M/S Jain Grani Marmo Pvt. Ltd., Udaipur v. Income Tax Officer, Ward 2 (1), Udaipur

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JODHPUR. JUDGMENT M/s Jain Grani Marmo Pvt. Ltd., Udaipur Vs. Income Tax Officer, Ward 2 (1), Udaipur. D.B. INCOME TAX APPEAL NO.70/2009 Date of Judgment : 10[th] May 2012 PRESENT HON'BLE THE JUSTICE MR. DINESH MAHESHWARIHON'BLE MR. JUSTICE KAILASH CHANDRA JOSHI Mr.Vineet Dave for the appellantMr.KK Bissa for the respondent. BY THE COURT: This appeal has been placed on board for hearingattached with the other appeal (ITA No.64/2009). However,the issues involved in these two appeals being different, ITANo.64/2009 has now been detached; and shall be consideredseparately. This appeal (ITA No.70/2009) by the assessee underSection 260-A of the Income Tax Act, 1961 ('the Act') isdirected against the judgment and order dated 20.07.2009 aspassed by the Income Tax Appellate Tribunal, Jodhpur Bench,Jodhpur (‘the ITAT’) in Income Tax Appeal No.319/JU/2008 2 DB ITA No.70/2009 relating to assessment year 2005-06. After having heard the learned counsel for the partiesand having perused the material placed on record includingthat related to the subsequent events, we are satisfied thatthis appeal, essentially against the order of remand, has beenrendered infructuous. Thus, dilatation on all the factualaspects does not appear necessary. A brief reference to therelevant background aspects would suffice. In the assessment proceedings for the assessment year2005-06, the appellant-assessee, who is engaged in theactivity of sawing of marble blocks into slabs and tiles andexporting the same, claimed exemption of profit underSection 10B of the Act. The Assessing Officer (‘the AO’), inhis order dated 28.12.2008, rejected such claim with thefinding that no manufacturing or production activity wasinvolved and no new article or thing came into existence bythe activity of the assessee. However, the Commissioner ofIncome Tax (Appeals), Udaipur [‘the CIT(A)’] came to theconclusion otherwise and held the appellant-assessee entitledfor exemption under Section 10B of the Act. This order of CIT(A) was challenged in Appeal No.319/JU/2008 by the revenuebefore the ITAT. In the aforesaid appeal before the ITAT, it was urged by 3 DB ITA No.70/2009the revenue that the CIT(A) erred in allowing the exemptionto the assessee under Section 10B of the Act while ignoringthe fact that the assessee was just engaged in the process ofcutting, sizing and polishing the marble and no new article orthing came into existence. The ITAT considered the facts ofthe case and found that neither the AO nor the CIT(A) hadcarried out the necessary inquiry to determine the nature ofactivity or the processes carried out by the assessee; andfound it a fit case to be restored to the file of AO for de novoconsideration, particularly on the nature of activity of theassessee. The ITAT ultimately observed and held as under:- In the aforesaid appeal before the ITAT, it was urged by 3 DB ITA No.70/2009the revenue that the CIT(A) erred in allowing the exemptionto the assessee under Section 10B of the Act while ignoringthe fact that the assessee was just engaged in the process ofcutting, sizing and polishing the marble and no new article orthing came into existence. The ITAT considered the facts ofthe case and found that neither the AO nor the CIT(A) hadcarried out the necessary inquiry to determine the nature ofactivity or the processes carried out by the assessee; andfound it a fit case to be restored to the file of AO for de novoconsideration, particularly on the nature of activity of theassessee. The ITAT ultimately observed and held as under:- “…..Therefore, we are of the considered view that this is afit case to be restored to the file of the Assessing Officerfor de novo consideration of this issue in the light ofsubmissions made by assessee before him that wasextracted from pages 2 to 16 in the Assessment order aswell as the decision of the Hon’ble Jurisdictional HighCourt of Rajasthan in the case of Arihant Tiles and Marblesand this Bench order in the case of Madhav Marbles, andalso verify the various activities alleged to have beencarried out by the assessee as to they will amount to‘manufacture’ or not by physically verifying the factorypremises of the assessee with reference to the books ofaccount maintained by the assessee, and pass necessaryconsequential order as per law, of course, strictly followingthe principles of natural justice. The assessee is alsohereby directed to cooperate with the Assessing Officer forearly disposal.”fit case to be restored to the file of the Assessing Officerfor de novo consideration of this issue in the light ofsubmissions made by assessee before him that wasextracted from pages 2 to 16 in the Assessment order aswell as the decision of the Hon’ble Jurisdictional HighCourt of Rajasthan in the case of Arihant Tiles and Marblesand this Bench order in the case of Madhav Marbles, andalso verify the various activities alleged to have beencarried out by the assessee as to they will amount to‘manufacture’ or not by physically verifying the factorypremises of the assessee with reference to the books ofaccount maintained by the assessee, and pass necessaryconsequential order as per law, of course, strictly followingthe principles of natural justice. The assessee is alsohereby directed to cooperate with the Assessing Officer forearly disposal.” In this appeal by the assessee against the order of remand so made by the ITAT, on 03.11.2010, this Courtobserved that the appeal is to be heard on the following substantial question of law:- “Whether the ITAT was justified in remitting thematter in view of the facts and circumstances of theinstant case?” However, on 14.12.2010, the Court framed two more substantial questions of law as under:- “(1) In the light of finding recorded by the Tribunalin paragraph 6 by observing “that assessee iscarrying on the activity of converting heavy marbleblocks into slabs and tiles”, whether it wasnecessary for the Tribunal to still remand the casefor finding out the nature of activities undertakenby the appellant-assessee? (2) Whether finding recorded by the Tribunal inparagraph 6 is sufficient for holding on facts that thenature of activity in which appellant is engaged inmanufacturing is proved and hence, no need toremand the case for again examining the issue?” A look at the aforesaid three questions makes it clearthat essentially, the validity of the order of remand as madeby the ITAT for finding out the nature of activities undertakenby the appellant-assessee is in question in this appeal. (2) Whether finding recorded by the Tribunal inparagraph 6 is sufficient for holding on facts that thenature of activity in which appellant is engaged inmanufacturing is proved and hence, no need toremand the case for again examining the issue?” A look at the aforesaid three questions makes it clearthat essentially, the validity of the order of remand as madeby the ITAT for finding out the nature of activities undertakenby the appellant-assessee is in question in this appeal. However, it is pointed out by the learned counsel for theparties that pursuant to the order of remand, the AO indeedcarried out the necessary inquiry on the nature of activities ofthe appellant-assessee and then, passed the order on30.12.2010 in favour of the assessee with reference to theorder passed by the Hon'ble Supreme Court on 02.12.2009 in 5 DB ITA No.70/2009 Civil Appeal No.8036/2009 [Income Tax Officer Vs. ArihantTiles and Marbles P. Ltd., reported in (2010) 320 ITR 79 (SC)]. A copy of the order dated 30.12.2010 has been placed onrecord whereform it is noticed that the AO has, inter alia, observed and held as under:- “In compliance of the ITAT order, visit of thefactory of the assessee has been carried out to inspect theoperations carried out by the assessee. On physicalinspection and also based on detailed submissions made bythe assessee which also includes step by stepmanufacturing process with flow Chart and also depictedwith photographs placed on record, it is clear that assesseecase is squarely covered under the Order of the HonableSupreme Court pronounced in Civil Appeal No.8036/2009pronounced on 02.12.2009. Considering the facts of theassessee is similar to the process narrated in the abovecitation and also accepted in assessee's own case forsubsequent assessment orders for assessment year 2007-8 &2008-09, the claim of the assessee u/s 10 B of the IncomeTax Act is hereby accepted/allowed.” In view of the subsequent events as placed on record bythe learned counsel for the parties and for the aforesaid orderdated 30.12.2010, as passed in relation to the appellant-assessee for the Assessment Year 2005-06, wherein theAssessing Officer has given effect to the remand order asmade by the ITAT; and wherein the findings have beenrecorded in favour of the appellant-assessee, we are clearlyof the view that the questions of law as formulated in thiscase on the validity of the order of remand, now could only beconsidered rather redundant and need not be answered. In MAMTA/mk 6 DB ITA No.70/2009 the ultimate analysis, when the findings on the core issue onmerits have been recorded in favour of the assessee afterremand, this appeal by the assessee against the order of remand could only be considered infructuous. Hence, while taking note of the order passed by theAssessing Officer on 30.12.2010, this appeal is treated asinfructuous and is dismissed as such. ,J. , J.