ACIT CIR 20(1), MUMBAI V. KARGWAL CORPORATION, MUMBAI

ITA 7276/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8947 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 25-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEERAJ PRADHAN
• Keywords: Business income
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.7276/MUM/2010 ASSESSMENT YEAR: 2007-08 ACIT, CIRCLE 20(1), 603, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-012. M/S. KARGWAL CORPORATION, A-403/404, SKYPAN CO.OP. HSG. SOC. LTD., OBEROI COMPLEX, ANDHERI(W), MUMBAI-400 053 PA NO.AADFK 9973 F (APPELLANT) VS. (RESPONDENT) APPELLANT BY : MS NEERAJ PRADHAN RESPONDENT BY: NONE DATE OF HEARING: 23.8.2012 DATE OF PRONOUNCEMENT: 5 .9.2012 ORDER PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2007-08 AGAINST ORDER DATED 13.8.2010 OF LD CIT(A)-31, MUMBAI ON FOLLOWI NG GROUNDS: 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN ALLOWING RS.15,12,426 AS DEDUCTION U /S.80IB OF THE I.T.ACT, 1961 CONSIDERING THE ASSESSEES ACTIVITY AS MANUFAC TURE. 2. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN TREATING THE JOB WORK CHARGES OF RS. 48,70,898 AS REGULAR BUSINESS INCOME AND TREATING IT AS ELIGIBLE FOR DED UCTION U/S. 80IB OF THE ACT, 1961. 3. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN MAKING ADDITION OF RS.18,022 ON ACCO UNT OF CASH EXPENSES. 2. THE NOTICE OF HEARING SENT TO THE RESPONDENT-ASS ESSEE HAS BEEN RECEIVED BACK UNSERVED BY THE POSTAL AUTHORITIES. HENCE, NO ONE APPEARED ON BEHALF OF RESPONDENT- ASSESSEE. IN VIEW OF THIS, WE PROCEED TO DECIDE TH E APPEAL OF REVENUE EXPARTE QUA RESPONDENT-ASSESSEE AFTER HEARING LD D.R. AND ON TH E BASIS OF MATERIAL ON RECORD. ITA NO.7276/MUM/2010 ASSESSMENT YEAR: 2007-08 2 3. AT THE TIME OF HEARING, LD D.R. IN RESPECT OF AL L THE GROUNDS RELIED ON ORDER OF ASSESSING OFFICER. 4. WE HAVE CONSIDERED SUBMISSIONS OF LD D.R. AND OR DERS OF AUTHORITIES BELOW. WE OBSERVE THAT ASSESSEE, A PARTNERSHIP FIRM IS ENGAGE D IN THE BUSINESS OF CUTTING AND POLISHING OF MARBLE BLOCKS AND SLABS. 5. IN RESPECT OF GROUND NO.1 OF APPEAL, THE AO STAT ED THAT CUTTING AND POLISHING OF MARBLE BLOCKS AND MARBLE SLABS DO NOT AMOUNT TO MAN UFACTURING OR PRODUCTION OF ANY ARTICLE OR THING. THEREFORE, ASSESSEE IS NOT ENTIT LED FOR DEDUCTION U/S. 80IB OF THE ACT. HOWEVER, LD CIT(A) BY FOLLOWING HIS OWN ORDER DATED 5.11.2009 FOR ASSESSMENT YEAR 2005-06 IN ASSESSEES OWN CASE AND ORDER DATED 24. 12.2009 FOR ASSESSMENT YEAR 2006- 07 AND ALSO CONSIDERING THE DECISION OF ITAT IN THE CASE OF AAKASH STONE INDUSTRIES LTD VS CIT (I.T.A. NO.2968/M/2004 ORDER DT.9.8.2006) AN D THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ARIHANT TILES & MARBLES P VT LTD VS. ITO, 295 ITR 148(RAJ), WHICH HAS BEEN UPHELD BY HONBLE SUPREME COURT IN ( CIVIL APPEAL NO.8036 OF 2009 DT.2.12.2009) HELD THAT ASSESSEE IS ENTITLED FOR DE DUCTION U/S. 80IB OF THE ACT. DURING THE COURSE OF HEARING, AS MENTIONED HEREINABOVE, LD D.R. HAS NOT DISPUTED ABOVE FINDINGS OF LD CIT(A) SAVE AND EXCEPT RELYING ON OR DER OF AO AND, THEREFORE, WE UPHOLD THE ORDER OF LD CIT(A) AND REJECT GROUND NO.1 OF AP PEAL TAKEN BY THE DEPARTMENT. 6. IN RESPECT OF GROUND NO.2 OF APPEAL, AS TO WHETH ER ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB OF THE ACT IN RESPECT OF JOB WOR K CHARGES OF RS.48,70,898, WE OBSERVE THAT AO HAS STATED THAT JOB WORKS AMOUNTING TO RS.48,70,898 HAS NO DIRECT NEXUS WITH THE MANUFACTURING ACTIVITY OF THE ASSESS EE AND, THEREFORE, SAME IS TREATED AS ITS INCOME FROM OTHER SOURCES. HOWEVER, LD CIT(A) BY FOLLOWING HIS ORDERS OF THE PRECEDING ASSESSMENT YEARS IN ASSESSEES OWN CASE F OR ASSESSMENT YEARS 2005-06 AND 2006-07 DIRECTED THE AO TO TREAT THE ENTIRE JOB WOR KS AS ITS BUSINESS INCOME. DURING THE COURSE OF HEARING, LD D.R. HAS NOT DISPUTED ABO VE OBSERVATIONS OF LD CIT(A). MOREOVER, ABOVE ISSUE IS COVERED BY THE DECISION O F HONBLE P&H HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. IMPEL FORGE AND ALLIE D INDUSTRIES LIMITED, 326 ITR 27(P&H) IN FAVOUR OF ASSESSEE . THEREFORE, WE UPHOLD THE ORDER OF LD CIT(A) AND REJECT GROUND NO.2 OF APPEAL TAKEN BY DEPARTMENT. ITA NO.7276/MUM/2010 ASSESSMENT YEAR: 2007-08 3 7. IN RESPECT OF GROUND NO.3 OF APPEAL, WE OBSERVE THAT SAID GROUND IS NOT FACTUALLY CORRECT AS LD CIT(A) IN PARA 5.3 OF THE IMPUGNED HA S CONFIRMED THE DISALLOWANCE OF CASH EXPENSES AMOUNTING TO RS.18,022. THEREFORE, GROUND NO.3 OF APPEAL TAKEN BY DEPARTMENT IS REJECTED. 8. IN THE RESULT, APPEAL FILED BY DEPARTMENT IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2012 SD/- (B.RAMAKOTAIAH ) ACCOUNTANT MEMBER SD/ (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 5 TH SEPTEMBER, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),31, MUMBAI 4. COMMISSIONER OF INCOME TAX,20 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI