Income Tax Appellate Tribunal - Delhi
U.S. Granite, New Delhi vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H' : NEW DELHI
BEFORE SHRI A.D.JAIN, JM AND SHRI R.C.SHARMA, AM
ITA No.3212/Del/2010
Assessment Year : 2007-08
Asstt.Commissioner of Vs. M/s U.S.Granite,
Income Tax, 2A, Shankar Market,
Circle-23(1), Connaught Circus,
New Delhi. New Delhi.
PAN No.AABFU0211E.
(Appellant) (Respondent)
Appellant by : Shri Amrendra Kumar, Sr.DR.
Respondent by : Shri S.D.Kapila and Shri R.R.Maurya,
Advocates.
ORDER
PER R.C.SHARMA, AM :
This is an appeal filed by the Revenue against the order of CIT(A) dated 29.4.2010 for the AY 2007-08, in the matter of order passed u/s 143(3) of the IT Act, wherein following ground has been taken by the Revenue :-
"On the facts and on the circumstances of the case the ld.CIT(A) has erred in law and on the facts in deleting the disallowance of Rs.1,97,89,776/- claimed by the assessee as deduction u/s 10B of the I.T.Act."
2. At the outset, learned AR placed on record the order of the Tribunal in assessee's own case wherein exactly similar issue has been decided in favour of the assessee for the AY 2006-07, order dated 30.9.2009.
3. On the other hand, learned DR Shri Amrendra Kumar vehemently contended that the Finance Act 2009 has inserted Section 2(29BA) w.e.f. 1.4.2009 to widen the definition of manufacture/production. As per learned DR, after insertion of sub-section 2(29BA), the definition of the word "production" has been 2 ITA-3212/Del/2010 widened. He further submitted that even though Section 2(29BA) was inserted w.e.f. 1.4.2009, but in terms of decision of Hon'ble Kerala High Court reported at 36 DTR 402, the amendment is retrospective and therefore applicable even for the AY 2007-08 under consideration.
4. We have considered the rival contentions and gone through the orders of the authorities below. The issue as to whether assessee firm engaged in the business of manufacture and export of granite and marble monuments was eligible for claim of deduction u/s 10B, has been considered by the Tribunal and after applying the decision of Hon'ble Supreme Court in the case of India Cine Agencies - 308 ITR 98, the Tribunal in its order dated 30.9.2009 for the AY 2006- 07, held as under:-
"3.4 We have considered the rival contentions in the light of material placed before us and also gone through the orders of the authorities below. From the record we found that assessee was engaged in business of manufacturing and export of granite marbles and granite monuments. For this purpose, the assessee used to procure rough blocks from queries, then these are the dressed, cut into slabs. Which are then resined and polished to give slabs etc. 3.5 Monuments were also manufactured out of granite and marbles which are distinctly different from marbles and granite so cut and polished were used for construction. Manufacturing by the assessee involved the following process:-
1. Blocks are cut for slabs by Gangsaw.
2. The next process is grinding.
3. After grinding, resin is applied to seal cracks etc.
4. The next process is polishing.
5. After polishing, trimming is done.
6. Packing as per customer requirement.
7. New material ready to export and sale.
3.6 After carrying out these operations, the following are the different types of products which are sold to the clients as per their requirements:-
1. Polished granite table - tops
2. Polished granite tiles.
3. Polished granite slabs.
4. Polished granite monuments.
3 ITA-3212/Del/2010
5. Polished granite for cut to size projects.
3.7 These finished products are absolutely different from the rough blocks of the granites procured which is being converted into different types of products and then sold by the assessee firm. Thus, the out put of the finished product is totally a different commercial product as compared to the raw granite blocks which constituted the input.
3.8 The relevant assessment year under consideration, is 2006-07, while disallowing the assessee's claim of deduction u/s 10B, the Assessing Officer has ignored explanation-4 of Section 10B, which was inserted by Finance Act, 2003 and is effective from 01.04.2004 and clarifies that "manufacture or produce" in relation to 10B "shall include cutting and polishing of precious and semi precious stones". The case law referred by the Assessing Officer pertains to the assessment year prior to the insertion of Explanation-4 of section 10B, therefore, not relevant at all. A detailed finding has been recorded by learned CIT(A) after dealing with all the case laws referred by the Assessing Officer, and after referring to the recent judicial pronouncements as well as decision of Hon'ble Supreme Court in the case of Cine Agencies (supra) wherein concept of manufacture of the production has been elaborately dealt with. It was held by Hon'ble Supreme Court that once the goods that emerged after several steps of processing has a distinct name, use and character, the same ought to be considered as manufacture. The moment there is transformation into an new commodity commercially known as a distinct and separate commodity having its own character its use and name, the same has to be considered as manufacture.
3.9 In view of the above discussion and keeping in view the detailed finding recorded by the CIT(A), which could not be controverted by DR, we do not find any infirmity in his order."
5. It is clear from the above that marble and granite monuments manufactured out of granite and marble blocks were different from marbles and granites. The activity of assessee was held to be manufacture for the purpose of claim of deduction u/s 10B. With regard to objection of the learned DR that situation has changed after insertion of Section 2(29BA) vide Finance Act, 2009, which is retrospective in view of the decision of Hon'ble Kerala High Court reported at 36 DTR 402, we are unable to agree with this contention of learned DR insofar as this amendment has already been considered by the Hon'ble Supreme Court in the case 4 ITA-3212/Del/2010 of Aryan Tiles & Marbles - 320 ITR 79 wherein this amendment was considered and Hon'ble Supreme Court observed that in view of the numerous judgments of Courts with regard to definition of word "production" which is wider in scope as compared to the word "manufacture", the Parliament itself has taken note of the ground reality and has amended the provisions of Income-tax Act, 1961 by inserting Section 2(29BA) vide Finance Act 2009 w.e.f. 1.4.2009. Thus, no question arises for treating this amendment as retrospective in nature.
6. As the issue is squarely covered by the order of the Tribunal in assessee's own case for the immediately preceding assessment year, we do not find any reason to interfere in the order of CIT(A) who has followed the order of the Tribunal in its order dated 29.4.2010.
7. In the result, the appeal of the Revenue is dismissed.
Decision pronounced in the open Court on 20th October, 2010.
Sd/- Sd/-
(A.D.JAIN) (R.C.SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 20.10.2010.
VK.
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
5 ITA-3212/Del/2010