ACIT, New Delhi v. Sh. Inderjeet Kochhar, New Delhi

ITA 3997/DEL/2009 | 2006-2007
Pronouncement Date: 18-03-2010 | Result: Dismissed

Appeal Details

RSA Number 399720114 RSA 2009
Assessee PAN AAGPK5691P
Bench Delhi
Appeal Number ITA 3997/DEL/2009
Duration Of Justice 5 month(s) 19 day(s)
Appellant ACIT, New Delhi
Respondent Sh. Inderjeet Kochhar, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 18-03-2010
Date Of Final Hearing 18-03-2010
Next Hearing Date 18-03-2010
Assessment Year 2006-2007
Appeal Filed On 29-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER ITA NO. 3997/DEL/2009 ASSESSMENT YEAR: 2006-07 ACIT CIRCLE 24(1) C.R. BLDG. NEW DELHI. VS. INDERJEET KOCHHAR 52A SAINIK FARMS KHANPUR NEW DELHI. AAGPK5691P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. STEPHAN GEORGE CIT(DR) RESPONDENT BY: RAJESH MAHANA ADV. O R D E R PER I.P. BANSAL J.M. THIS IS DEPARTMENTAL APPEAL AND DIRECTED AGAINST THE ORDER OF CIT(A) DATED 15 TH JULY 2009 FOR A.Y. 2006-07. GROUNDS OF APPEAL RE AD AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 2 10 49 279/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB OF THE INCOME TAX ACT 1961. 2. THE APPELLANT CRAVES LEAVES TO ADD ALTER OR AME ND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. 2. THE ASSESSEE IS PROPRIETOR OF M/S FOIL PACK INDU STRIES AND M/S IKO OVERSEAS. THE MAIN BUSINESS ACTIVITY OF THE AS SESSEE IS COATING 2 ITA NO. 3997/DEL/2009 LAMINATION AND PRINTING OF ALUMINUM FOIL. THE INCO ME EARNED FROM THIS ACTIVITY HAS BEEN SUBJECTED TO DEDUCTION U/S 80IB(4 ) IN RESPECT OF UNIT AT GANGAVAL JAMMU CONSEQUENTLY DEDUCTION OF RS. 2 10 49 279/- IS CLAIMED. IN A.Y. 2004-05 THE AO HELD THAT SUCH ACT IVITY OF THE ASSESSEE DOES NOT AMOUNT TO MANUFACTURE THEREFORE ASSESSEE WAS NOT ENTITLED TO GET DEDUCTION U/S 80IB. THE CLAIM OF THE ASSESSEE FOR THAT YEAR WAS ACCEPTED BY LD. CIT(A) VIDE HIS ORDER DATED 9 TH AUGUST 2007 AND THE DEPARTMENTAL APPEAL AGAINST THAT ORDER WAS DISMISS BY THE TRIBUNAL VIDE ITS ORDER DATED 19 TH SEPTEMBER 2008 IN ITA NO. 4621/D/07. AFTER NARRATING THESE FACTS LD. AO OBSERVING THAT THE QUE STION THAT WHETHER A PARTICULAR ACTIVITY TANTAMOUNT TO MANUFACTURE IS A MIXED QUESTION OF FACT AND LAW THEREFORE HE PROCEEDED TO EXAMINE THIS ISS UE DESPITE THEIR BEING EARLIER ORDER OF THE TRIBUNAL VIDE WHICH THE RELIEF GIVEN BY CIT(A) ON THIS ISSUE WAS UPHELD AND AFTER REFERRING TO CER TAIN JUDICIAL PRONOUNCEMENTS HE HAS COME TO THE CONCLUSION THAT T HE ACTIVITY CARRIED ON BY THE ASSESSEE DID NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF AN ARTICLE. ACCORDINGLY THE DEDUCTION U/S 80IB WAS DI SALLOWED. 3. LD. CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSE E. FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE AND B Y OBSERVING THAT THE JUDICIAL PRECEDENCE OF THE TRIBUNAL WAS BINDING UPO N HIM. THE REVENUE IS AGGRIEVED AGAINST SUCH FINDING OF LD. CIT(A). HE NCE FILED AN APPEAL. 4. AT THE TIME OF HEARING AFTER NARRATING THE FACT S LD. AR OF THE ASSESSEE HAS BROUGHT TO OUR NOTICE THAT FOR A.Y. 04 -05 THE ORDER OF THE TRIBUNAL VIDE WHICH THE ORDER OF CIT(A) WAS UPHELD WHEREIN THE 3 ITA NO. 3997/DEL/2009 ASSESSEE WAS HELD TO BE ENTITLED FOR DEDUCTION U/S 80IB WAS MADE SUBJECT MATTER OF FURTHER APPEAL BY THE REVENUE BEF ORE HONBLE DELHI HIGH COURT AND THE SAID APPEAL OF THE REVENUE HAS B EEN DECIDED BY HONBLE HIGH COURT VIDE ORDER DATED 31 ST AUGUST 2009 IN ITA NO. 596 OF 2009. HE HAS PLACED BEFORE US A COPY OF THE SAID O RDER AND A COPY WAS ALSO GIVEN TO LD. DR. FOR THE SAKE OF COMPLETENESS OF THE ORDER THE DECISION OF THEIR LORDSHIPS OF HONBLE DELHI HIGH C OURT IN ASSESSEES OWN CASE IS REPRODUCED BELOW: - ITA NO. 596/2009 1. THE QUESTION WHICH ARISES FOR CONSIDERATION IS AS TO WHETHER BUSINESS OF COATING AND LAMINATION OF ALLUM INIUM FOIL FOR USE OF PHARMACEUTICAL INDUSTRIES FOR PURPO SES OF PACKAGING OF MEDICINE IS A MANUFACTURING ACTIVITY O R NOT. THIS HAS ARISEN IN THE CONTEXT OF THE RESPONDENT/AS SESSEE CLAIMING BENEFIT OF SEC. 80IB OF THE INCOME TAX ACT WHICH CLAIM WAS REJECTED BY THE AO. HOWEVER IN APPEAL THE CIT(A) REVERSED THE FINDING AND THE OPINION OF THE CIT(A) HAS BEEN UPHELD BY THE INCOME TAX APPELLATE TRIBUNA L ALSO. 2. WE FIND FROM THE ORDERS OF THE CIT(A) AS WELL AS ITAT THAT THE PROCESS OF CONVERSION OF ALUMINUM FOIL INT O PHARMACEUTICAL FOIL BY LAMINATION OR COATING HAS BE EN DISCUSSED IN DETAIL AND A FINDING OF FACT IS ARRIVE D AT TO THE EFFECT THAT NEW AND DIFFERENT PRODUCT IS PRODUCED W ITH TH SAID CONVERSION AND THEREFORE IT IS MANUFACTURING PROC ESS. THIS IS A PURE FINDING OF FACT. WE MAY ADD HERE THAT CI T(A) DESCRIBED THE PROCESS IN THE FOLLOWING WORDS: - NOW HERE IS A CASE WHERE EVEN THE ALUMINUM FOIL AFTER THE SPECIFIC PROCESS BROUGHT INTO EXISTENCE NEW END PRODUCT WHICH WAS IRREVERSIBLE AND WAS DISTINCT AND DIFFERENT IN CHARACTER FROM THE ORIGINAL ALUMINUM FOIL 4 ITA NO. 3997/DEL/2009 PURCHASED BY THE APPELLANT AND IT WAS MARKED ALSO AS A COMMODITY DIFFERENT FROM PLAIN ALUMINUM FOIL THE APPELLANT WAS ENTITLED TO THE BENEFIT OF SEC. 80I OF THE I.T. ACT. THE FACTS OF THE CASE AS DISCUSSED BY THE HONBLE SUPREME COURT IN THE CASE OF JOHNSON & JOHNSON VS. COLLECTOR OF CENTRAL EXCISE BOMBAY ARE ALMOST THE SAME WHEREIN IT WAS HELD THAT PRINTING COATING AND PAPER PACKING OF ALUMINUM FOILS AMOUNT TO MANUFACTURE OF A NEW PRODUCT WITH DISTINCT NAME AND CHARACTER AND USE FROM THE BARE ALUMINUM FOILS. 3. LD. COUNSEL FOR THE RESPONDENT HAS ALSO PRODUCED BEFORE US A CHART SHOWING THE PROCESS WHICH IS UNDE R GONE FOR PRODUCING BLISTER FOIL AS WELL AS PHARMACEUTICA L FOIL (VMCH HEAT SEAL COATED FOIL) FROM THE RAW MATERIAL IN THE FORM OF ALUMINUM FOIL. THIS PROCESS IS DESCRIBED A S UNDER: - A 1. RAW MATERIAL ROLL JUMBO ALUM FOIL ROLL. 2. SHELLAC WASH TO REMOVE OIL FROM THE SURFACE OF O IL. 3. VMCH COATING STATION (HEAT SEAL LACQUER) 4. WHILE PASSING THROUGH THE HOT TUNNEL OF 40 LENG TH THEN IMMEDIATELY PASS THROUGH CHILLED ROLLERS. 5. REWIND THE MATERIAL TO REWINDING STATION. B. TAKE THE MATERIAL TO REWINDING/TRIMMING MACHINE . C. TAKE THE MATERIAL TO SLITTING MACHINE FOR SLITT ING TO THE REQUIRED SIZES. 4. THE PROCESS IS UNDERTAKEN WITH THE USE OF MACHIN ES. IT BECOMES NECESSARY BECAUSE OF THE SPECIFIC REQUIR EMENTS OF THE PHARMACEUTICAL INDUSTRY FOR PACKAGING OF THE MEDICINES. THE ALUMINUM FOIL SIMPLICITOR IN ITS OR IGINAL FORM IS OF NO USE AND UNLESS IT UNDER GOES THE AFORESAID PROCESS AND IS PRODUCED IN A DIFFERENT FORM THERE CANNOT B E PACKAGING OF MEDICINES BY THE PHARMACEUTICALS INDUS TRIES. 5 ITA NO. 3997/DEL/2009 MR. MAHNA ALSO STATES THAT IT IS TREATED AS SEPARAT E PRODUCT UNDER THE EXCISE LAWS AS WELL. 5. FOR THESE REASONS WE ARE OF THE OPINION THAT TH E VIEW TAKEN BY THE AUTHORITIES BELOW IS PERFECTLY JUSTIFI ED AND NO QUESTION OF LAW ARISES. 6. DISMISSED. 5. IN THIS VIEW OF THE SITUATION AFTER HEARING BOT H THE PARTIES AS THE ISSUE HAS BEEN SET AT REST BY HONBLE DELHI HIGH CO URT IN ASSESSEES OWN CASE WE FOUND NO MERIT IN THE DEPARTMENTAL APP EAL AND THE SAME IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/- SD/- (A.K. GARODIA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR