Ita/619/2013 Of Commissioner Of Income Tax-Iii v. M/S.mineral Enterprises Ltd

IN THE HIGH COURT OF KARNATAKA AT BENGALURUON THE 23 DAY OF NOVEMBER, 201383 BEFORE. THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR.JUSTICE K.NATARAJAN | INCOME TAX APPEAL NO.619 OF 2701 BETWEEN: 1.COMMISSIONER OF INCOME TAX-IIIL C.R.BUILDING, QUEENS ROAD,BENGALURU.BENGALURU. 2.THE JOINT COMMISSIONER | OF INCOME TAX (OSD), | BENGALURU. _.. APPELLANTS | (BY SRI E.I.SANMATHI, ADVOCATE) AND" M/S. MINERAL ENTERPRISES LIMITED|300/1B, 16 CROSS, |SADASHIVANAGAR, BENGALURU - 560 O8O. ~.. RESPONDENT| (BY SRI A.SHANKAR, SENIOR COUNSEL~ ALONGWITH SRI M.LAVA, ADVOCATE) THIS|INCOMETAXAPPEAL|ISFILEDUNDER|SECTION 260-A OF THE INCOME-TAX ACT 1961, ARISING|OUT OF ORDER DATED 31.05.2013 PASSED IN ITA.NO.533/BANG/2012, FOR THE ASSESSMENT YEAR 200/72008 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND OR SUCH OTHER QUESTIONS OF LAW AS MAY.BE FORUMULATED BY THE COURT AS DEEMED FIT; SET.ASIDE APPELLATE ORDER DATED 31.05.201L3 PASSED BYTHE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH,|BENGALURU AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'’S CASE, IN APPEAL PROCEEDINGS NO.ITANO.533/BANG/2012 FOR THE ASSESSMENT YEAR 200/72008. AK AK THIS INCOME TAX APPEAL COMING ON FOR)HEARING THIS DAY, RAVI MALIMATH J., DELIVERED THEFOLLOWING: JUDGMENT Tne assessee is a Company engaged in the businessof mining and export of minerals. It nas set up an export.oriented unit in the year 2004 after getting necessarypermission from the authorities. It claimed deduction|under Section 10-B of the Act in respect of profits derivedfrom export oriented unit. For the first year namely,2005-2006 deduction was claimed for the activity ofextraction and processing of mining ore and exporting the) Same. Ine revenue took a stand that the said process.does not amounts to manufacture and therefore tne!assessee was not entitied to deduction under Section 10-B.of the Act. Ultimately, the issue was decided py the.Tribunal in favour of the assessee. Therefore, the issue)whetner tne assessee is entitied for deduction under!Section 10B of the Act for the assessment year 2005-2006was settled pursuant to the order of tne Tribunal. 2).However, the Assessing Officer issued noticeunder Section 148 of tne Act for the assessment year.2005-06. According to the Assessing Officer in the courseof proceedings for the assessment year 2007-2008, it was.noticed that the assessee purchased iron ore fines, inadaition to extraction of iron ore from its own mines to tnevalue of Rs.4,33,69,492/-. That the purchase of iron orefines did not undergo any process and it was sold as such.Tnerefore, the assessee was not entitied for deduction|under Section 10-B of the Act, until and unless the)assessee derives profit from manufacture, production etc. That the assessee had claimed deduction in respect ofpurcnase and sales of iron ore fines. Tnerefore, the.assessIngauthorityrestricted tneclaim.TO R.42,02,88,123/-.as|against|Rs.44,10,01,/757/-.Aggrieved by the same, an appeal was preferred beforetneCommissioner.of.Income- | a(Appeals).Tne.Commissioner of Income-Tax (Appeals), partly allowed theSame with regard to restriction based on the findings|recorded in the assessee’s own case for the previous year.holding that the same amounts to manufacture/processingand so far as certain discrepancies as noted in the Dilis|submitted by the assessee, the Assessing Officer wasdirected to re-consider the said discrepancies. Aggrieved|by the same, the Revenue preferred an appeal before theTribunal for all the assessment years namely, 2005-2006,|2006-2007, 2008-2009 and 2007-2008. 3.ITA No. 619 of 2013 arises out of appealproceedings No.533/BNG/12 for the assessment year2007-2008. The connected appeal, ITA No.620 of 2013 arises out of appeal proceedings 1254/Bangalore/11 forthe assessment year 2008-200. By the order dated |28-04-2014, the appeals were admitted to consider the.following substantial questions of law. 3.ITA No. 619 of 2013 arises out of appealproceedings No.533/BNG/12 for the assessment year2007-2008. The connected appeal, ITA No.620 of 2013 arises out of appeal proceedings 1254/Bangalore/11 forthe assessment year 2008-200. By the order dated |28-04-2014, the appeals were admitted to consider the.following substantial questions of law. “(1)WhetherOP)thefactsandInthecircumstances of the case, the Tribunal ts rignt in.law in upholding the order of the Commissioner in.allowing the assesee’s claim for deduction underSection 10B of the I.T.Act, for the traded iron ore,without appreciating the fact that the activity of theassessee in extraction and processing of mining oredoes not amount to manufacture or production ofarticle or thing as prescribed in Section 10B andwhenrequirementsforeligibility UnderSaidprovision is not satisfied by assessee ? (2)WhetherOf)thefactsand|Inthecircumstances of the case, the Tribunal its right tnlaw in holding that the reimbursement of travelling:expenses of Rs.5,55,808/- and supervision chargesof Rs.15,30,8/0/- are to be excluded both from thetotal turnover as well as from export turnover onlyas per the definitions as given in Section 10A/10B°of the [.T. Act and total turnover has not Deendefined in the Section? (3)Whether the Tribunal is correct [In law Innoiding that the deduction under Section 10B.snould be computed in the above manner followingthe Jjuagment of this Court in the case of TATAElaxsi, wnicn has not become final since the SLP|preferred by Revenue is pending before Apex Courton this [ssue? (4)WhetherOf)thefactsandInthecircumstances of the case, the Tribunal justified in.law in holding tnat the assessee is entitied to.additionaldepreciation Of)winamIl||withoutappreciatingthefactthettheadditionaladepreciation is allowable only on new plant ormachinery included in the fixed assets scheduleana not on tne windmills engagedad in powegeneration ? (5)WhetherOf)thefactsand|In|thecircumstances of the case, the Tribunal is Justifiedin law in nolding that tne assessee is entitled to.additional depreciation on Winamill by relying on.the decision of the Madras High Court in the case ofCIT vs. VIM Ltd., 319 ITR 336 witnout appreciating the fact that the Department has not accepted thesaid decision of the High Court of Madras and hasfiled SLP before the Supreme Court, wnicn its stillpending and tne decision of the Madras High Court.in the above case hes still not become final ?” Learned counsel submits that substantial questions of law|Nos. 2 & 3 are covered by the judgment in the case ofCOMMISSIONER OF INCOME-TAX, CENTRAL- III vs. HCLTECHNOLOGIES|LITD.,reported In,12018]93|TAXMANN.COM 33 (SC). Hence the questions of law are)answered in favour of the assessee and against therevenue. 4The substantial question Nos. 4 & 5 do not)arise for consideration. Thnerefore, it is only question No.1)that would arise for consideration. Hence, they haveaddressed the arguments on the same. — 5. While considering the plea of the revenue andthe assessee the Commissioner of Income-Tax(Appeals)|was of the view that there are various discrepancies as Learned counsel submits that substantial questions of law|Nos. 2 & 3 are covered by the judgment in the case ofCOMMISSIONER OF INCOME-TAX, CENTRAL- III vs. HCLTECHNOLOGIES|LITD.,reported In,12018]93|TAXMANN.COM 33 (SC). Hence the questions of law are)answered in favour of the assessee and against therevenue. 4The substantial question Nos. 4 & 5 do not)arise for consideration. Thnerefore, it is only question No.1)that would arise for consideration. Hence, they haveaddressed the arguments on the same. — 5. While considering the plea of the revenue andthe assessee the Commissioner of Income-Tax(Appeals)|was of the view that there are various discrepancies as noted in the bills submitted by the assessee. The)discrepancies are as to whether the purcnase is made by.the assessee are ROM or iron ore fines. The plea of theassessee is that wnat has been purcnased is ROM wnhicn isprocessed. However, the finding of the Assessing Officer isthat wnat nas been purcnased and wnat has been sold is.iron ore. The reasons in support of such a decision hasbeen accorded therein. In so considering the plea of the)assessee and the material led-in, the Commissioner of Income-Tax(Appeals), was of the view that there arediscrepancies in certain bills with regard to purchase of)iron ore fines or ROM. The above discrepancies werenotedintheorder|OT|Commissioner.OT|iIncomeTax(Appeals). It is for this reason that the Assessing.Officer was adirected to re-consider tne pills wherein tnesaid discrepancies are noticed and only after verifying theSame to re-do tne assessment witn reference to tne!discrepancies only. However, what is further contended istnat it is not just the discrepancies in tne bills Dut also with regard to the documents furnished by the assessee withregard to the Customs Department and Department ofMines etc. Therefore, the learned counsel for the assessee|contends tnat when the matter is required to be re-considered, the same should be re-considered so far as all |these years wnicnh are relevant to the case of the assessee. 6. Under these circumstances, we are of the view|tnat in view of the various discrepancies as noticed by the)Commissioner of Income-Tax(Appeals), that the matterrequires reconsideration by tne Assessing Officer only so)far as any such discrepancies that arises from the recordsare concerned. MIherefore, we are of the view tnat the}order of Commissioner of Income-Tax(Appeals) directingtne Assessing Officer to restrict the deduction on the Dilis|is Just and proper. In the instant case, we do not think it)appropriate that the entire matter requires to be)reconsidered afresh on all the issues. It Is just and)appropriate that the matter be re-considered only so far asthe aforesaid observation is concerned. Consequently, the| substantial question of law is answered to the extent thatthe authorities were justified in directing the Assessing|Officer to restrict the deductions on the bills where|discrepancies were noted and to re-work the deductions|after verifying the bills. The substantial question of law is.accordingly answered. The appeal is accordingly disposed off. Sd/- |Sd/-_JUDGE JUDGE | Rsk/-