TMI Blog2012 (12) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... hashank Dubey Sr. Adv with Mr. D. L. Dewangan Adv Respondent Rep. by : Mr. Anand Dadariya Adv JUDGEMENT Per : Abhay Manohar Sapre, J : (1) This is an Income Tax Reference made by the Income Tax Appellate Tribunal (for short hereinafter called "the Tribunal") under Section 256 (1) of the Income Tax Act, 1961 (for short hereinafter called "the Act") to this Court at the instance of the assessee to answer the following two questions of law said to arise out of the order of the Tribunal:- 1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessee was not an Industrial Company and, therefore, liable for additional tax under Section 104 of the Income Tax Act, 1961? 2. Whether in the facts and circumstances of the case, Tribunal was right in not admitting the additional ground of appeal preferred by the assessee? (2) In order to answer the questions referred, few relevant facts from the statement of case by the Tribunal to this Court need mention infra. (3) The assessee is a Pvt. Limited Company registered as such under the Companies Act. The assessee is the builder and undertakes various kinds of civil constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and conditions of the contract steel and cement were supplied by the department which were processed by the assessee to bring out a new separately identifiable product viz. concrete. The question now is whether making concrete out of steel and cement etc. amounts to manufacture or processing of goods. The answer to this question is found in para 32 of the Full Bench decision which is reported below. "Considering the various activities which include manufacturing of steel structure making of concrete slab and other such activities are the activities of either manufacture or processing of goods. When several materials are mixed in a particular proportion so as to make reinforced concrete and such slabs are used in the main construction work, it is certainly processing of goods. The departmental representatives has, however, accepted that in a normal construction work of this type, manufacturing or processing of goods has invariably to be undertaken. It is, therefore, clear that the assessee company is engaged in the manufacture or processing of goods." (6) The assessee completed the aforesaid works contract. They were then subjected to regular assessment proceedings which e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) and Tribunal while rejecting the contention of the assessee placed reliance on the law laid down by the Supreme Court in the case of Commissioner of Income Tax, Orissa and Others v. M/s. N.C. Budharaja and Company and Others (1994 Supp. (1) SCC 280) as in their opinion, the issue involved was fully covered by the law laid down in this decision against the assessee and hence the demand for payment of additional tax was upheld. (10) It may be pertinent to mention that while prosecuting the appeal before the Tribunal, the assessee had raised one additional point. According to assessee, they were otherwise not liable to pay any additional tax under Section 104 ibid because they had earned certain percentage of profits which enabled them to come out of rigour of Section 104 ibid. However, the Tribunal did not allow the assessee to raise this additional point observing that since it was never raised by the assessee at any stage either before A.O. or CIT (Appeals) but was raised for the first time before the Tribunal and hence it was not allowed to be raised by the Tribunal. It was held that in the absence of any factual foundation laid either before A.O. or CIT (Appeals) by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was given in negative by observing as under:- "The respondent-assessee was a firm of contractors constituted for the purpose of construction of a dam in Orissa. The Orissa High Court held that the word "article" covered even a dam and that the respondent- assessee was, for the A.Ys. 1974-75 and 1975-76, entitled to the benefit of Section 80-HH(1). The Revenue in its appeal against the said decision contended that the constructing of a dam did not fall within the words "manufacture or produce articles". The word "production" has a wider connotation than the word "manufacture". While even manufacture can be characterized as production, every production need not amount to manufacture. The word "production" or "produce" when used in juxtaposition with the word `manufacture' takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. The word 'articles' is not defined in the Act or the Rules. It must, therefore, be understood in its normal connotation-the sense in which it is understood i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany to enable them to avail the benefit earmarked for any industrial company under the Act. Indeed the law laid down in M/s. N.C. Budharaja's case had full application to the case in hand and no distinguishable features could be pointed out by the learned counsel for the assessee for holding that assessee was in fact engaged in the activity of manufacturing or processing and that they produced some kinds of goods/articles which enabled them to claim the benefits provided under the Act to such companies. (16) We are therefore of the considered view that assessee was not engaged in any manufacturing or/and processing activity and hence was not eligible to claim the status of an industrial company and in consequence was not eligible to claim the benefits earmarked for industrial companies under the Act. (17) Learned counsel for the assessee then contended that since in the assessment proceedings of the years in question, the taxing authorities had already given the benefit to the assessee by treating them to be an Industrial Company and hence such finding was binding on the authorities while deciding the issue arising in Section 104 proceedings. In other words, the submission was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to CIT (Appeal) and then to Tribunal to challenge its correctness. (22) By these observations, it should not be construed as laying down the proposition that a plea if not raised in the first instance can never be allowed to be raised at subsequent stages in higher forum. All that we wish to observe is that if the plea is found to be purely legal and goes to its root then perhaps the Tribunal may in appropriate case permit such issue to be raised but if it is a pure question of fact or mixed question of law and fact then in appropriate case, the Tribunal has jurisdiction to decline such is the case here. (23) In the facts of this case, firstly it was an issue of fact or we may say it was a mixed question of fact and law and secondly no attempt was made to raise such plea either before A.O. or CIT (Appeals) with the result that there was no factual finding recorded by any of the authorities on the said plea. In our opinion, mere raising a point in argument for the first time before the Tribunal without there being any factual foundation in its support could not be permitted. In any event, looking to the nature of question raised, the Tribunal was right in not permitting the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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