M/S Regal Industries Limited v. Commissioner Of Income Tax, Chandigarh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 468 of 2009 (O&M)Date of decision: 10.9.2009. M/s Regal Industries Limited Vs. Commissioner of Income Tax, Chandigarh. ......Appellant ...Respondent CORAM:-HON'BLE MR.JUSTICE ADARSH KUMAR GOELHON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT:Mr.Puneet Bali, Advocate, for the assessee.**** ADARSH KUMAR GOEL, J. (Oral) 1.The assessee has preferred this appeal under Section 260A ofthe Income Tax Act, 1961 (for short, “the Act”) against the order dated19.12.2008 (Annexure A-7) passed by the Income Tax Appellate Tribunal,Chandigarh, Bench 'A', Chandigarh in I.T.A. No. 732/CHD/01 forassessment year 1997-98, proposing to raise the following substantialquestions of law: “i)Whether the Assessing Officer can deny thebenefit under Section 80IA when the same hasbeen given in the preceding years in view of thelaw laid down in Saurashtra Cement vs. CIT 123ITR 669 and CIT vs. Paul Brothers, 216 ITR 548?ii)Whether on the facts and in the circumstancesof the present case, the learned ITAT is rightin law in coming to the conclusion that theprocess of manufacturing rubber latex solution 9 [2] (adhesive) from the natural latex is not'manufacture' as stipulated in Section 80IA ofthe Income Tax Act, 1961. iii) Whether the learned ITAT gravely erred innot considering the Certificates issued by theIndustries Department, Government ofHimachal Pradesh, clearly showing that theappellant was manufacturing the rubber latexsolution w.e.f. 1.11.1994?not considering the Certificates issued by theIndustries Department, Government ofHimachal Pradesh, clearly showing that theappellant was manufacturing the rubber latexsolution w.e.f. 1.11.1994? iv)Whether the learned ITAT gravely erred innot relying upon the Labour Inspector's reportdated 26.2.1997 as well as the attendanceregisters duly checked by the LabourInspector on 18.2.1997 which clearly showsthat the appellant was employing 25 personsin his factory premises?not relying upon the Labour Inspector's reportdated 26.2.1997 as well as the attendanceregisters duly checked by the LabourInspector on 18.2.1997 which clearly showsthat the appellant was employing 25 personsin his factory premises? v) Whether the learned ITAT misread theevidence with regard to Labour Inspector'sreport dated 26.2.1997?evidence with regard to Labour Inspector'sreport dated 26.2.1997? 2.The assessee claimed deduction under Section 80IA. The saidclaim was rejected by the Assessing Officer, which view has been upheldby the CIT(A) as well as by the Tribunal. It was held that the assesseeclaimed that it was purchasing latex and diluting it in a big drum called'emulsifiers fire', which could not be termed 'manufacturing'. The factum of 9 [3] carrying on manufacturing activity was also not established. The assesseecould not produce any electricity bill. There was no evidence of ESI or PFreturns nor any evidence of sale of goods. The assessee claimed that booksof accounts were burnt in fire and though every effort was made to lodgeFIR, the police department did not do so. Reliance was also placed on acertificate issued by the General Manager, Solan. The assessee producedextract from payment of wages register. The evidence of the assessee wasrejected concurrently by all the authorities. 3. The Tribunal observed: 9 [3] carrying on manufacturing activity was also not established. The assesseecould not produce any electricity bill. There was no evidence of ESI or PFreturns nor any evidence of sale of goods. The assessee claimed that booksof accounts were burnt in fire and though every effort was made to lodgeFIR, the police department did not do so. Reliance was also placed on acertificate issued by the General Manager, Solan. The assessee producedextract from payment of wages register. The evidence of the assessee wasrejected concurrently by all the authorities. 3. The Tribunal observed: “In view of these facts, since at any stage, nothinghas been produced/furnished evidencing that theassessee has actually manufactured anything,therefore, we have not found any infirmity in theimpugned order. Our above view is also fortifiedby the following decisions: CIT vs. HindustanMetal Refining Works Pvt. Ltd. 128 ITR 472(Cal). CIT v. Relish Foods 237 ITR 59 (SC), SaxEagle Chicory v. CIT 255 ITR 178 (SC)D.D.Shah & Bros. vs. Union of India 148Taxman 1 (Raj). If the aforesaid facts and thejudicial pronouncements are kept in juxtapositionwith the facts of the present appeal, we havefound that the assessee neither produced therecords of purchasing raw material nor explainedthe process of manufacturing and also no proof of 9 [4] sale. For claiming deduction under Section 80IA,the assessee is supposed to explain that the endproduct, if any, is commercially knowndifferently. However, in the present appeal theassessee even has not explained what ismanufactured by it or whether the assessee isactually manufacturing anything, therefore, in theabsence of all these facts, the benefit of deductioncannot be extended to the assessee. Consequently,we have no t found any infirmity in the impugnedorder, the same is upheld.” 4.The above findings are findings of fact and cannot be held tobe perverse. The factum of manufacturing and selling having not beenestablished, no substantial question of law arises. 5.The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE September 10, 2009raghav (DAYA CHAUDHARY) JUDGE