ACIT 20(3), MUMBAI v. SUDHIR S. BHATIA, MUMBAI

ITA 4283/MUM/2009 | 2000-2001
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 428319914 RSA 2009
Assessee PAN AACPB0427C
Bench Mumbai
Appeal Number ITA 4283/MUM/2009
Duration Of Justice 10 month(s) 6 day(s)
Appellant ACIT 20(3), MUMBAI
Respondent SUDHIR S. BHATIA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 21-05-2010
Assessment Year 2000-2001
Appeal Filed On 15-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI R V EASWAR SENIOR VICE PRESIDENT AND SHRI R K PANDA ACCOUNTANT MEMBER I T A NO: 4283/MUM/2009 AND 4232/MUM/2000 (ASSESSMENT YEAR: 2000-01 AND 2006-07) DEPUTY COMMISSIONER OF INCOME TAX 20(3) / INCOME TAX OFFICER 20(3)(3) MUMBAI APPELLANT VS SHRI SUDHIR S BHATIA MUMBAI RESPONDENT (PAN: AACPB0427C) APPELLANT BY: SHRI S K MOHANTY RESPONDENT BY: SHRI DEEPAK TRALSHAWALA O R D E R R V EASWAR SENIOR VICE PRESIDENT: THESE ARE APPEALS BY THE REVENUE RELATING TO THE A SSESSMENT YEARS 2000-01 AND 2006-07. THE GROUNDS OF APPEAL A RE IDENTICAL IN BOTH THE YEARS. 2. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE MAN UFACTURE OF INSECTICIDES. ONE OF THE PRODUCTS MANUFACTURED BY THE ASSESSEE IS POPULARLY KNOWN IN THE MARKET AS LAXMAN REKHA. 3. THE ONLY QUESTION IN THE APPEALS IS WHETHER THE ASSESSEE IS ENTITLED TO THE DEDUCTION UNDER SECTION 80-IB OF TH E INCOME TAX ACT 1961 IN RESPECT OF THE PROFITS FROM THE AFORESAID B USINESS. THE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM ON THE GROUND THAT IT DOES NOT INVOLVE ANY MANUFACTURE. THE CIT(A) HELD THAT THE PROCESS INVOLVES MANUFACTURE AND HENCE THE ASSESSEE IS ENTI TLED TO THE DEDUCTION. IN COMING TO THIS CONCLUSION HE FOLLOWE D HIS APPELLATE ORDER FOR THE ASSESSMENT YEAR 2004-05. 2 4. THE REVENUE IS IN FURTHER APPEAL BEFORE THE TRIB UNAL. THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2004-05 IN ITA NO: 2272/MUM/2008 DATED 26 TH NOVEMBER 2009. A COPY OF THE ORDER HAS BEEN FILED BEFORE US. WE HAVE PERUSED TH E SAME AND WE FIND THAT THE TRIBUNAL IN PARAGRAPHS 9 TO 11 OF ITS ORDER HAS EXAMINED THE VARIOUS PROCESSES INVOLVED IN THE ACTIVITY AND HAS COME TO THE CONCLUSION THAT THE FINAL PRODUCT WHICH IS BEING US ED AS REPELLANT FOR KILLING COCKROACHES IS BEING SOLD UNDER THE BRAND N AME OF LAXMAN REKHA AND IS A NEW PRODUCT DIFFERENT FROM THE ING REDIENTS AND HENCE THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE ENTITLI NG IT TO THE DEDUCTION UNDER SECTION 80-IB. THE TRIBUNAL HAS AL SO NOTICED THE DEFINITION OF MANUFACTURE INSERTED BY FINANCE (NO .2) ACT 2009 WITH RETROSPECTIVE FROM 01.04.2009 DEFINING THE WORD M ANUFACTURE AND TAKING THE VIEW THAT THE DEFINITION BEING CLARIFICA TORY IN NATURE WOULD ALSO APPLY TO THE YEAR UNDER APPEAL BEFORE THEM. I N THIS DEFINITION IT HAS BEEN HELD THAT MANUFACTURE MEANS A CHANGE RES ULTING IN TRANSFORMATION OF THE ARTICLE INTO A NEW AND DISTIN CT OBJECT HAVING A DIFFERENT NAME CHARACTER AND USE; OR THE BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OBJECT OR ARTICLE WITH A DIFFERENT COMPOSITION OR INTEGRAL STRUCTURE. THE TRIBUNAL IN COMING TO ITS CONCLUSIO N HAS MAINLY FOLLOWED THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF GR AMOPHONE CO. OF INDIA LTD. VS. COLLECTOR OF CUSTOMS CALCUTTA (1999 ) 114 ELT 770 WHERE IT WAS HELD THAT TRANSFORMATION OF A SUBSTANC E INTO A NEW COMMERCIAL COMMODITY KNOWN AS A DISTINCT AND SEPARA TE COMMODITY 3 HAVING ITS OWN CHARACTER USE AND NAME WHETHER BY ONE OR SEVERAL PROCESSES AMOUNTS TO MANUFACTURE. 5. SINCE THE FACTS RELATING TO THE CONTROVERSY FOR THE YEARS UNDER APPEAL ARE THE SAME AS IN THE ASSESSMENT YEAR 2004- 05 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL CITED SUPRA WE UPHOLD THE DECISION OF THE CIT(A). 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SOUGHT T O RAISE THE ISSUE REGARDING THE ELECTRICITY EXPENDITURE INCURRE D BY THE ASSESSEE A POINT WHICH WAS TOUCHED UPON BY THE TRIBUNAL IN ITS EARLIER ORDER. IN THE YEAR BEFORE THE TRIBUNAL THE DEPARTMENT HAD RAI SED THE CONTENTION THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON EL ECTRICITY WAS VERY LOW AND THEREFORE IT COULD NOT HAVE ENGAGED IN TH E MANUFACTURING ACTIVITY EXCEPT BY ENGAGING 20 OR MORE PERSONS AND THIS ASPECT OF THE MATTER REQUIRES TO BE VERIFIED. THE TRIBUNAL THOU GH IT AGREED WITH THE ASSESSEE THAT IT WAS ENGAGED IN MANUFACTURE REMITT ED THE ISSUE RAISED BY THE DEPARTMENT TO THE ASSESSING OFFICER W ITH A DIRECTION TO EXAMINE THE ISSUE WHETHER THE MANUFACTURING ACTIVIT Y WAS BEING CARRIED OUT WITH OR WITHOUT THE AID OF POWER. RELY ING ON THIS DIRECTION OF THE TRIBUNAL THE REVENUE RAISED A PLEA BEFORE US A LSO THAT A SIMILAR DIRECTION SHOULD BE ISSUED TO THE ASSESSING OFFICER FOR THE YEARS UNDER APPEAL. WE ARE HOWEVER UNABLE TO ACCEPT THE REVE NUES PLEA BECAUSE THE ASSESSING OFFICER HAS NOT RAISED ANY SU CH ISSUE IN THE ASSESSMENT ORDERS FOR THE YEARS UNDER APPEAL AND NO SUCH GROUND HAS ALSO BEEN RAISED BEFORE US IN THE GROUNDS OF APPEAL . IN ITS APPEAL FOR THE ASSESSMENT YEAR 2004-05 THE ASSESSING OFFICER AND THE REVENUE 4 HAD RAISED A SPECIFIC PLEA ON THE BASIS OF THE LOW CONSUMPTION OF ELECTRICITY FOR THAT YEAR. IN THE ABSENCE OF ANY I SSUE MADE OUT BY THE ASSESSING OFFICER FOR THE YEARS UNDER APPEAL ON THE BASIS OF THE CONSUMPTION OF ELECTRICITY AND IN THE ABSENCE OF A SPECIFIC GROUND TAKEN BEFORE US TO THAT EFFECT WE ARE UNABLE TO EN TERTAIN THE PLEA OF THE REVENUE. 7. IN THE RESULT THE APPEALS FILED BY THE REVENUE ARE DISMISSED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MAY 2010. SD/- SD/- (R K PANDA) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESI DENT MUMBAI DATED 21 ST MAY 2010 SALDANHA COPY TO: 1. SHRI SUDHIR S BHATIA 44 MANJU TOWERS 3 RD CROSS ROAD LOKHANDWALA ANDHERI (WEST) MUMBAI 400 053 2. DCIT 20(3) / ITO 20(3)(3) 3. CIT-20 4. CIT(A)-XXXII 5. DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI