Ita/787/2008 Of Herald Publications Pvt Ltd v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATLBD THIS THE DAY OF DECEMBER 2014. PRESENT. THE HON’BLE MR.JUSTICE N.KUMAR AND THE HON’BLE MR.JUSTICE B.MANOHAR_ I.T.A. No.787/2008 BETWEEN: Herald Publications Pvt. Ltd.,Having Office at —RUA DE OUREM.Sst. TOME Street,Panaji — Goa -405001.~. APPELLANT (By Sri.G.Sarangan, Sr.Counsel for Sri.Balram R.Rao, Adv.) AND: The Asst. Commissioner of |Income Tax, Circle 12(3),|Bangalore. _ — RESPONDENT | (By Sri... V.Anand, Adv.) AR AR This [TA 1s filed under section 260-A of [-T.Act, 1961, arising outof order dated 30.04.2008 passed in ITA.No.349/ PNJ/2004, for the|Assessment Year 2000-2001, praying to formulate the substantial| questions of law stated therein and allow the appeal and set aside theorder passed by the ITAT, Panaji, in ITA No.349/PNJ/2004|dt.30.04.2008. This ITA coming on for Hearing this day,N.KUMAR, J.,delivered the following: JUDGMENT The assessee has preferred this appeal against the order passed bythe Tribunal holding that the assessee is not entitled for deduction undersection SOIB in view of the fact that the assessee has to establish that themanufacturing process was maintained by way of a separate unit, for|which satisfaction has to be recorded by the Assessing Officer by|verifying the number of employees, purchasers and etc., under which nosubstantive evidence has been established by the assessee even before us. oDThe assessee is a Private Limited Company carrying on|business as publisher of a Daily Herald and operating a job printing unit.The assessee’s claim for exemption under section 80IB was rejected by |the Assessing Officer on the ground that out of 11 persons employed,|four employees are not employed in the manufacturing process which|means that the effective number of employees engaged in the| manufacturing process comes to seven which does not satisfy the|condition as required under section 80IB(2)(tv) of Income Tax Act and|therefore, the assessee is not entitled to the benefit. The assessee|preferred an appeal against the said order before the Commissioner ofIncome Tax, Panaji, who relying on his own order in the case of assesseefor the earlier year upheld the order of the Assessing Officer and|dismissed the appeal. In the second appeal, the Tribunal upheld the|otder passed by the Appellate Authority. Agerieved by the said order,|the present appeal ts filed. — CuThe appeal was admitted to consider the following|substantial question of law:-_ 1) Whether the Lribunal wasjustified in denying the exemption under} section S50LB of the Income Lax Act, 1961 on the ground that theassessee has not employed ten employees in the manufacturing process)though more than ten employees were employed in the establishments| 4.The question involved herein arose for consideration|before the Hon’ble High Court of Bombay at Goa in the assessee’s case| itself for the earlier year. After taking note of the admitted facts and the judgements relied on by both the parties, the Bombay High Court heldhas under:-| CuThe appeal was admitted to consider the following|substantial question of law:-_ 1) Whether the Lribunal wasjustified in denying the exemption under} section S50LB of the Income Lax Act, 1961 on the ground that theassessee has not employed ten employees in the manufacturing process)though more than ten employees were employed in the establishments| 4.The question involved herein arose for consideration|before the Hon’ble High Court of Bombay at Goa in the assessee’s case| itself for the earlier year. After taking note of the admitted facts and the judgements relied on by both the parties, the Bombay High Court heldhas under:-| 7Here the provisions of Section 80 LA(2)(v) of theIncome Lax Act employs two phrases; first one is IndustrialUndertaking’ and the second is ‘Manufacturing Process’. [his Clause(v) considers the Industrial Undertaking which manufactures orprocess articles or things. By implication, it excludes those IndustrialUndertakings whith do not manufacture or produce any article orthing. Section SO LA(1) speaks of a business of an industrialundertaking. Sub-section (2) thereof speaks of an IndustrialUndertaking. Clause (t) therein lays down that such IndustrialUndertaking shoulda not beformed by splitting up or reconstruction ofa business, already in existence. Similarly, its Clause (tt) alsonecessitates that such industrial undertaking shoula not be formed bytransfer to a new business ofmachinery orplantpreviously usedfor anypurpose. Lhus concept of ‘business’ envisaged therein appears to bewider incluaing within itself the ‘industrial undertaking. However,for the presentpurpose it 1s not necessary to conclusively lay down anysuch law.” 5Though the principle ofres judicatahas no application in deciding the cases under the Income Tax Act, when the fact situation for the earlier year is identical with the subsequent year and the legal|position is clear, the judgement rendered on an earlier occasion 1sapplicable. ‘That is precisely what the Tribunal has held. Admittedly,|even for the subsequent year, the assessee had not employed ten or more,such employees in the industrial undertaking for the manufacturing|process. Therefore, the assessee is not entitled for the benefit of SectionSOIB of the Act. Accordingly, the substantial question of law is answered in favourof the revenue and against the assessee. Hence, we pass the following:- ORDER Appeal is dismissed. Parties to bear their own costs. Bss.. Sd/-| JUDGE Sd/-| JUDGE