High Court Of Punjab & Haryana
CIT vs. Deepak Mittal
Section 260A, 263
Asst. Year 2003-04
M.M. Kumar & Jitendra Chauhan, JJ.
IT Appeal No. 523 of 2009
18th February, 2010
Counsel Appeared :
Vivek Sethi, for the Appellant
M.M. KUMAR, J. :
The Revenue has approached this Court under s. 260A of the IT Act, 1961 (for brevity âthe Actâ) challenging order dt. 27th May, 2009 passed by the Income-tax Appellate Tribunal, Amritsar Bench (for brevity âthe Tribunalâ) in ITA No. 340/Asr/2008 in respect of the asst. yr. 2003-04. The Tribunal has set aside the order dt. 28th Aug., 2003 (sic) passed by the CIT, Jalandhar (1) by exercising jurisdiction under s. 263 of the Act holding that on the basis of survey report conducted under s. 133A of the Act, the assessment completed under s. 143(3) of the Act on 14th Nov., 2005 by the AO cannot be set aside by the CIT by exercising revisional jurisdiction. In that regard, the Tribunal has placed reliance on the views taken by the Hyderbad Bench in the case of Sri Harisankar Cashew Mfg. Co. vs. ITO (1991) 41 TTJ (Hyd) 149 : (1992) 42 ITD 466 (Hyd) and the views of the Amritsar Bench in the case of Jolly Engineers & Contractors (P) Ltd. vs. ITO (1982) 2 ITD 92 (Asr). The aforesaid order of the Tribunal had attained finality as it is not pointed out that any appeal was filed or if filed the orders have been reversed. The Tribunal has also adversely commented on the order of the CIT because he did not point out that any loss to the Revenue would arise and the order passed by the AO is essential (sicâprejudicial) to the interest of the Revenue. He has simply asked the AO to re-examine the documents produced by the assessee whereas the AO itself made detailed enquiry and had come to the conclusion on the basis of the evidence on record. In these circumstances, the Tribunal has opined that power of revision could not have been exercised.
2. The Tribunal has also examined the merits of the issue raised before the AO and the CIT(A). In an answer to the query given by the assessee it was claimed that he is fully eligible for deduction under s. 80-IB(4) of the Act. He further stated that definition of small-scale industries have been expanded under s. 80-IB(14)(g) of the Act. The question considered by the AO was whether it is indulging in manufacturing process or not. The assessee has been engaged in the production or manufacture of article or thing i.e., components of tractors like differential housing, gear box housing and rear cover housing. To the allegation that assessee was engaged only in job work, the following question-answer proforma have been cited : “Q. Please explain the process of the components received after machining from Auto Component Indl. Corpn. Baddi, District Solan in details. Ans. Ist operation, on the vertical machining centre on CNC machines.
On this CNC machine drilling, reaming, chamfering, pad milling operations are being done, with respect to dowel hole on next machine boring machine/and taping.
After the above operation, rear cover will be ready for further assembly. In assembly few important parts like ram cylinder, response ball, rock shaft etc.are fitted to complete this sub-assembly. It is in respect of two types of rear covers received after reaming machine from Baddi. Q. From the above it is clear that at Baddi very small machining/ grinding of components is done, whereas major process is completed at ITL Hoshiarpur, please explain. Ans. All critical machinery operation of chassis parts i.e. rear cover, differential housing and reduction unit are being done at M/s ITL, Hoshiarpur on precision sophisticated CNC and other special purpose machines.
Q. Do you send the similar components for machining and grinding to other concerns except Baddi ?
Ans. We do not send these three components for machining/grinding to any other concerns/place except Baddi. Q. I am showing you one of twenty-six photographs of the components and machinery and assembly process taken in your presence, please give the description of the same. Ans. I have given the description at the backside of each photograph under my signatures.”
3. The AO has given categorical finding that assessee is engaged in the process of manufacturing of products and accordingly he has granted concession under s. 80-IB of the Act. The Tribunal has placed reliance on a judgment of Honâble the Supreme Court in the case of Textile Machinery Corporation Ltd. vs. CIT 1977 CTR (SC) 151 : (1977) 107 ITR 195 (SC). In that case the assessee was engaged in the machining of raw-casting, heat treatment of raw-crankshaft and polishing of raw casting etc. and therefore it has been held that the assessee is engaged in manufacturing or production of articles. Similar view was taken by the Madras High Court in the case of CIT vs. Perfect Liners (1983) 142 ITR 654 (Mad). The claim of the assessee has been found to be genuine as the assessee has explained the various processes after the components are received from M/s Auto Components Indl. Corporation, Baddi (Solan). It shows that after the receipt of components, the first operation undertaken by the assessee-respondent is the vertical machining centre on CNC machine which has been explained as under : “One this CNC machine drilling, reaming, chamfering, pad milling operation are being done, with respect to dowel hole on next machine boring machine/and tapping.
After the above operation, rear cover will be ready for further assembly. In assembly, few important parts like ram cylinder, response ball, rock shaft etc. are fitted to complete the sub-assembly. It is in respect of two types of rear covers received after reaming machine from Baddi.
In respect of differential housing and reduction unit, different sets of machines are there for further operation to make the component ready for assembly. As at present, these two components are not in stock, as such the working of the same cannot be shown.” Likewise major process is completed by the assessee-respondent and the same has been explained in answer to various questions : “All critical machinery operation of chassis parts i.e. rear cover, differential housing and reduction unit are being done at M/s ITL, Hoshiarpur on precision sophisticated CNC and other special purpose machines.”
The AO has also examined the various workers of the assessee and have then recorded the finding which answer the provisions of s. 80-IB(4) of the Act.
Having heard the learned counsel at a considerable length, we are of the view that the order of the Tribunal does not suffer from any legal infirmity or gives rise to any such substantive question of law which may warrant admission of the appeal. The exercise of revisional jurisdiction by the CIT is wholly without any justification. It has rightly been held that change of opinion by reappraising the evidence is not within the parameter of revisional jurisdiction of CIT under s. 263 of the Act. Therefore, the appeal fails and the same is dismissed.
[Citation : 324 ITR 411]