS (P) LTD. 3 BUILDING ELEVATOR, LIFT SECURITY SYSTEMS ETC. THE CIT(A) HAS RECORDED A FINDING THAT THE FINISHED PRODUCT WAS ENTIRELY DIFFERENT FROM TH E RAW MATERIAL PURCHASED. THE CIT(A) HAS FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORACLE SOFTWARE INDIA LTD. 320 ITR 546. IN THESE FA CTS OF THE CASE WE ARE OF THE VIEW THAT SINCE INPUT AND OUTPUT OF THE ASSESSEE WA S ENTIRELY DIFFERENT PRODUCTS AND THE FINAL PRODUCT WAS MANUFACTURED AFTER USING DIFF ERENT HARDWARE AND SOFTWARE AND THE FINISHED PRODUCT BEING DIFFERENT FROM THE RAW M ATERIAL PURCHASED BY THE ASSESSEE, CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ACTIVITY CARRIED OUT BY THE ASSESSEE DEFINITELY FALLS UNDER THE DEFINITION OF MANUFACTUR E AND THEREFORE WAS ENTITLED TO THE DEDUCTION. IN THIS VIEW OF THE MATTER, WE CONFIRM T HE ORDER OF THE CIT(A) AND GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 4. IN THE RESULT APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.06.2015. SD/- SD/- (T.S. KAPOOR) (G.C. GUPTA) ACCOUNTANT MEMBER VICE PRESIDE NT DATED: 02.06.2015 *VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR ITA NO. 6290/DEL/2012 ITO VS. G VC SYSTEMS (P) LTD. 4 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 18.5.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 19.5.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER