Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2008 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2008 (6) TMI 248 - AT - Income TaxDisallowance of Exemption U/s 10BA - survey u/s 133A - three units did not fulfil the conditions laid down u/s. 10BA - Disallowance u/s. 80HHC - SFT sales (counter sales) against convertible foreign exchange. Disallowance of Exemption U/s 10BA - survey u/s 133A - three units did not fulfil the conditions laid down u/s. 10BA - partnership firm dealing in the manufacture and export of wooden handicraft items, Diaris, textile and other metal items - items of artistic value - AO has observed that the items exported by the assessee are furniture and other items of general utility and these items cannot be said to be the items having artistic value as per Expln. (b) to s. 10BA - HELD THAT:- Assessee has submitted that the workers live in the premises of the assessee, took their food, use the modem toiletries and washing facilities etc. Their work is all alone checked by the assessee quality inspectors and are indeed under the ultimate control of the assessee. The termination of the contract of the contractor would result in their immediate eviction and loss of job. As per agreement those employees cannot work in any other units of any other person. As per definition of the workman as provided in s. 2(s) of the Industrial Disputes Act, 1947 includes any person employed in any industry or by a contractor in relation to execution of his contract with such employer included within the ambit of employees these workmen also - Therefore, we are of the view that the assessee has employed more than 20 workers during the year and therefore, satisfies the conditions contained in s. 10BA(2)(e) of the Act. Assessee further submitted that the assessee in all the preceding years has been accepted as exporter of wooden handicrafts and has been allowed (benefit) u/s. 80HHC of the Act. The assessee has also been recognized by other departments of Government of India, Handicraft Export Council of India, the Sales-tax Department of Government of Rajasthan and all other concerned authorities, all along. The assessee caters to the requirement of diverse buyers of Europe, USA, Japan, Australia, South Africa, etc. for wood based handicrafts amidst fierce competition in the global market. The assessee is engaged in promoting those types of manufacturing and with those steps within the manufacturing value chain that require more people inputs (labour intensive) that cannot be easily performed by the machinery and requires less capital. The creative talent visualization and originality of its carpenters in "production department" the dexterity of its workmen directly employed or through contractors or the job workers, the expertise of the large number of labour in polishing artistic, mirror and bone china fixing in wooden articles, special packing as per requirement of MNCs is the main strength of our artistic wooden handicrafts manufactured for export. The use of 'Aara machine' fumigation, power driven screw drivers; grinders, gauge machine are only aid to the workmen and playa secondary role and help. The real role is that of the expert creative workmen with their dexterity. The assessee has further submitted the explanation that the goods manufactured or produced by the assessee are eligible articles or things having the artistic value and in this regard the explanation was that Webster Dictionary defines "artistic". During the course of survey u/s. 133A, the authorized officers themselves had occasion to visit and see Manglam Arts woodbased more than 850 items of artistic nature developed by Manglam Arts from time to time at one place for review by visitors. Besides they had also visited the product development section where the skilled and trusted craftsmen were busy in crafting new models and the videography was also done by the department. Survey authorities had visited and saw the picture painting artists doing art work on wooden boxes, wooden containers etc. Manglam Arts has successfully developed its leading position in designing colour shading artistry in hand in printing on wooden articles/things, but its wooden products are presently a brandname by itself and this is duly reflected in the continuous surge in its sales of wooden handicrafts since 2001. From the perusal of the facts and circumstances of the case and the explanation given by the assessee, we are of the view that the AO has ignored the explanation given by the assessee and has not taken the facts of the case in the right perspective. Therefore, in our view the assessee is manufacturing the items of artistic value even after getting some process on piece of job basis from outside but under its control. The items so produced or manufactured will be treated as manufacture or production by the assessee employing more than 20 persons. Therefore, we are of the view that the assessee has fulfilled all the conditions u/s 10BA(2) of the Act and therefore. he is entitled to deduction u/s 10BA(1) and we find no infirmity in the order of the learned CIT(A) who has rightly reversed the decision of the AO. Thus ground No. 1 of the Revenue is dismissed. Disallowance u/s. 80HHC - SFT sales (counter sales) against convertible foreign exchange - HELD THAT:- We concur with the views of the learned CIT(A) in view of the consistent decisions taken by this Bench and also the case referred by the learned CIT(A) and also the decision of Hon'ble Supreme Court of India in the case of CIT vs. Silver & Arts Palace [2002 (12) TMI 12 - SUPREME COURT]. Therefore, we find no infirmity in the order of the ld CIT(A) who has rightly reversed the order of the AO on the issue. Thus ground No. 2 of the Revenue is dismissed. In the result the appeal of the Revenue is dismissed.
|