TMI Blog2015 (2) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... ts [2008 (6) TMI 248 - ITAT JAIPUR-A] has held that the assessee is entitled for deduction under section 10BA. We are of the considered view that the assessee was in manufacturing of goods and eligible for deduction U/s 10BA of the Act - Decided in favour of assessee - C.O. No. 29/JP/2012 (Arising out @ITA No. 222/JP/2012) - - - Dated:- 27-2-2015 - SHRI R.P. TOLANI, JM SHRI T.R. MEENA, AM Revenue by : Shri Ajay Malik (Addl.CIT) Assessee by : Shri Vikash Rajvanshi (CA) ORDER PER: T.R. MEENA, A.M. The appeal by revenue and cross objection by assessee arise from the order dated 19/12/2011 of Learned CIT (A)-II, Jaipur for A.Y. 2008-09. Respective grounds of appeal as well as C.O. are as under:- Grounds in Revenue Appeal. On the facts and in the circumstances of the case, the Learned CIT(A)-II, Jaipur has erred in:- (1) allowing exemption U/s 10BA of the IT Act in spite of the fact that goods exported were not manufactured by the assessee which is the primary condition for exemption u/s 10BA. (2) not considering the facts found during the course of survey conducted earlier at assessee s business premises, which confirmed that the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing as well as claim made by the appellant U/s 10BA of the Act. It has been held that for A.Y. 2004-05, 2005-06 and 2006-07, this deduction has been disallowed by the then Assessing Officer on the ground that major activity was undertaken by the assessee were trading only, no artistic items manufactured as per Sub-section (2) of Section 10BA of the Act, there must be manufacturing or production of eligible articles of things. Since most of purchases were of readymade furniture which was exported as it was or after minor polishing on the same. Therefore, it has been held that these activities cannot be considered as manufacturing or production. By considering the various decisions in paragraphs No. 4 of the assessment order, held that definition laid down by the Hon'ble Supreme Court and Hon ble Rajasthan High Court as cited in the assessment order, it can easily be concluded that business activity of the assessee of purchasing readymade furniture against the form 17B for trading purposes and exporting the same only after polishing and packing the same, cannot be termed as manufacturing of furniture, not to subject of manufacturing of handmade artistic furniture. Under these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has incurred substantial expenditure on its manufacturing activity. Statements of 12 persons were recorded by AO during remand proceedings and those persons have categorically stated that they sold unfinished goods to the assessee and major portion of work on those goods have been done by the assessee itself in their premises. Neither the facts narrated by the supplier were found incorrect nor there was any other evidence to hold that the assessee is only doing manufacturing process. On similar facts, the Tribunal in case of Mangalam Arts in ITA No. 815/JP/2007 dated 20/06/2008 has held that the assessee is entitled for deduction under section 10BA .The ld. CIT (A) has also taken this case into consideration and found that facts are similar. Therefore, in our considered view and in view of rule of consistency, the ld. CIT (A) was justified in holding that the assessee is entitled for deduction under section 10BA of the Act. Neither any fresh material was brought on record by ld. CIT DR nor the findings of ld. CIT(A) could be controverted by placing positive material therefore for this reason also, we are of the view that order of ld. CIT (A) is liable to be confirmed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a business already in the existence. c) It is not formed by the transfer to a new business of Machinery or Plant previously used for any purpose. Since assessee has started a new undertaking as described above and the assessee had purchased all new Plant Machinery for manufacturing process during the Assessment year 2008-09 also, the assessee purchased all new Plant Machinery of ₹ 1,02,23,345/-. Therefore this condition is also fulfilled. The main machinery was hand tool, grinder, sanding machine drill machine required for wooden handicraft artistic work. d) Ninety percent or more of its sale during the previous year relevant to the assessment year are by way of exports of the eligible articles or thing. During the year also, the assessee has exported 99.92% of eligible articles or things. Hence the above said condition of section 10BA is fulfilled by the assessee. e) It employs twenty or more workers during the previous year in the process of manufacture or production. Section 10BA of The Income Tax Act specifies that the assessee employs twenty or more workers during the previous year in the process of manufacture or production. As per the wages register s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituted 47.65% of total direct expenses. Therefore the value addition was made after production activities and goods were not exported as such. Only on the basis of purchases being made against Form 17B, it could not be said that the assessee had not done any manufacturing activity because as per Rule 23(1)(b) of RST Act, there was no prohibition on the buyer exporter from making changes in the products to be exported and there was nothing which could warrant adverse inference on the ground that purchases were made against Sale Tax 17B Form. In view of above facts, I direct the AO to allow deduction of ₹ 71,25,075/- U/s 10BA to the appellant. This ground of appeal is allowed. 4. Now the Revenue is in appeal before us. The learned D.R. vehemently supported the order of the Assessing Officer. 5. At the outset, the learned AR for the assessee argued that this issue has already been considered by the Hon ble ITAT, Jaipur in assessee s own case vide order dated 14/07/2011 passed in ITA Nos. 1111, 1112 and 1113/JP/2010 for A.Y. 2004-05, 2005-06 and 2006-07 and held that the assessee was manufacturing the goods for export purposes. The Hon ble ITAT, Jaipur has given detailed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee, otherwise the assessee has its own manufacturing premises where permanent employees are employed and if this expenditure is taken into consideration then it is not 1% but it is substantial expenditure. This aspect has also been examined by the ld. CIT (A) and found that the assessee has incurred substantial expenditure on its manufacturing activity. Statements of12 persons were recorded by AO during remand proceedings and those persons have categorically stated that they sold unfinished goods to the assessee and major portion of work on those goods have been done by the assessee itself in their premises. Neither the facts narrated by the supplier were found incorrect nor there was any other evidence to hold that the assessee is only doing manufacturing process. On similar facts, the Tribunal in case of Mangalam Arts in ITA No. 815/JP/2007 dated 20.6.2008 has held that the assessee is entitled for deduction under section 10BA. The ld. CIT (A) has also taken this case into consideration and found that facts are similar. Therefore, in our considered view and in view of rule of consistency, the ld. CIT (A) was justified in holding that assessee is entitled for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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