M/s. Asian Exports, Kolkata v. CIT - X, Kolkata, Kolkata

ITA 603/KOL/2011 | 2006-2007
Pronouncement Date: 04-11-2011 | Result: Allowed

Appeal Details

RSA Number 60323514 RSA 2011
Assessee PAN AAFFA6254M
Bench Kolkata
Appeal Number ITA 603/KOL/2011
Duration Of Justice 6 month(s) 15 day(s)
Appellant M/s. Asian Exports, Kolkata
Respondent CIT - X, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 04-11-2011
Assessment Year 2006-2007
Appeal Filed On 19-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE /AND . ! . '# ) [BEFORE SRI MAHAVIR SINGH JM & SHRI C. D. RAO AM] $ $ $ $ / I.T.A NO. 603/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2006-07 M/S. ASIAN EXPORTS VS. COMMISSIONER OF INCOME- TAX-X KOL (PAN:AAFFA 6254 M) (*+ /APPELLANT ) ( -*+/ RESPONDENT ) FOR THE APPELLANT: SHRI M. KATARUKA FOR THE RESPONDENT: SHRI D. R. SINDHAL DATE OF HEARING: 01.11.2011 DATE OF PRONOUNCEMENT: 04.11.2011 '. / ORDER PER MAHAVIR SINGH JM ( ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT KOL-X IN NO.CIT KOL- X/263/09-10/6272-74 DATED 18/29.03.2011. ASSESSMEN T WAS FRAMED BY DCIT CIRCLE-30 KOLKATA U/S. 143(3) OF THE INCOME TAX ACT 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 10.11. 2008. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST REVISION ORDER OF CIT U/S. 263 OF THE ACT. FOR THIS ASSESSEE HAS RAISED AS MANY AS NINE GROUNDS WHICH ARE ARGUMENTATIVE AND CONTAINS ONLY ONE ISSUE. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.2006 WHEREBY HE HAS CLAIMED EXEMPTION U/S. 10 B OF THE ACT. ASSESSING OFFICER PROCEEDED TO SCRUTINIZE THE RETURN AND ACCORDINGLY NOTICES U/S. 143(2) AND 142(1) WERE ISSUED AND SERVED ON ASSESSEE. THE ASSESSEE IS AN EXPORTE R OF ORNAMENTAL COLOURED FISH. ASSESSING OFFICER AFTER GOING THROUGH THE EXPORT INVOICES CO PIES OF BANK STATEMENTS FROM WHERE TURNOVER OF EXPORT FISH WERE EXEMPT AND ALSO EXAMINED THE CE RTIFICATE OF APPROVAL AS 100% EXPORT ORIENTED SCHEME FROM THE DEVELOPMENT COMMISSIONER. MINISTRY OF COMMERCE ALLOWED 100% EXEMPTION U/S. 10B OF THE ACT. SUBSEQUENTLY CIT KOLKATA-X AFTER EXAMINATION OF RECORDS ISSUED SHOW CAUSE NOTICE VIDE NO. CIT/KOL-X/263/REV ISION/10-114466 DATED 23.02.2011 WHEREIN HE RECORDED THAT DURING THE YEAR ASSESSEE H AD EXPORTED ONLY ORNAMENTAL FISHES AND AS PER SECTION 10B OF THE ACT A 100% EOU IS ELIGIBLE F OR EXEMPTION OF EXPORT PROFITS IF IT PRODUCES OR MANUFACTURES ARTICLE OR THINGS OR COMPU TER SOFTWARE. ACCORDING TO CIT PRODUCTION 2 ITA 605/K/2011 SHRI KAMAL KISHORE GANDHI A.Y. 06-07 OR MANUFACTURE OR ARTICLE OR THINGS MEAN THAT BASIC NATURE OF PRODUCT WOULD BE DIFFERENT FROM RAW MATERIAL AND IN THE INSTANT CASE THE BASIC NATU RE OF RAW MATERIAL AND FINISHED WORK REMAINED THE SAME AND BY GROWING LIVE STOCKS AND BY ARTIFICIALLY CHANGING THE COLOUR OF THEM DO NOT FALL UNDER THE CATEGORY OF MANUFACTURING OR PRODUCTION. ACCORDINGLY ACCORDING TO CIT ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S. 10B OF THE ACT. ACCORDING TO CIT ASSESSING OFFICER FAILED TO EXAMINE THE ISSUE PROPERLY AND AS SUCH AS SESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFO RE PROPOSED TO SET ASIDE THE ASSESSMENT TO BE EXAMINED BY THE ASSESSING OFFICER AFRESH. ASSESSEE REPLIED THAT IT WAS REQUIRED TO PRODUCE DETAILED METHOD ADOPTED IN MANUFACTURING OR PRODUCI NG THE ORNAMENTAL FISH AND AFTER DUE CONSIDERATION WAS PERMITTED ALLOWANCE OF EXEMPTION U/S. 10B OF THE ACT. THE LD. COUNSEL ALSO POINTED OUT THAT FROM THE VERY SHOW CAUSE NOTICE OF THE CIT OBSERVING THAT ASSESSING OFFICER FAILED TO EXAMINE THE ISSUE PROPERLY AND HENCE THE VERY BASIC ORDER OF CIT REVISING THE ASSESSMENT IS BAD IN LAW. ACCORDING TO ASSESSEE T HE EXPLANATION REGARDING MANUFACTURE OR PRODUCTION WAS SOUGHT BY THE ASSESSING OFFICER DURI NG THE COURSE OF HEARING FOR THE PURPOSE OF VERIFICATION OF ELIGIBILITY OF EXEMPTION U/S. 10B O F THE ACT AND BASICALLY THE ASSESSING OFFICER HAS FORMED AN OPINION ON THE VERY ALLOWANCE OF EXEM PTION U/S. 10B OF THE ACT AND THE SAME CANNOT BE REVISED U/S. 263 OF THE ACT I.E. IN THE R EVISIONARY PROCEEDINGS. THE LD. COUNSEL ALSO BROUGHT TO THE NOTICE OF ITAT ORDER FOR ASSESSMENT YEAR 2004-05 REGARDING ELIGIBILITY OF EXEMPTION U/S. 10B OF THE ACT ON TRANSFORMATION OF JUVENILE FISHES INTO ORNAMENTAL FISHES AMOUNT TO MANUFACTURE OR PRODUCTION WHICH WAS HELD BY TRIBUNAL IN ASSESSEES FAVOUR IN ITA NO.1952/K/2006 DATED 9 TH MARCH 2007. LD. COUNSEL FURTHER STATED THAT HON BLE KOLKATA HIGH COURT HAS ALSO DISMISSED THE DEPARTMENTAL APPEAL CO NFIRMING THE ORDER OF TRIBUNAL VIDE ORDER DATED 13.02.2008 IN THE CASE OF CIT VS. ASIAN EXPOR TS IN ITA NO.764 OF 2007 IN G.A. NO.3709 OF 2007. ON THE OTHER HAND LD. CIT DR SHRI D. R. SINDHAL STATED THAT HONBLE HIGH COURT HAS ERRED IN CONFIRMING THE ORDER OF TRIBUNAL IN AS SESSEES OWN CASE AND ACCORDING TO HIM IN THE INSTANT CASE THE BASIC NATURE OF RAW MATERIAL AND THE FINISHED PRODUCTS REMAINED THE SAME AND BY GROWING LIVE STOCK OR BY ARTIFICIALLY CHANGI NG THE COLOUR ON THEM THEY DO NOT FALL UNDER THE CATEGORY OF MANUFACTURE OR PRODUCTION AND THER EFORE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S. 10B OF THE ACT. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. FROM THE PERUSAL OF ABOVE DESCRIPTION OF VARIOUS PR OCESSES LIST OF PLANT AND MACHINERY AND PACKAGING PROCESS IT IS EVIDENT THAT ASSESSEE IS C ERTAINLY INVOLVED IN THE MANUFACTURING OF ORNAMENTAL FISHES AS SUCH ORNAMENTAL FISHES ARE ONL Y MANUFACTURED BY THE ASSESSEE AFTER A NUMBER OF PROCESSES UNDERTAKEN BY IT INCLUDING THE SEX REVERSAL WHICH IS NOT AT ALL POSSIBLE WITHOUT MANUFACTURING OR PROCESSING ACTIVITY. THE A SSESSEE HAS ALSO MADE AVAILABLE THE 3 ITA 605/K/2011 SHRI KAMAL KISHORE GANDHI A.Y. 06-07 LITERATURE IN SUPPORT OF ABOVE PROCESSING ACTIVITY FOR MANUFACTURING OF ORNAMENTAL FISHES WHICH CLEARLY ESTABLISHED THE CLAIM OF THE ASSESSEE THAT IT WAS PRODUCING ORNAMENTAL FISHES WHICH ARE MANY-FOLD VALUABLE THAN THE JUVENILE FISHES. APART FROM ABOVE FACT WE HAVE ALSO NOTED THE FACT THAT THE ABOVE PROCESSING ACTIVITY UNDERTAKEN BY TH E ASSESSEE HAS NOT BEEN CONTROVERTED OR REBUTTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE . CONSIDERING THE ABOVE FACT WE FIND THAT THE CLAIM OF ASSESSEE TO HAVE MANUFACTURING ORNAMEN TAL FISHES FINDS SUPPORT FROM THE RATIO OF DECISION RELIED BY LEARNED AUTHORISED REPRESENTATIV E AND PARTICULARLY THE DECISION OF HONBLE SUPREME COURT IN CASE OF ASPINWALL & CO. LTD. VS. C IT (2001) 251 ITR 323 (SC). AS EVIDENT FROM THE PROCESS UNDERTAKEN BY THE ASSESSEE THE AS SESSEE IS MAKING A TOTAL CHANGE OF RAW FISHES WHICH IS ONLY POSSIBLE WITH THE HELP OF PROCESS OF MANUFACTURING. SOME OF SUCH PROCESSES AND FEATURES ARE AS UNDER: (I) CHANGE IN THE SEX OF FISHES AT THE BEGINNING OF THEIR LIFE BY BLENDING HORMONES IN ARTIFICIAL FOOD. (II) THIS RESULTS IN CHANGE OF COLOUR OF FISHES AN D VALUE ADDITION TO THE FISHES. (III) GIVING DIFFERENT COLOURS TO FISHES BY INJECTI NG CHEMICALS TO FISHES AS PER REQUIREMENT OF IMPORTERS AND THE MARKET. IV) THESE MANUFACTURED FISHES ARE OF DIFFERENT CHAR ACTER AS THEY CANNOT SURVIVE IN THE NATURAL ENVIRONMENT AND REQUIRE SPECIAL/ARTIFICIAL CONDITIONS BY THE ASSESSEE. V) THE MANUFACTURED FISHES ARE DIFFERENT IN USE ALS O AS SAME CANNOT BE CONSUMED AND ARE OF ONLY ORNAMENTAL VALUE. (VI) THE ORNAMENTAL FISH LOSES ITS CHARACTER AFTER MANUFACTURING AND CANNOT BE REVERTED BACK TO ITS ORIGINAL FORM I.E. JUVENILE FISH. (VII) ALL OTHER ACTIVITIES WHICH HAVE ALREADY BEEN MENTIONED IN THE PROCESS CHART SUBMITTED BY THE ASSESSEE ARE REPRODUCED ELSEWHERE IN THIS OR DER AND NOT CONTROVERTED BY THE REVENUE. SINCE THE ASSESSEE HAS UNDERTAKEN A NUMBER OF PROCE SSES FOR MANUFACTURING ORNAMENTAL FISHES AND SUCH PROCESSING ACTIVITY WAS UNDERTAKEN BY A NU MBER OF MACHINERIES INSTALLED BY THE ASSESSEE APART FROM THE FACT THAT IT WAS ALSO GRANT ED LICENSE BY THE COMPETENT AUTHORITY AND TO UNDERTAKE SUCH PROCESSING ACTIVITIES IN OUR CONSID ERED OPINION THE ASSESSEE IS FULFILLING ALL THE CONDITIONS OF PRODUCTION AS LAID DOWN IN S. 10B OF THE ACT AND THEREFORE IT IS ELIGIBLE FOR EXEMPTION AS SPECIFIED IN S. 10B OF THE ACT. EVEN O THERWISE THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE HIGH COURT OF C ALCUTTA ITA NO.764 OF 2007 G.A NO.3709 OF 2007 VIDE JUDGMENT DATED 13.2.2008 CONFIRMED TH E ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1952/K/2006 AND REPORTED IN (2007) 110 TT J 152 (KOL). ONCE HONBLE CALCUTTA HIGH COURT HAS CONFIRMED THE PROCESS OF ASSESSEE BE ING THAT OF MANUFACTURE OR PRODUCTION THE CIT CANNOT REVISE ON THAT VERY BASIS WHILE INVOKING THE REVISIONARY PROVISIONS U/S. 263 OF THE ACT. THE REVISION ORDER PASSED BY CIT U/S. 263 IS Q UASHED. APPEAL OF THE ASSESSEE IS ALLOWED. 4 ITA 605/K/2011 SHRI KAMAL KISHORE GANDHI A.Y. 06-07 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. 6. ORDER PRONOUNCED IN OPEN COURT ON 04.11.2011. SD/- SD/- . ! ! ! ! . '# (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 4TH NOVEMBER 2011 /0 %12 3 JD.(SR.P.S.) '. 4 5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M/S. ASIAN EXPORTS 200/2A RASH BEHARI AVENUE KOLKATA-700 029. 2 -*+ / RESPONDENT CIT-X KOLKATA. 3 . DCIT CIRCLE-30 KOLKATA. 4. => % / DR KOLKATA BENCHES KOLKATA -5 / TRUE COPY '.%?/ BY ORDER 2 /ASSTT. REGISTRAR .