Income Tax Appellate Tribunal - Agra
Yogesh Anand, New Delhi vs Assessee on 23 October, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
AGRA BENCH, AGRA
BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
SHRI A.L. GEHLOT, ACCOUNTANT MEMBER
ITA No. 215/Agra/2011
Asstt. Year : 2006-07
Yogesh Anand, vs. The Commissioner of
Prop. M/s. Jennex International, of Income-tax, Gwalior.
Hirani Bhawan, Lala Ka Bazar,
Gwalior.(PAN: ABRPA 2746 D).
(Appellant) (Respondent)
Appellant by : Sh. Rajendra Sharma, Advocate
Respondent by : Sh. Waseem Arshad, Sr. D.R.
Date of hearing : 23.10.2012
Date of pronouncement of order : 23.11.2012
ORDER
Per Bhavnesh Saini, J.M.:
This appeal by the assessee is directed against the order of ld. Commissioner of Income-tax, Gwalior dated 24.03.2011 u/s. 263 of the IT Act for the assessment year 2006-07.
2. According to the office note, the appeal of the assessee is time barred by 11 days. The assessee filed application for condonation of delay explaining therein that the impugned order was served upon the Authorized Representative. The appeal memo was prepared by him and was dispatched to Delhi office of the 2 ITA No. 215/Agra/2011 assessee. Since the assessee was on business tour, therefore, the same could not be intimated to the assessee. Copy of invoice for ticket booking etc. was filed in the paper book. The assessee explained that the delay was caused due to visit of the assessee outside city. The ld. Counsel for the assessee, therefore, submitted that the assessee was able to explain the nominal delay due to reasonable cause. Therefore, the delay may be condoned. The ld. DR has no objection for condonation of delay in filing the appeal. Considering the explanation of the assessee and the nominal delay in filing the appeal within the period of limitation and the ld. DR has no objection for condonation of delay, we are of the view that the assessee has been able to explain the nominal delay in filing the appeal beyond the period of limitation. Accordingly, the delay in filing the appeal is condoned.
3. Briefly, the facts of the case are that the assessment in this case was framed u/s. 143(3) vide order dated 17.12.2008. The AO allowed claim of assessee for deduction u/s. 10B of the IT Act. The assessee is stated to be engaged in the business of marble stone export. The ld. CIT, however, found that the order of the AO is erroneous and prejudicial to the interest of Revenue. The ld. CIT(A) noted that the assessee has claimed that the unit owned by him is 100% export oriented unit processing natural stone slabs into counter laps, kitchen top, vanities mosaic tiles border etc. According to section 10B, profit derived by 100% export oriented 3 ITA No. 215/Agra/2011 unit shall be allowed as deduction, subject to the conditions specified therein, i.e., the undertaking manufacturing or producing any article or thing or computer software etc. The ld. CIT noted that in the case of M/s. Lucky Minmat (P) Ltd., 245 ITR 830 (SC), it was held that cutting of marble blocks into slabs & tiles does not amount manufacturing. Therefore, the assessee is not entitled for deduction u/s. 10B of the IT Act. Show cause notice u/s. 263 was issued. The assessee's reply is quoted in the impugned order, in which the assessee explained that he is running an industrial undertaking, which is 100% export oriented unit for manufacturing of granite tiles and mosaic tiles from slabs after cutting and polishing and intermediary process. The assessee has maintained proper books, which are audited and proper claim is made u/s. 10B of the IT Act. All the details were furnished before the AO as well as in the audit report. The undertaking of the assessee undergoes the process of cutting, lamination, rounding the tiles through CNC machine, polishing from the stage of purchase of slabs to the stage of export. The proceedings u/s. 263 of the IT Act have been initiated because of the audit objection. However, the decision of Hon'ble Supreme Court in the case of ITO vs. Arihant Tiles and Marbles (P) Ltd., 320 ITR 79 delivered on 02.12.2009 has not been looked into, which is in favour of the assessee, in which the decision in the case of M/s. Lucky Minmat (P) Ltd. (supra) has been considered. It was submitted 4 ITA No. 215/Agra/2011 that the facts in the case of M/s. Lucky Minmat (P) Ltd. (supra) are different. It was, therefore, submitted that the proceedings may be dropped. 3.1 The ld. CIT, however, did not accept the contention of the assessee in view of the decision in the case of M/s. Lucky Minmat (P) Ltd. (supra) and also noted that the AO did not make detailed enquiry on the issue u/s. 10B of the IT Act. Therefore, the order is erroneous in so far as prejudicial to the interest of Revenue and also relied upon the decision of Hon'ble Allahabad High Court in the case of Jagdish Kumar Gulhati vs. CIT, 269 ITR 71 and the decision of Hon'ble Delhi High Court in the case of J.B. Enterprises vs. CIT, 99 ITR 375 and set aside the assessment order directing the AO to examine the issue and complete the assessment afresh accordingly.
4. The ld. Counsel for the assessee reiterated the submissions made before the ld. CIT and submitted that the assessee is 100% export oriented undertaking manufacturing and producing different articles and as such, entitled for deduction u/s. 10B of the IT Act. Complete details have been explained in the audit report and the AO issued several notices at the stage of assessment and asked for the details of manufacturing and the production and the assessee explained all the details and his entitlement for deduction u/s. 10B of the IT Act. Copies of the same 5 ITA No. 215/Agra/2011 are filed in the paper book along with the scheme of the Government of India about 100% export oriented units. He has also referred to the notice of the AO dated 22.05.2008 (PB-40), in which the AO asked for detailed note on nature of business of assessee and the detailed note on deduction claimed u/s. 10B of the IT Act and its admissibility. The assessee filed reply to the same before the AO giving all the details and the explanation, how the assessee is entitled for deduction u/s. 10B of the IT Act. The ld. Counsel for the assessee referred to all the details in the paper book and submitted that the AO examined the issue in detail and rightly allowed deduction u/s. 10B of the IT Act. He has submitted that the proceedings u/s. 263 were initiated merely on audit objection. The facts in the case of M/s. Lucky Minmat (P) Ltd. (supra) are clearly distinguishable from the facts of the assessee and at the time of passing of the impugned order, the decision in the case of Arihant Tiles & Marbles (P) Ltd. (supra) was available, in which the point in issue has been decided in favour of the assessee. In the said decision, Hon'ble Supreme Court considered its earlier decision in the case of M/s. Lucky Minmat (P) Ltd. (supra). He has, therefore, submitted that since the AO took one of the possible view under the law, therefore, the order of the AO is not erroneous in so far as prejudicial to the interest of Revenue. On the other hand, the ld. DR relied upon the impugned order and submitted that the assessee is not entitled for deduction u/s. 10B of the IT Act.
6 ITA No. 215/Agra/2011
5. We have considered the rival submissions and the material on record. In sum and substance, the ld. CIT initiated the proceedings u/s. 263 of the IT Act, relying upon the decision in the case of M/s. Lucky Minmat (P) Ltd. (supra), in which it was held as under :
"No manufacturing process is involved in mining of limestones and marble blocks and cutting and sizing the same and, therefore, assessee engaged in such activities is not entitled to relief under s. 80HH."
5.1 The facts of this case are clearly distinguishable from the facts of the case of the assessee. Later on, Hon'ble Supreme Court, considering the above decision in the case of M/s. Lucky Minmat (P) Ltd. (supra), delivered the decision on 02.12.2009 in the case of ITO vs. Arihant Tiles & Marbles (P) Ltd., 320 ITR 79, in which it was held as under :-
"Conversion of marble blocks into polished slabs and tiles constitutes "manufacture or production" as it results in emergence of a new and distinct commodity and, therefore, assessees undertaking such activity are entitled to the benefit of s. 80IA."
5.2 The above decision squarely applies to the facts of the case and was available before the ld. CIT as well. Therefore, the ld. CIT should have considered the above decision in proper perspective instead of canceling the original assessment order in this case. Further, the assessee declared all the details in the 7 ITA No. 215/Agra/2011 audit report and its manufacturing process and how the assessee is entitled for deduction u/s. 10B of the IT Act. The AO called for the complete details at the assessment stage about the manufacturing process of the assessee and admissibility of the claim u/s. 10B of the IT Act. The assessee furnished complete details before the AO and satisfied the AO as to how the assessee was entitled for deduction u/s. 10B of the IT Act. The AO was satisfied with the explanation of the assessee and the material on record and granted deduction to the assessee u/s. 10B of the Act after verifying the claim of the assessee. The AO, therefore, verified the facts from the material on record and duly enquired into the claim of the assessee in detail before taking the view in favour of the assessee. Thus, the AO took one of the possible view in the matter in issue after making detailed enquiry on the claim of the assessee u/s. 10B of the IT Act. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 held -
"Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law."
5.3 Considering the above discussion, we are of the view that the AO made proper and detailed enquiry about the claim of deduction u/s. 10B of the IT Act 8 ITA No. 215/Agra/2011 and took one of the possible view as per law in favour of the assessee. If the CIT did not agree with the view of the AO, it could not be said that the assessment order was erroneous in so far as prejudicial to the interest of Revenue. The impugned order is entirely based upon the judgment in the case of M/s. M/s. Lucky Minmat (P) Ltd. (supra), which is later on considered by the Hon'ble Supreme Court in the case of ITO vs. Arihant Tiles & Marbles (P) Ltd. (supra), which is in favour of the assessee. Therefore, the order of the ld. CIT cannot be sustained in law. We accordingly, set aside the impugned order and restore the original assessment order dated 17.12.2008.
6. In the result, the appeal of the assessee is allowed.
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