ITO 20(3)(3), MUMBAI v. SAI ENTERPRISES, MUMBAI

ITA 1614/MUM/2010 | 2003-2004
Pronouncement Date: 28-01-2011 | Result: Dismissed

Appeal Details

RSA Number 161419914 RSA 2010
Assessee PAN AANFS2478P
Bench Mumbai
Appeal Number ITA 1614/MUM/2010
Duration Of Justice 10 month(s) 27 day(s)
Appellant ITO 20(3)(3), MUMBAI
Respondent SAI ENTERPRISES, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-01-2011
Assessment Year 2003-2004
Appeal Filed On 03-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J. SUDHAKAR REDDY A.M. AND SHRI V. DU RGA RAO J.M. ITA NO. 1614/M/2010 ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER 20(3)(3) APPELLANT 5 TH FLOOR ROOM NO. 521 LALBAUG PIRAMAL CHAMBERS PAREL MUMBAI 400 012. VS. M/S SAI ENTERPRISES RESPONDENT C/O LADHA & LADHA. C.AS. 3/312 NAVJIVAN SOCIETY LAMINGTON ROAD MUMBAI 400 008. (PAN AANFS2478P) APPELLANT BY : MR. JITENDRA YADAV RESPONDENT BY : MR. ASHOK SHARMA . ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- 31 MUMBAI PASSED ON 29/12/2009 FOR THE AS SESSMENT YEAR 2003-04. 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE ACTION OF THE CIT(A) IN DELETING THE PENALTY OF RS. 33 29 223/- LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME ON 28/11/2003 DECLARING A GROSS TOTAL INC OME OF RS. ITA NO. 1614/M/10 M/S SAI ENTERPRISES. 2 90 59 108/- AND AFTER COMPUTING DEDUCTION U/S 80 IB NIL INCOME WAS SHOWN. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF T HE ACT DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. 90 59 110/-.DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ASKED T HE ASSESSEE TO EXPLAIN AS TO HOW THE CONVERSION OF MARBLE BOULDERS INTO MARBLE SLABS AMOUNTED TO MANUFACTURING ACTIVITY SO AS TO QUALITY FOR DEDUCTION U/S 80IB AND ALSO TO EXPLAIN THE ALLOWABILITY OF ITS CO NSEQUENTIAL CLAIM MADE U/S 80IB OF THE ACT. IN REPLY THE ASSESSEE SU BMITTED A DETAILED REPLY ON THE SAME AND CONTENDED THAT THE ACTIVITY O F CONVERSION OF MARBLE BOULDERS INTO MARBLE SLABS IS ACTUALLY A MAN UFACTURING ACTIVITY AND RELIED UPON SEVERAL JUDGMENTS. THE AO REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND DISALLOWED THE ENTIRE C LAIM OF THE ASSESSEE OF RS. 90 59 110/- CLAIMED U/S 80IB OF THE ACT. THE CIT(A) CONFIRMED THE ACTION OF THE AO. THEREAFTER THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASS ESSEE HAD FURNISHED IN ACCURATE PARTICULARS OF INCOME AND THEREFORE H E LEVIED A PENALTY OF RS. 33 29 223/- U/S 271(1)(C) OF THE ACT. 4. BEFORE THE CIT()A) THE LEARNED AR OF THE ASSESS EE SUBMITTED THAT THE QUANTUM APPEAL FILED AGAINST THE ORDER OF CIT(A) WAS ADJUDICATED BY THE ITAT WHEREIN THE ITAT SET ASIDE THE ORDER OF CIT(A) AND RESTORED THE SAME FOR PASSING A FRESH ORDER TO THE FILE OF CIT(A). THE LEARNED CIT(A) VIDE HIS ORDER DATED 24/07/2009 ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IN IN ITS TOTALITY. THEREFORE THE LEARNED AR OF THE ASSESSEE CONTENDED THAT THE DISALLOWANCE ITSELF IS NOT THERE THE PENALTY LEVIED ON THE SAME CANNOT SURVIVE. AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A) CANCELLED T HE PENALTY LEVIED BY THE AO ON THE GROUND THAT THE SINCE THE ENTIRE Q UANTUM ADDITION BASED ON WHICH THE PENALTY LEVIED IS DELETED I FIN D THAT THERE EXISTS NO GROUND FOR THE SUBSTANTIABILITY OF THE PENALTY. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 1614/M/10 M/S SAI ENTERPRISES. 3 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. AGAINST THE ORDER OF CIT(A) DAT ED 24/07/2009 WHEREIN HE DELETED THE DISALLOWANCE MADE BY THE AO U/S 80IB THE REVENUE FILED AN APPEAL BEFORE THE ITAT VIDE ITA NO S. 5645 & 5646/MUM/09 FOR ASSESSMENT YEARS 2003-04 AND 2005-0 6. THE ITAT DISMISSED THE APPEALS OF THE REVENUE BY OBSERVING A S UNDER:- 2. WE HAVE HEARD THE PARTIES. THE ASSESSEE IS ENGAG ED IN THE MANUFACTURING OF MARBLE SLABS FROM MARBLE BLOCKS/ B OULDERS AND MARBLE PRODUCTS IN ITS SSI UNIT AT SILVASA. THE ASS ESSEE CLAIMED THE DEDUCTION U/S 80IB WHICH WAS EQUIVALENT TO 100 % OF ITS TOTAL INCOME OF RS. 90 59 108/- IN THE ASSESSMENT YEAR 20 03-04 AND RS. 12 89 709/- IN THE ASSESSMENT YEAR 2005-06. THE AO DENIED THE DEDUCTION TO THE ASSESSEE. HE WAS OF THE OPINIO N THAT THE ASSESSEES ACTIVITY OF CUTTING AND POLISHING OF MAR BLE BOULDERS CANNOT BE TREATED AS MANUFACTURING OR PRODUCTION. I N THE OPINION OF THE AO MERELY SUBJECTING THE MARBLE BOULDERS TO THE PROCESS OF CUTTING OR EVEN BY PART POLISHING BY THE ASSESSEE C ANNOT BE TREATED AS MANUFACTURING OR PRODUCTION TO QUALIFY F OR DEDUCTION U/S 80IA/80IB. THE AO RELIED ON THE DECISIONS OF HO NBLE SUPREME COURT IN THE CASES OF GOMATESH GRANITIES (2 006) 246 ITR 737 CIT VS. VIJAY GRANITES PVT. LTD. 267 ITR 606 CIT VS. LUCKY MINMATES 245 ITR 830 ETC. THE AO THEREFORE BROUGH T TO TAX THE ENTIRE NET PROFIT DISALLOWING THE CLAIMED DEDUCTION U/S 80IB. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A) AN D FOUND FAVOUR. NOW THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL SUBMITTED THAT NOW THIS ISSUE ST ANDS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN FAVOUR OF THE ASSESSEE IN THE CASE OF ITO VS. ARIHA NT TILES & MARBLES (P) LTD. 320 ITR 79/186 TAXMAN 439 (SC). W E HAVE ALSO HEARD THE LD. DR. IN THE CASE OF ARIHANT TILES & MA RBLES (P) LTD. (SUPRA) THE HONBLE SUPREME COURT AFTER CONSIDERIN G THE DECISION IN THE CASE OF CIT VS. SESA GOA LTD. 271 ITR 331 ( SC) CIT VS. BUDHARAJA & CO. 204 ITR 412 (SC) AND DISTINGUISHIN G DECISION IN THE CASE OF LUCKY MINMAT (P.) LTD. VS. CIT 162 CTR 404 (SC) AND AMAN MARBLE INDUSTRIES (P.) LTD. VS. COLLECTOR OF CENTRAL EXCISE (2003) 157 ELT 393 (SC) HELD THAT A CONVERSION OF M ARBLE BLOCKS INTO POLISHED SLABS AND TILES AMOUNT TO A MANUFACTU RE OR PRODUCTION AS IT RESULTS IN THE EMERGENCE OF A NEW AND DISTINCT COMMODITY AND HENCE SUCH ACTIVITY IS ENTITLED FOR D EDUCTION U/S 80IA. WE THEREFORE RESPECTFULLY FOLLOWING THE PRI NCIPLES LAID DOWN IN THE CASE OF ARIHANT TILES & MARBLES (P) LTD . 9SUPRA) UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. A CCORDINGLY COMMON GROUNDS TAKEN IN REVENUES BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ITA NO. 1614/M/10 M/S SAI ENTERPRISES. 4 6. AS RIGHTLY POINTED OUT BY THE LEARNED AR OF THE ASSESSEE BEFORE THE CIT(A) SINCE THE QUANTUM ADDITION ITSELF IS NO N-EXISTENT LEVYING PENALTY ON SUCH NON-EXISTENT ADDITION DOES NOT HAVE LEGS TO STAND THEREFORE WE HEREBY CONFIRM THE ORDER OF THE CIT(A ) IN CANCELING THE PENALTY OF RS. 33 29 223/- LEVIED BY THE AO U/S 271 (1(C) OF THE ACT. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JANUARY 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 28 TH JANUARY 2011. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE G BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV ITA NO. 1614/M/10 M/S SAI ENTERPRISES. 5 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 20/01/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 24/01/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER