Commissioner Of Income Tax, Udaipur v. M/S Tirupati Microtech Pvt. Ltd

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 20 / 2013 Commissioner of Income Tax, Udaipur Versus ----Appellant M/s Tirupati Microtech Pvt. Ltd. 1604/1610, Village - Thoor,District Udaipur (Raj.) ----Respondent D.B. Income Tax Appeal No. 23 / 2013Commissioner of Income Tax, Udaipur ----Appellant Versus M/s Tirupati Microtech Pvt. Ltd. 1604/1610, Village - Thoor,District Udaipur (Raj.) ----Respondent Commissioner of Income Tax, Udaipur ----AppellantVersus M/s Tirupati Microtech Pvt. Ltd. 1604/1610, Village - Thoor,District Udaipur (Raj.) ----Respondent D.B. Income Tax Appeal No. 51 / 2008Commissioner of Income Tax, Udaipur ----AppellantVersus M/s Tirupati Microtech Pvt. Ltd. 1604/1610, Village Thoor, Udaipur ----Respondent D.B. Income Tax Appeal No. 40 / 2008 Commissioner of Income Tax, Udaipur. ----Appellant Versus M/s Tirupati Microtech Pvt. Ltd. 1604/1610, Village Thoor, Udaipur. ----Respondent D.B. Income Tax Appeal No. 21 / 2013 Commissioner of Income Tax, Udaipur ----Appellant Versus M/s Tirupati Microtech Pvt. Ltd. 1604/1610, Village - Thoor, District :- Udaipur (Raj.) ----Respondent D.B. Income Tax Appeal No. 144 / 2013 Commissioner of Income Tax, Udaipur ----Appellant Versus M/s Tirupati Microtech Pvt. Ltd. 1604/1610, Village - Thoor, District :- Udaipur (Raj.) ----Respondent _____________________________________________________ For Appellant(s) : Mr.KK Bissa. For Respondent(s) : Mr.Sanjay Jhanwar. _____________________________________________________ HON'BLE MR. JUSTICE K. S. JHAVERI HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATIJudgment / Order 24/01/2018 1.By way of these appeals, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeals of the department and affirmed the order ofCIT (Appeals). 2.While admitting the appeals, this Court framed followingsubstantial questions of law :- ITA 20/2013 1.Whether on the facts and circumstances of the case aswell as in the law, the Tribunal is justified in holding thatconversion of Zircon Sand into Zircon Powder is irreversibleand, therefore, amounts to manufacture or productioneligible for deduction under Section 801 B(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and others Vs.Bheraghat Minerals Industries 247 ITR 230 and Sacs EaglesChicory Vs. CIT, Reported in 255 ITR 178 (SC)? 2.Whether on the facts and circumstances of the case aswell as in the law, the learned Tribunal is justified in allowingthe relief in respect of the non-inclusion of other income forthe purpose of calculation of deduction under section 801Bignoring the fact that other income does not form the part ofprofit derived from an industrial undertaking? ITA 23/2013 1.Whether on the facts and circumstances of the case aswell as in the law, the Tribunal is justified in holding thatconversion of Zircon Sand into Zircon Powder is irreversibleand, therefore, amounts to manufacture or productioneligible for deduction under Section 801 B(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and others Vs.Bheraghat Minerals Industries 247 ITR 230 and Sacs EaglesChicory Vs. CIT, Reported in 255 ITR 178 (SC)? 2.Whether on the facts and circumstances of the case aswell as in the law, the learned Tribunal is justified in allowingthe relief in respect of the non-inclusion of other income forthe purpose of calculation of deduction under section 801Bignoring the fact that other income does not form the part ofprofit derived from an industrial undertaking? ITA 24/2013 2.Whether on the facts and circumstances of the case aswell as in the law, the learned Tribunal is justified in allowingthe relief in respect of the non-inclusion of other income forthe purpose of calculation of deduction under section 801Bignoring the fact that other income does not form the part ofprofit derived from an industrial undertaking? ITA 24/2013 1.Whether on the facts and circumstances of the case aswell as in the law, the tribunal is justified in holding thatconversion of Zircon sand into Zircon Powder is irreversibleand, therefore, amounts to manufacture or productioneligible for deduction under section 801B(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and other Vs.Bheraghat Minerals Industries 247 ITR 230 and Sacs EaglesChicory Vs. CIT, reported in 255 ITR 178 (SC)? 2.Whether the Tribunal was justified in ignoring thestatement of lender admitting to have providedaccommodation entry instead of actual amount and thelearned Tribunal coming to the conclusion which is perverse. ITA 51/2008 1.Whether on the facts and in the circumstances of thecase as well as in the law, the tribunal is justified in holding that conversion of Zircon Sand into Zircon Powder isirreversible and, therefore, amounts to manufacture orproduction eligible for deduction under section 801B(ii)ignoring the cases of Dy. Commissioner of Sales Tax andothers Vs. Bheraghat Minerals Industries 246 ITR 230 andSacs Eagles Chicory Vs. CIT, reported in 255 ITR 178 (SC)? 2.Whether on the facts and in the circumstances of thecase as well as in the law, the learned Tribunal is justified inallowing the relief in respect of the non-inclusion of otherincome for the purpose of calculation of deduction underSection 801B ignoring the fact that other income does notform the part of profit derived from an industrialundertaking? ITA 40/2008 Whether on the facts and in the circumstances of the case aswell as in the law, the tribunal is justified in holding thatconversion of zircon Sand into Zircon Powder is irreversibleand, therefore, amounts to manufacture or productioneligible for deduction under Section 801(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and others Vs.Bheraghat Minerals industries 246 ITR 230 and Sacs EaglesChicory Vs. CIT, reported in 255 ITR 178 (SC)? ITA 21/2013 1.Whether on the facts and circumstances of the case aswell as in the law, the tribunal is justified in holding thatconversion of Zircon sand into Zircon Powder is irreversibleand, therefore, amounts to manufacture or productioneligible for deduction under Section 801B (3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and others Vs.Bheraghat Minerals Industries 247 ITR 230 and Sacs EaglesChicory vs. CIT, reported in 255 ITR 178 (SC)? 2.Whether on the facts and circumstances of the case aswell as in the law, the learned Tribunal is justified in allowingthe relief in respect of the non-inclusion of other income forthe purpose of calculation of deduction under Section 801Bignoring the fact that other income does not form the part ofprofit derived from an industrial undertaking? ITA 144/2013 Whether on the facts and in the circumstances of the case aswell as in the law, the Tribunal is justified in holding thatconversion of Zircon Sand into Zircon Powder is irreversibleand, therefore, amounts to manufacture or productioneligible for deduction under Section 801B(3) (ii) ignoring thecases of Dy. Commissioner of Sales Tax & Ors. Vs. BheraghatMinerals Industries 246 ITR 230 and Sacs Eagles Chicory Vs. CIT, reported in 255 ITR 178 (SC)? 3.Learned counsel for the appellant has taken us to the orderof the CIT (Appeals) and Tribunal and contended that the A.O. has ITA 144/2013 Whether on the facts and in the circumstances of the case aswell as in the law, the Tribunal is justified in holding thatconversion of Zircon Sand into Zircon Powder is irreversibleand, therefore, amounts to manufacture or productioneligible for deduction under Section 801B(3) (ii) ignoring thecases of Dy. Commissioner of Sales Tax & Ors. Vs. BheraghatMinerals Industries 246 ITR 230 and Sacs Eagles Chicory Vs. CIT, reported in 255 ITR 178 (SC)? 3.Learned counsel for the appellant has taken us to the orderof the CIT (Appeals) and Tribunal and contended that the A.O. has rightly assessed that the process undertaken by the assessee isnot manufacturing and, therefore, the benefit of Section 80IB isnot allowable to the assessee. While considering the case, theA.O. relied on the judgments reported in 246 ITR 230 (SC) (Dy.Commissioner of Sales Tax and others. vs. Bherhaghat Minerals Industries) and 255 ITR 178 (SC) (Sacs Eagles Chicory vs. CIT).4.However, learned counsel for the respondent has relied upon the decision of the Hon'ble Supreme Court in (2010) 320 ITR 79(SC) (Income Tax Officer, Udaipur. vs. Arihant Tiles and Marbles (P) Ltd. wherein in para 23, it has been observed as under :- "23. Before concluding, we would like to make oneobservation. If the contention of the Department is to beaccepted, namely that the activity undertaken by therespondents herein is not a manufacture, then, it would haveserious revenue consequences. As stated above, each of therespondents is paying excise duty, some of the respondentsare job workers and the activity undertaken by them hasbeen recognised by various Government Authorities asmanufacture. To say that the activity will not amount tomanufacture or production under Section 80IA will havedisastrous consequences, particularly in view of the fact thatthe assessees in all the cases would plead that they were notliable to pay excise duty, sales tax etc. because the activitydid not constitute manufacture. Keeping in mind the above factors, we are of the view that inthe present cases, the activity undertaken by each of therespondents constitutes manufacture or production and,therefore, they would be entitled to the benefit of Section80IA of the Income Tax Act, 1961." 4.1He also relied on Government Circular No.556/52/2000-CX dated 30.10.2000 wherein zircon sand process was considered Powered by TCPDF (www.tcpdf.org) and held to be a process and liable for excise. 5.Taking into consideration the observations made by theHon'ble Supreme Court in para 23 referred to herein, we are incomplete agreement with the view taken by the Tribunal whichhas described the activity of assessee as manufacturing process.Thus, all the issues are answered in favour of the assessee and against the department. 6.Accordingly, the instant appeals are dismissed. (DR. PUSHPENDRA SINGH BHATI)J. (K. S. JHAVERI)J. S.Phophaliya/-