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. 22 / 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. K.K. Bissa For Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K. S. JHAVERI HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI Order 25/01/2018 1.By way of this appeal, the appellant has challenged theimpugned judgment and order passed by the learned Tribunalwhereby the learned Tribunal has dismissed the appeal. 2.This Court, while admitting the present appeal on30.05.2013 has framed the following substantial questions of law: “1. Whether on the facts and circumstances of thecase well as in the law, the tribunal is justified inholding that conversion of Zircon Sand into ZirconPowder is irreversible and, therefore, amounts tomanufacture or production eligible for deduction underSection 801B(3)(ii) ignoring the cases of Dy.Commissioner of Sales Tax and others Vs. BheraghatMinerals Industries 247 ITR 320 and Sacs EaglesChicory Vs. CIT, reported in 255 ITR 178 (SC)? 2. Whether on the facts and circumstances of the caseas well as in the law, the learned Tribunal is justified in allowing the relief in respect of the non-inclusion ofother income for the purpose of calculation ofdeduction under Section 801B ignoring the fact thatother income does not form the part of profit derivedfrom an industrial undertaking?” 3.The issues now covered by the decision rendered bythis Court in Commissioner of Income Tax, Udaipur Vs. M/sTirupati Microtech Pvt. Ltd., (D.B. Income Tax Appeal No. 20 /2013) decided on 24.01.2018 along with other analogous matters,which reads as under: “1. By way of these appeals, the appellant haschallenged the judgment and order of the Tribunalwhereby the Tribunal has dismissed the appeals ofthe department and affirmed the order of CIT(Appeals). 2. While admitting the appeals, this Court framedfollowing substantial questions of law :- ITA 20/2013 1. Whether on the facts and circumstances of thecase as well as in the law, the Tribunal is justifiedin holding that conversion of Zircon Sand intoZircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under Section 801 B(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and othersVs. Bheraghat Minerals Industries 247 ITR 230 andSacs Eagles Chicory Vs. CIT, Reported in 255 ITR178 (SC)? 2. Whether on the facts and circumstances of thecase as well as in the law, the learned Tribunal isjustified in allowing the relief in respect of the non-inclusion of other income for the purpose ofcalculation of deduction under section 801Bignoring the fact that other income does not formthe part of profit derived from an industrialundertaking? ITA 23/2013 1. Whether on the facts and circumstances of the case as well as in the law, the Tribunal is justifiedin holding that conversion of Zircon Sand intoZircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under Section 801 B(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and othersVs. Bheraghat Minerals Industries 247 ITR 230 andSacs Eagles Chicory Vs. CIT, Reported in 255 ITR178 (SC)? 2. Whether on the facts and circumstances of thecase as well as in the law, the learned Tribunal isjustified in allowing the relief in respect of the non-inclusion of other income for the purpose ofcalculation of deduction under section 801Bignoring the fact that other income does not formthe part of profit derived from an industrialundertaking? ITA 24/2013 case as well as in the law, the Tribunal is justifiedin holding that conversion of Zircon Sand intoZircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under Section 801 B(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and othersVs. Bheraghat Minerals Industries 247 ITR 230 andSacs Eagles Chicory Vs. CIT, Reported in 255 ITR178 (SC)? 2. Whether on the facts and circumstances of thecase as well as in the law, the learned Tribunal isjustified in allowing the relief in respect of the non-inclusion of other income for the purpose ofcalculation of deduction under section 801Bignoring the fact that other income does not formthe part of profit derived from an industrialundertaking? ITA 24/2013 1. Whether on the facts and circumstances of thecase as well as in the law, the tribunal is justifiedin holding that conversion of Zircon sand intoZircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under section 801B(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and otherVs. Bheraghat Minerals Industries 247 ITR 230 andSacs Eagles Chicory Vs. CIT, reported in 255 ITR178 (SC)? 2. Whether the Tribunal was justified in ignoringthe statement of lender admitting to have providedaccommodation entry instead of actual amountand the learned Tribunal coming to the conclusionwhich is perverse. ITA 51/2008 1. Whether on the facts and in the circumstancesof the case as well as in the law, the tribunal isjustified in holding that conversion of Zircon Sandinto Zircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under section 801B(ii) ignoring thecases of Dy. Commissioner of Sales Tax and othersVs. Bheraghat Minerals Industries 246 ITR 230 andSacs Eagles Chicory Vs. CIT, reported in 255 ITR178 (SC)? 2. Whether on the facts and in the circumstancesof the case as well as in the law, the learnedTribunal is justified in allowing the relief in respectof the non-inclusion of other income for thepurpose of calculation of deduction under Section 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 ofthe case as well as in the law, the tribunal isjustified in holding that conversion of zircon Sandinto Zircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under Section 801(3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and othersVs. Bheraghat Minerals industries 246 ITR 230 andSacs Eagles Chicory Vs. CIT, reported in 255 ITR178 (SC)? ITA 21/2013 1. Whether on the facts and circumstances of thecase as well as in the law, the tribunal is justifiedin holding that conversion of Zircon sand intoZircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under Section 801B (3)(ii) ignoring thecases of Dy. Commissioner of Sales Tax and othersVs. Bheraghat Minerals Industries 247 ITR 230 andSacs Eagles Chicory vs. CIT, reported in 255 ITR178 (SC)? 2. Whether on the facts and circumstances of thecase as well as in the law, the learned Tribunal isjustified in allowing the relief in respect of the non-inclusion of other income for the purpose ofcalculation of deduction under Section 801Bignoring the fact that other income does not formthe part of profit derived from an industrialundertaking? ITA 144/2013 2. Whether on the facts and circumstances of thecase as well as in the law, the learned Tribunal isjustified in allowing the relief in respect of the non-inclusion of other income for the purpose ofcalculation of deduction under Section 801Bignoring the fact that other income does not formthe part of profit derived from an industrialundertaking? ITA 144/2013 Whether on the facts and in the circumstances ofthe case as well as in the law, the Tribunal isjustified in holding that conversion of Zircon Sandinto Zircon Powder is irreversible and, therefore,amounts to manufacture or production eligible fordeduction under Section 801B(3) (ii) ignoring thecases of Dy. Commissioner of Sales Tax & Ors. Vs.Bheraghat Minerals Industries 246 ITR 230 andSacs Eagles Chicory Vs. CIT, reported in 255 ITR178 (SC)? to the order of the CIT (Appeals) and Tribunal andcontended that the A.O. has rightly assessed thatthe process undertaken by the assessee is notmanufacturing and, therefore, the benefit ofSection 80IB is not allowable to the assessee.While considering the case, the A.O. relied on thejudgments 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 respondenthas relied upon the decision of the Hon'bleSupreme Court in (2010) 320 ITR 79 (SC) (IncomeTax Officer, Udaipur. vs. Arihant Tiles and Marbles(P) Ltd. wherein in para 23, it has been observedas under :- "23.Before concluding, we would like to makeone observation. If the contention of theDepartment is to be accepted, namely that theactivity undertaken by the respondents herein isnot a manufacture, then, it would have seriousrevenue consequences. As stated above, each ofthe respondents is paying excise duty, some of therespondents are job workers and the activityundertaken by them has been recognised byvarious Government Authorities as manufacture.To say that the activity will not amount tomanufacture or production under Section 80IA willhave disastrous consequences, particularly in viewof the fact that the assessees in all the caseswould plead that they were not liable to pay exciseduty, sales tax etc. because the activity did notconstitute manufacture. Keeping in mind the above factors, we are of theview that in the present cases, the activityundertaken by each of the respondents constitutes manufacture or production and, therefore, theywould be entitled to the benefit of Section 80IA ofthe Income Tax Act, 1961." 4.1He also relied on Government CircularNo.556/52/2000-CX dated 30.10.2000 whereinzircon sand process was considered and held to bea process and liable for excise. 5. Taking into consideration the observationsmade by the Hon'ble Supreme Court in para 23referred to herein, we are in complete agreementwith the view taken by the Tribunal which hasdescribed the activity of assessee asmanufacturing process. Thus, all the issues areanswered in favour of the assessee and against thedepartment. 6. Accordingly, the instant appeals are dismissed.” 4.In light of the aforequoted judgment, the presentappeal is dismissed. The substantial questions of law are answeredin favour of the assessee and against the department. (DR. PUSHPENDRA SINGH BHATI)J. (K. S. JHAVERI)J. Skant/-60