The ITO, Vapi Ward-4,, Daman v. M/s. Innovative Industries, Daman

ITA 3084/AHD/2007 | 2004-2005
Pronouncement Date: 28-05-2010 | Result: Dismissed

Appeal Details

RSA Number 308420514 RSA 2007
Assessee PAN AAAHI4376P
Bench Ahmedabad
Appeal Number ITA 3084/AHD/2007
Duration Of Justice 2 year(s) 10 month(s) 12 day(s)
Appellant The ITO, Vapi Ward-4,, Daman
Respondent M/s. Innovative Industries, Daman
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-05-2010
Date Of Final Hearing 21-05-2010
Next Hearing Date 21-05-2010
Assessment Year 2004-2005
Appeal Filed On 16-07-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 3084/AHD./2007 ASSESSMENT YEAR : 2004-2005 INCOME TAX OFFICER VAPI WARD-4 -VS.- M/S. INNOVATIVE INDUSTRIES DAMAN (PAN : AAAHI 4376 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJEEV KASHY AP SR. D.R. RESPONDENT BY : SHRI PRAKRITI UPADHY AY O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 13.03.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) VALSAD DELETIN G THE ADDITION OF RS.14 36 135/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME OF RS. NIL ON 01.11.2004 AFTER CLAIMING DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT OF RS.14 36 135/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 22.12.2006 WHEREIN HE HELD THAT THE ASSESSEES UNIT IS NOT MANUFACTURING /PRODUCING ANY NEW ARTICLE/ THING BECAUSE IN MANUFACTURING OR PRODUCTION END PRODUCT MUST BE DIFFERENT FROM TH E INITIAL MATERIAL USED FOR MANUFACTURE/ PRODUCTION. ACCORDING TO ASSESSING OFFICER IN THIS CASE INITIAL MATERIALS USED AS WELL AS END PRODUCT BOTH ARE SAME I.E. PERFUME/ SPRAY. HE ACCO RDINGLY DENIED THE DEDUCTION UNDER SECTION 80IB AMOUNTING TO RS.14 36 135/- CLAIMED BY THE ASS ESSEE. ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED THAT THE PROCESS OF MANUFACTURE AS EXPLAINED BY THE ASSESSEE IN THEIR SUBMISSIONS AS WELL AS QUOTED BY THE ASSESSING OFF ICER IN THE IMPUGNED ASSESSMENT ORDER IS AS UNDER :- PROCESS OF MANUFACTURE 2 ITA NO. 3084/AHD/200 7 THE GOODS MANUFACTURED BY THE APPELLANT ARE HOME CA RE PROJECTS LIKE THE PREMIUM AIR FRESHENERS AEROSOL PRODUCT. THE MANUFAC TURE OF THE PRODUCTS INVOLVES VARIOUS STAGES OF MANUFACTURE AS BELOW :- (A) CONTAINER FORMING FIRSTLY THE TIN PLATES ARE PROCURED AND THEN THE SA ME ARE CONVERTED INTO CANS. THIS PROCESS IS CARRIED OUT BY THE JOB WORKER M/S. VIVID H INDUSTRIES AS PER THE REQUIREMENTS AND SPECIFICATIONS STIPULATED BY THE A PPELLANT. THE CONTAINERS SHOULD BE OF SUCH SPECIFICATIONS WHICH CAN WITHSTAN D THE PRESSURE EXERTED BY THE PROPELLANT. THE CONTAINERS ARE SO DESIGNED SO AS TO RENDER THE SAME SUITABLE FOR FITTING OF I-INCH AEROSOL VALVES. (B) PRE-MIX PREPARATION :- THIS STAGE OF MANUFACTURING PROCESS INVOLVES MIXING OF DIFFERENT CHEMICALS I.E. THE PRODUCT CONSTITUENTS ACCORDING TO PRE-DETERMIN ED FORMULATION. THE CHEMICALS USED FOR PREPARING PRE-MIX FORMULATION ARE VARIOUS CHEMICALS LIKE AROMATIC INDUSTRIAL CHEMICALS WHICH IN LOOSE TERMS ARE ALSO KNOWN AS PERFUMES/ FRAGRANCE) ISO-PROPYL ALCOHOL ETC. IN SOME OF THE PROCESSES THE CHEMICALS VIZ. TRIETHYLENE GLYCOL PROPYLENE GLYCOL CAN ALSO BE AD DED AS ADDITIONAL INGREDIENTS DEPENDING UPON THE INDIVIDUAL FORMULA OF THE PRE-MI X AS PER THE REQUIREMENT OF EACH MANUFACTURER. THE AROMATIC INDUSTRIAL CHEMICAL S PURCHASED BY THE APPELLANT ARE INPUTS FOR THE MANUFACTURE OF AIR FRESHENERS AN D THE SAME ARE NOT CAPABLE OF BEING USED FOR THE HOME CARE APPLICATIONS AS AIR FR ESHENERS IN THE CONDITION IN WHICH THEY ARE MANUFACTURED BY THE AROMATIC INDUSTR IAL CHEMICALS MANUFACTURERS. THEREFORE A PRE-MIX FORMULATION CONSISTING OF VAR IOUS PRODUCT CONSTITUENTS IS PREPARED AS FIRST STAGE OF PRODUCTION. (C) CLEANING OF TIN CANS :- THE TIN CANS RECEIVED FROM THE JOB WORKER ARE THORO UGHLY CLEANED FROM INSIDE SO AS TO ENSURE THAT THERE ARE NOT CONTAMINATING RE MANANTS IN THE CONTAINERS AS WELL AS TO ENSURE CORROSION FREE TIN CAN LIFE. (D) FILLING :- FILLING OF PRE-MIX INTO AEROSOL TIN CAN WITH THE HE LP OF LIQUID FILING MACHINE IN A PRE-DETERMINED QUANTITY OF PRODUCTS. (E) CRIMPING :- SEALING OF PRES BUTTON TYPE VALVE INTO THE TIN CAN CONTAINERS. VALVES ARE ESSENTIAL FOR ACCURATELY CONTROLLING THE DISCHARGE OF THE PRODUCT OF UNIFORM PARTICLE SIZE AND OF REQUIRED SPRAY PATTERN . THE VALVE MECHANISM ASSEMBLY IS ALSO FITTED WITH VALVE CUP GASKET DIP TUBE ACTUATOR AND SPRAY NOZZLE. (F) CHARGING :- FILLING THE REQUIRED TYPE AND QUANTITY OF PROPELLAN T INTO THE CONTAINER. IN THIS PROCESS LIQUEFIED PROPELLANT IS CHARGED INTO THE CO NTAINER THROUGH THE VALVE UNDER PNEUMATIC PRESSURE AT NORMAL TEMPERATURE. DUR ING THE PROCESS PURGING 3 ITA NO. 3084/AHD/200 7 OF AIR FROM THE CONTAINER IS ALSO CARRIED OUT SO AS TO AVOID CONTAMINATION OF THE PRODUCT DUE TO PRESENCE OF AIR. (G) WEIGHING :- FILLED TIN CANS ARE WEIGHED FOR ENSURING UNIFORM QU ANTITY OF FILLING. (H) WATER- BATHING :- THESE FILLED AND SEALED CONTAINERS ARE WATER BATHED TO ENSURE THAT THERE IS NO LEAKAGE IN THE GAS FILLED CONTAINERS. (I) SEALING :- THE CONTAINERS FILLED WITH PRODUCT PRE-MIX AND FITT ED WITH VALVE ARE SEALED WITH THE HELP OF SEALING MACHINE. (J) PACKING :- THEREAFTER THESE CONTAINERS ARE TESTED FOR VALVE A PROTECTIVE CAP IS PLACED ON THE VALVE AND THEN THE SAME ARE TAKEN UP FOR PACKIN G. 3. AFTER CONSIDERING THE VARIOUS SUBMISSIONS IN TH E IMPUGNED ORDER THE LD. CIT(A) FOR THE DETAILED REASONS GIVEN IN THE ASSESSMENT ORDER HEL D THAT ACTIVITY OF THE ASSESSEE-FIRM IS OF MANUFACTURE AND THEREFORE THE ASSESSEE SATISFIE S THE CONDITION STIPULATED UNDER SECTION 80IB OF THE ACT AND IS ELIGIBLE FOR THE BENEFIT OF DEDUCTIO N UNDER THE SAID SECTION. AGGRIEVED BY THE ORDER OF LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US SHRI SANJEEV K ASHYAP SR. D.R. APPEARED ON BEHALF OF THE REVENUE AND RELYING ON THE REASONING GIVEN BY T HE ASSESSING OFFICER IN THE ASSESSMENT ORDER CONTENDED THAT THE ASSESSEE IS NOT ENGAGED IN MANUF ACTURING THEREFORE THE ASSESSING OFFICER RIGHTLY DENIED THE CLAIM OF DEDUCTION UNDER SECTION 80IB. 5. ON THE OTHER HAND SHRI PRAKRITI UPADHYAY LD. C OUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 6. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT IN THE ASSESSMENT YEAR 2005-06 THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB AMOUN TING TO RS.3 21 667/- THIS WAS DENIED BY THE ASSESSING OFFICER. ON APPEAL THE LD. CIT(A) AL LOWED THE SAME. THE APPEAL OF THE REVENUE AGAINST THE SAID ORDER IS REJECTED BY THE ITAT SM C BENCH AHMEDABAD VIDE ORDER DATED 12.12.2008 IN ITA NO. 883/AHD/2008 FOR THE ASSESSME NT YEAR 2005-06. THE LD. COUNSEL OF THE 4 ITA NO. 3084/AHD/200 7 ASSESSEE SUBMITTED THAT THE PROCESS OF MANUFACTURIN G EMPLOYED IN THE ASSESSMENT YEAR UNDER APPEAL IS SAME AS IN THE ASSESSMENT YEAR 2005-06. T HE LD. COUNSEL ACCORDINGLY SUBMITTED THAT SINCE NOW THE MATTER IS SQUARELY COVERED BY THE DEC ISION DATED 12.12.2008 OF ITAT SMC BENCH AHMEDABAD IN ASSESSEES OWN CASE IN ITA NO. 883/AHD/2008 FOR THE ASSESSMENT YEAR 2005-06 THEREFORE FOLLOWING THE SAID ORDER THE A PPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR UNDER APPEAL BE REJECTED. 7. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE ASSESSME NT YEAR 2005-06 ALSO THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 80IB OF THE INCO ME TAX ACT. ON APPEAL THE LD. CIT(A) ALLOWED THE SAME AND ON FURTHER APPEAL ITAT SMC BENCH AHMEDABAD IN ASSESSEES OWN CASE IN ITA NO. 883/AHD/2008 FOR THE ASSESSMENT YEA R 2005-06 VIDE ORDER DATED 12.12.2008 DISMISSED THE APPEAL OF THE REVENUE. SINCE NOW THE ISSUE INVOLVED IN THIS APPEAL STANDS SQUARELY COVERED BY THE DECISION DATED 12.12.2008 OF ITAT S MC BENCH AHMEDABAD IN ASSESSEES OWN CASE IN ITA NO. 883/AHD/2008 FOR THE ASSESSMENT YEA R 2005-06 WE RESPECTFULLY FOLLOWING THE SAME HOLD THAT THE LD. CIT(A) RIGHTLY HELD THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND AS SUCH ENTITLED TO DEDUCTION UNDER SECTION 80IB OF TH E INCOME TAX ACT 1961. WE THEREFORE INCLINE TO UPHOLD THE ORDER OF LD. CIT(A). 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 28.05.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 / 05 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPU TY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.