M/s. Milap Rice Mills, Ahmedabad v. The Income tax Officer,Ward-6(1),, Ahmedabad

ITA 3359/AHD/2010 | 2006-2007
Pronouncement Date: 09-03-2011 | Result: Allowed

Appeal Details

RSA Number 335920514 RSA 2010
Assessee PAN AADFM7011L
Bench Ahmedabad
Appeal Number ITA 3359/AHD/2010
Duration Of Justice 2 month(s) 19 day(s)
Appellant M/s. Milap Rice Mills, Ahmedabad
Respondent The Income tax Officer,Ward-6(1),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 09-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 09-03-2011
Date Of Final Hearing 09-03-2011
Next Hearing Date 09-03-2011
Assessment Year 2006-2007
Appeal Filed On 20-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : SMC BENCH : AHMEDABAD (BEFORE HONBLE SHR I T.K. SHARMA J.M .) I.T.A. NO. 3359/AHD./2010 ASSESSMENT YEAR : 2006-2007 M/S. MILAP RICE MILLS AHMEDABAD -VS - I.T.O. WARD-6(1) AHMEDABAD (PAN : AADFM 7011L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI U.S.BHATI A.R. RESPONDENT BY : SHRI VIMALENDU VERMA D .R. O R D E R THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 15.10.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XVI A HMEDABAD CONFIRMING THE DISALLOWANCE OF CLAIM OF DEPRECIATION AMOUNTING TO RS. 2 95 356/ - FOR THE ASSESSMENT YEAR 2006-2007. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE C LAIMED ADDITIONAL DEPRECIATION OF RS.2 95 356/- ON THE GROUND THAT IT IS ENGAGED IN R ICE PROCESSING ACTIVITY. THE ASSESSING OFFICER REJECTED THIS CLAIM ON THE GROUND THAT IT IS NOT A MANUFACTURING ACTIVITY. THE ASSESSING OFFICER ALSO RELIED ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CYNAMID INDIA LTD. REPORTED IN 237 ITR 585 WHEREIN THE HON'BLE SUPREME COURT HAS HELD AS UNDER: ACCORDING TO BLACKS LAW DICTIONARY THE OPERATION OF DE-HUSKING PADDY IS NOT AN INDUSTRIAL OR MANUFACTURING OPERATION AS COMMO NLY UNDERSTOOD; IT IS ESSENTIALLY AN AGRICULTURAL OPERATION AND SUCH CH ANGES AS ARE BROUGHT ABOUT IN THE PRODUCT ARE AN OUTCOME OF AGRICULTURAL OPERAT ION. BOTH RICE AND HUSK REMAIN IN THEIR NATURAL FORM AS A RESULT OF DE-HUSKING A ND ARE COVERED BY THE TERM AGRICULTURAL PRODUCT . 3. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) IT WAS ARGUED THAT THE JUDGEMENTS OF THE HON'BLE SUPREME COURT IN THE CASES OF GEM INDIA MANUFACTURING COMPANY AND LUCKY MINERAL PRIVATE LTD. ARE NOT APPL ICABLE TO THE FACTS OF THE ASSESSEES CASE. IT 2 ITA NO. 3359-AHD-2010 WAS ARGUED THAT ITS CASE IS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF STATE OF KARNATAKA VS- U.B. RAGHURAMSHETTY REPORTE D IN 47 STC 369 WHEREIN THE HON'BLE SUPREME COURT HELD THAT THE MILLING OF PADDY IS A M ANUFACTURING PROCESS. THE ASSESSEE FURTHER STATED THAT ON THE BASIS OF THIS DECISION THE CIT APPEAL IN HIS ORDER DATED 02/03/2010 HAS ALLOWED THE APPEAL OF THE ASSESSEE FOR A.Y. 2006-07. IT WAS ALSO POINTED OUT TO THE ASSESSEE THAT THE ASSESSING OFFICER HAS REPRESENTED VIDE WRITTEN SUBM ISSION THAT THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CYNAMID INDIA LTD. (SUPRA) SH OULD BE FOLLOWED. A COPY OF THIS LETTER WAS GIVEN TO THE ASSESSEEL DURING THE HEARING ON 12/10/ 2010 AND WAS ASKED TO GIVE HIS COMMENTS AS TO WHETHER THIS DECISION IS APPLICABLE OR NOT. THE ASSESSEE STATED THAT IT DOES NOT WANT ANY FURTHER TIME AS ITS CASE IS FULLY COVERED BY THE DECISION O F HON'BLE SUPREME COURT IN THE CASE OF U. B. RAGHURAMSHETTY (SUPRA) CITED ABOVE. THE ASSESSEE ST ATED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTI ON OF THE ASSESSING OFFICER FOR THE DETAILED REASONS GIVEN IN PARA 2.3 WHICH READS AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND OBSERVATION OF THE ASSESSING OFFICER. THE DECISION OF HONOURABLE SUPR EME COURT IN THE CASE OF U B RAGURAMSHETTY (SUPRA) CLEARLY STATED THAT MILLING OF PADDY IS A MANUFACTURING PROCESS AND INTERESTINGLY THE DECISION OF HONOURABLE SUPRE ME COURT IN THE CASE OF CYNAMID INDIA LTD. (SUPRA) HAS ALSO CLEARLY STATED THAT THE OPER ATION DEHUSKING PADDY IS NOT A MANUFACTURING OPERATION. THE DECISION IN THE CASE OF U B RAGURAMSHETTY (SUPRA) IS DATED 24/11/1981 AND IS IN THE CONTEXT OF SALES-TAX ACT WHEREAS THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF CYNAMID INDIA LTD. [S UPRA] IS DATED 13/04/1999 AND IS GIVEN UNDER THE INCOME TAX ACT. THE DECISION OF HO NOURABLE SUPREME COURT IN THE CASE OF CYNAMID INDIA LTD. [SUPRA] IS A LATER DECISION AN D UNDER THE INCOME TAX ACT AND IS THEREFORE FOLLOWED. THE DISALLOWANCE MADE BY THE A SSESSING OFFICER IS THEREFORE CONFIRMED. THE GROUNDS OF APPEAL ARE DISMISSED. 5. AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING SHRI U.S.BHATI A.R. APP EARED ON BEHALF OF THE ASSESSEE AND RELIED ON THE DECISION OF THE ITAT HYDERABAD C BENCH IN THE CASE OF ITO-VS- K. CHAKRADHARA REDDY REPORTED IN (1984) 20 TTJ (HYD) 126 WHEREIN IT WAS HELD THAT CRUSHING OF PADDY AND PRODUCTION OF RICE INVOLVES MANUFACTURING PROCESS AS PADDY AND RICE ARE TWO DISTINCT COMMODITIES. THE 3 ITA NO. 3359-AHD-2010 COUNSEL OF THE ASSESSEE POINTED OUT THAT IN THIS DE CISION THE ITAT HYDERABAD C BENCH HAS FOLLOWED THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF STATE OF KARNATAKA VS- B. RAGHURAMA SHETTY (1981) 47 STC 369 (SC) AND ASHOK R ICE MILLS VS- SECOND ITO (1981) 11 TTJ 117 (BANG). 7. ON THE OTHER HAND SHRI VIMALENDU VERMA D.R. V EHEMENTLY SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 8. HAVING HEARD BOTH THE SIDES I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE. THE ITAT HYDERABAD C BENCH IN THE CASE OF ITO-VS- K. CHAKR ADHARA REDDY ( SUPRA ) RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE FOLLOWING THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASES OF STATE OF KARNATAKA VS- B. RAGHURAMA SHETTY (1981) 47 STC 369 (SC) AND ASHOK RICE MILLS VS- SECOND ITO (1981) 11 TTJ 117 (BANG) ( SUPRA ) WHEREIN THE HON'BLE SUPREME COURT HELD THAT THE ASSESSEE IS A MANUFACTURING CONCERN. THE ISSUE INVOLVED BEFORE THE ITAT HYDERABAD BENCH IN THE AFORESAID CASE IS WHETHER CRUSHING OF PADDY AND PRODUCTION OF RICE WILL AMOUNT TO INDUSTRIAL UNDERTAKING INVOLVED IN MANUFACTURING PR OCESS. THE BENCH OBSERVED THAT THIS VERY QUESTION WAS ALSO CAME UP BEFORE THE ITAT BANGALO RE BENCH IN ITA NO.242/BANG/1978-79 FOR THE ASSESSMENT YEAR 1977-78 IN THE CASE OF ASHOK RI CE MILLS VS- SECOND ITO (1981) 11 TTJ 117 (BANG) WHEREIN THE TRIBUNAL HELD AS UNDER: CONVERTING PADDY INTO RICE WOULD CERTAINLY BE PROD UCTION IF WE APPLY THE TESTS LAID DOWN IN THE CASE OF SINGH ENGINEERING WORKS PVT. LTD. 1978 CTR (ALL) 201 : (1979) 119 ITR 891 (ALL) AT 894 AS WELL AS THE ME ANING OF THE WORD PRODUCED NOTICED IN THE DECISION IN THE CASE OF AIR 1969 S C 930 AT 931. IN VIEW OF THIS WE ALLOW THE APPEAL OF THE ASSESSEE AND THE ITO WILL REVISE THE ASSESSMENT ACCORDINGLY. 8.1 I RESPECTFULLY FOLLOWING THE ABOVE DECISION DIRECT THE ASSESSING OFFICER TO ALLOW THE ADDITIONAL DEPRECIATION AS CLAIMED BY THE ASSESSEE . 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.0 3.2011. SD/- (T.K. SHARMA) DATED : 09 /03/2011 JUDICIAL MEMBER 4 ITA NO. 3359-AHD-2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED 4) CIT CONCERNED 5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD TALUKDAR/SR.P.S.