Tea Promoters (India) Pvt. Ltd., Kolkata V. CIT, Kolkata - II, Kolkata

ITA 698/KOL/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70393 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 25-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 30-04-2009
• Court: TRIBUNAL
• Assessee Lawyers: N JAIN
• Section: 10B; 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . . . . . . . . , ,, , , ! '# ! '# ! '# ! '# ] ]] ] [BEFORE HONBLE SRI R.S.SYAL, AM & HONBLE SRI G EORGE MATHAN, JM] % % % % /ITA NO.698/KOL/2009 &#' ()/ ASSESSMENT YEAR : 2004-05 ('+ / APPELLANT ) - # - ( -.'+ /RESPONDENT) TEA PROMOTERS (INDIA) PVT. LTD. . C.I.T., KOLKATA -II KOLKATA KOLKATA (PAN:AADCT 0260 H) '+ / 0 / FOR THE APPELLANT: SHRI N.JAIN, CA -.'+ / 0 / FOR THE RESPONDENT: SHRI A.K.SINGH, CIT(DR) 1#2 / 3 /DATE OF HEARING : 13.11.2013 4( / 3 /DATE OF PRONOUNCEMENT : 13.11.2013. 5 / ORDER PER SHRI GEORGE MATHAN, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. C.I.T, KOLKATA-II PASSED U/S 263 OF THE IT ACT IN M. NO.CIT.KOL-II/U/ S 263/C-13/08-09/6093-95 DATED 13.03.2009 FOR ASSESSMENT YEAR 2004-05. 2. SHRI N.JAIN, CA APPEARED ON BEHALF OF THE ASSES SEE AND SHRI A.K.SINGH, CIT(DR) APPEARED ON BEHALF OF THE REVENUE. 3. AT THE TIME OF HEARING IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE IN THIS APPEAL WAS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY SUCCEEDI NG ASSESSMENT YEAR IN ITA NO.1189/KOL/2008 DATED 23.11.2012 WHEREIN THE COORD INATE BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS -: ITA NO.698/KOL/2009 TEA PROMOTERS (INDIA)PVT.LTD.. VS C.I.T.,KOL-II,KO LKATA A.YR.2004-05 2 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE I SSUE IN APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY ABOVE SPECIAL BENCH DECISION IN AS MUCH AS THE AUTHORITIES BELOW HAVE DECLINED EXEMPTION U/S 10B O N THE SHORT GROUND THAT THE BLENDING OF TEA DOES NOT AMOUNT TO MANUFACTURE OR P RODUCTION OF TEA FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 10B. THIS IS EVIDENT FROM T HE FOLLOWING OBSERVATIONS MADE BY THE CIT(APPEALS) IN HIS IMPUGNED ORDER :- 6. FROM THE DETAILS AND EVIDENCES WHICH WERE BROUG HT BEFORE ME AND BEFORE THE A.O. I FIND THAT THE APPELLANT IS BLENDING TEA WITH VARIOU S AGRICULTURAL PRODUCE AND SUBSTANCES OR MIXES IT WITH FRAGRANCES TO GIVE A DISTINCT FLAV OUR OR SCENT OR TASTE SO THAT DIFFERENT AROMA AND FLAVOUR IS EXPERIENCED BY THE CONSUMERS. HOWEVER, IN SPITE OF BLENDING OF TEA WITH THESE PRODUCE, SUBSTANCES, AND FRAGRANCE, THE COMMERCIAL PRODUCT WHICH IS PURCHASED BY THE CONSUMER IS TEA. AN ORDINARY CON SUMER DOES NOT PURCHASE THE PRODUCE MERELY FOR FLAVOUR OR AROMA OF THE ADDITIVE USED IN BLENDING, BUT THE PRODUCT IS PURCHASED PRIMARILY FOR ITS TEA CONTENT. IT MAY BE SO THAT THE APPELLANT MAY MARKET ITS PRODUCT AS FLAVOURED TEA BUT THE PRODUCT GETS MARKE TED MAINLY BECAUSE OF THIS TEA COMPONENT INCLUDED IN THE FINAL PRODUCT. EVEN AFTER BLENDING OF TEA WITH OTHER SUBSTANCES THE DOMINANT COMPONENT OF THE END PRODUC T IS TEA AND FOR A COMMON CONSUMER THE PRODUCT IS SOLD & MARKETED AS BLENDED OR SCENTED OR FLAVOURED TEA. IN MY OPINION THEREFORE, THE FINAL PRODUCT IS KNOWN TO TH E TRADE & COMMERCE AND CROSS SECTIONS OF THE CONSUMERS AS TEA & NOT AS A DIFFERE NT OR DISTINCT PRODUCT BECAUSE OF THE ADDITIVES USED IN BLENDING. 7. IN THE APPELLATE PROCEEDINGS THE A/R FOR THE APP ELLANT COULD NOT BRING BEFORE ME ANY EVIDENCE WHICH COULD PERSUADE ME TO TAKE A .VIEW CO NTRARY TO THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS TARA AGENCIES ( SUPRA). NO MATERIAL WAS BROUGHT ON RECORD TO DEMONSTRATE THAT THE ACTIVITIES CARRIE D ON BY THE APPELLANT AMOUNTED TO MANUFACTURE OR PRODUCTION OF A NEW ARTICLE OR THING . HE DID NOT ESTABLISH THAT THE END, PRODUCT EXPORTED BY THE APPELLANT WAS KNOWN OR RECO GNIZED BY THE TRADE OR BY CONSUMERS OTHERWISE THAN AS TEA OR THAT THE END P RODUCT WAS CONSUMED BY THE CUSTOMERS FOR THE DISTINCTIVE FEATURES OF THE BLEND ED PRODUCT. 8. IN THE LIGHT OF THE ABOVE FACTS AND EVIDENCES A S WERE MADE AVAILABLE TO ME, I AM OF THE CONSIDERED VIEW THAT THE FINAL PRODUCT EXPORTED BY THE APPELLANT IN THE INTERNATIONAL MARKET CONTINUED TO REMAIN TEA AS ITS DOMINANT COM PONENT AND THE END PRODUCT WAS KNOWN TO THE CONSUMER AS BLENDED TEA WHICH DID NOT HAVE SEPARATE & DISTINCT IDENTITY OR USE FROM THE PRINCIPAL RAW-MATERIAL, I..E TEA. MERE LY BECAUSE THE APPELLANTS PRODUCT ENJOYS DIFFERENT FRAGRANCE OR SCENT OR AROMA AS COM PARED WITH BLACK TEA IN ITS ORIGINAL FORM DID NOT ALTER THE FACT THAT THE END C ONSUMER PURCHASED THE APPELLANTS PRODUCT FOR THE PURPOSE OF CONSUMPTION OTHERWISE TH AN AS TEA PREPARATION. IN MY OPINION, THEREFORE, THE RATIO LAID DOWN BY THE SUPR EME COURT IN THE CASE OF TARA AGENCIES (SUPRA) IS EQUALLY APPLICABLE BECAUSE U/S 10B(2) OF THE ACT THE DEDUCTION IS PERMISSIBLE ONLY IF AN ASSESSEE IS ENGAGED IN MANUF ACTURE OR PRODUCTION OF AN ARTICLE OR THING. I, THEREFORE, HOLD THAT THE APPELLANT WAS NO T ENTITLED TO CLAIM DEDUCTION U/S 10B OF THE ACT. 9. THE APPELLANTS RELIANCE ON THE DEFINITION OF E XPRESSION MANUFACTURE CONTAINED IN THE SPECIAL ECONOMIC ZONES ACT, 2005 IS ALSO MISPLA CED. THE WORD MANUFACTURE OR PRODUCTION OF AN ARTICLE HAS BEEN INTERPRETED BY T HE SUPREME COURT FOR THE PURPOSE OF GRANTING BENEFICIAL DEDUCTIONS UNDER THE INCOME-TAX ACT IN ITS VARIOUS DECISIONS. IN PARTICULAR THE SUPREME COURT CONSIDERED AND INTERPR ETED THE SAID EXPRESSION IN RELATION TO DEDUCTION ALLOWABLE UNDER THE INCOME-TAX ACT TO AN ASSESSEE ENGAGED IN EXPORT OF BLENDED TEA. ON ANALYZING THE FACTS & VARIOUS STAGE S INVOLVED IN BLENDING OF TEA THE ITA NO.698/KOL/2009 TEA PROMOTERS (INDIA)PVT.LTD.. VS C.I.T.,KOL-II,KO LKATA A.YR.2004-05 3 SUPREME COURT HELD THAT BLENDING OF TEA DID NOT AMO UNT TO MANUFACTURE OR PRODUCTION OF NEW ARTICLE. IN THE CASE DECIDED BY THE SUPREME COURT THE ASSESSEE HAD BLENDED DIFFERENT VARIETIES OF TEA. IN THE PRESENT CASE, HO WEVER, THE ASSESSEE BLENDED TEA WITH OTHER PRODUCE & SUBSTANCES SUCH AS ORANGE, JASMINE, LEMON, STRAWBERRY ETC AND ALSO ADDED FRAGRANCE MISCHIEF OR VARIETIES OF FLAVOURS OR SPICES TO GIVE DIFFERENT AROMA OR TASTE. IN MY OPINION, HOWEVER, MERELY BECAUSE SOME MORE INGREDIENTS WERE BLENDED WITH VARIETIES OF TEA DID NOT MATERIALLY CHANGE OR ALTER THE FACTS OF THE CASE BECAUSE THE PRODUCT EXPORTED CONTINUED TO BE MARKETED AS PRODU CE OF TEA. IN MY OPINION, THE DECISION OF THE SUPREME COURT IN THE CASE OF TARA A GENCIES (SUPRA) IS EQUALLY APPLICABLE TO THE PRESENT CASE. I, THEREFORE, UPHOL D THE ORDER OF THE A.O. REJECTING THE APPELLANTS CLAIM FOR DEDUCTION U/S 10B OF THE I.T. ACT. GROUND NOS. 1,2 & 3 ARE, THEREFORE, REJECTED. 4. LEARNED CIT(APPEALS) HAS MAINLY RELIED UPON HO NBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT VS TARA AGENCIES (292 ITR 444). HOWEVER, EVEN AFTER CONSIDERING THIS DECISION, HONBLE SPECIAL BENCH, AS INDEED HONBLE KERALA HIGH COURT AS REFERRED TO IN THE SPECIAL BENCH DECISION, HAS HELD THAT BLENDI NG OF TEA DOES AMOUNT TO MANUFACTURE OR PRODUCTION OF TEA FOR THE PURPOSE OF EXEMPTION U /S 10B. WE HAVE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY HIGHER TIERS IN JUDICIAL HIERARCHY. RESPECTFULLY FOLLOWING THE SPECIAL BENCH DECISION ( SUPRA), AND IN VIEW OF AGREED POSITION THAT THE ISSUE IS COVERED BY THE SPECIAL B ENCH DECISION, WE UPHOLD THE CLAIM OF THE ASSESSEE. THE ASSESSEE GETS THE RELIEF ACCORDIN GLY. 4. IN REPLY THE LD. DR SUBMITTED THAT THE ASSESSEE WAS NOT ONLY BLENDING TEA BUT WAS ALSO HAVING EXPORT OF SPICES AND OTHER ITEMS. I T WAS THE SUBMISSION THAT ORDER PASSED U/S 263 OF THE ACT WAS LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF ORDER PASSED U./S 263 OF THE ACT WHICH IS THE SUBJECT MATTER OF THE APPEA L BEFORE US CLEARLY SHOWS THAT THE LD. CIT HAS INVOKED HIS POWERS U/S 263 OF THE ACT ONLY IN RESPECT OF THE ISSUE OF BENEFIT OF DEDUCTION U/S 10B OF THE ACT IN RESPECT OF BLEND ING OF DIFFERENT TYPES OF TEA. IT IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY SUCCEEDING YEAR. IN THE CIRCUMSTANCES RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY SUCCEEDING YEAR ORDER PASSED U/S 263 OF THE ACT STANDS QUASHED AND THE APPEAL OF THE ASSESSEE I S ALLOWED. ITA NO.698/KOL/2009 TEA PROMOTERS (INDIA)PVT.LTD.. VS C.I.T.,KOL-II,KO LKATA A.YR.2004-05 4 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.11.2013. SD/- SD/- [ . . , ] [ . ! '# , ] [R.S.SYAL] [ GEOR GE MATHAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( (3 3 3 3) )) ) DATE: 13.11.2013. R.G.(.P.S.) 5 / -&&6 76(8- COPY OF THE ORDER FORWARDED TO: 1. TEA PROMOTERS (INDIA)PVT. LTD., 30, J.L.NEHRU ROAD, KOLKATA-700016. 2 C.I.T., KOLKATA-II, KOLKATA. 3 . CIT KOLKATA 4. CIT(A)- KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA .6 -&/ TRUE COPY, 5#1/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES