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TMI Blog2015 (2) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... ption u/s 10BA of the It Act, substantial manufacturing activity is to be carried out and insignificant activity like polishing, fitting etc. to almost finished goods purchased from the market would not suffice for the purpose of Section 10BA. (4) not considering the fact that the assessee made purchase of raw wood of Rs. 2,02,99,938/- which is only 15.90% of total purchase. Balance 84.1`0% purchases made by the assessee are of polishing material, packing material, semi-finished goods, which proves that no substantial manufacturing activity is done by the assessee which is the primary condition for exemption u/s 10BA. (5) not considering the finding of the A.O. that the assessee is basically engaged in purchasing readymade furniture of artistic work and after doing some polishing and finishing work exporting the same. Which is proved from the list of Sundry Creditors for goods more than Rs. 5 lacs furnished by the assessee wherein most of the major creditors are Handicraft showroom which supply readymade furniture having artistic work." Ground in Cross Objection "On the facts and in the circumstances of the case and in law, the Learned CIT(A)-II, Jaipur has erred in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en articles as laid down U/s 10BA of the Act and she is not eligible for exemption under this Section. Accordingly, he treated amounting to Rs. 71,25,075/- as normal taxable income from business. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned CIT(A), who had allowed the appeal by observing as under:- "3.1 I have duly considered the submissions of the appellant. I find that the issue of allowability of deduction U/s 10BA has been decided in the favour of the assessee by the order of Hon'ble Jaipur Tribunal (ITA No. 1111, 1112 & 1113/JP/2010)dated 14/07/2011 for A.Y. 21004-05, A.Y. 2005-06 and A.Y. 2006-07. The observations of the Hon'ble Tribunal in para 12 are reproduced as under: "We have heard rival submissions and considered them carefully. We have also perused various evidences filed before ld. CIT (A) in support of the case of the assessee and also the detailed written submissions placed on record alongwith the submission of ld. ClT DR. After considering the submission and perusing all other materials, we find that ld. CIT(A) was justified in holding that assessee is eligible for deduction claimed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BA (2), the following conditions were necessary for claiming the deduction: a) It manufactures or produces the eligible articles or things without the use of imported raw material; "Eligible article means" all handmade articles or things, which are of artistic value and which requires the use of wood as the main raw material-." Since the business of the assessee is export of wooden handicraft items having artistic value with an antique look, raw materials such as wooden items, polish, stones, brass, iron, etc. are used for making it an artistic item. Since grooving, brass work, inlay work, metal work, carving, studding work, stone work and other related process cannot be carried out with the help of machines (since being a meticulous work) it involves thought, personal skills and constructive power to manufacture the product of artistic nature. The semi finished wooden items and article and things purchased against Form 17B are further subjected to manufacturing process and converted into eligible handmade crafted artistic wooden articles and things. For example for manufacturing a table, only a top was purchased which too had a skeleton shape. Thereafter legs of the table wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom job charges paid were around 150 during the year. Thus, it is amply clear on facts and in law both that the appellant is a manufacturing exporter and had satisfied all the conditions laid down U/s 10BA (2) (e) and hence the entire deduction was to be allowed. 3.3 lt was also held by the Hon'ble Jodhpur Tribunal in the case of Kwal Pro Exports Vs ITO (ITA No. 543,544,545/Jd/2007 and 415/Jd/2008) that the AO had inferred that the assessee simply carried out trading of manufactured items purchased locally and this finding was found to be perverse on facts. The Tribunal observed that various steps undertaken by the assessee on the semi-finished goods and other articles gave them a commercial look making the article completely distinct in character and making them marketable commodity. The tribunal further observed that even though the original identity of the material did not lose its identity completely yet a different commercial commodity had been brought into existence by the assessee and that the end product so produced was different and distinct both in character and use as well. The Tribunal held that if change made in the article resulted in a new and different articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory and no advance tax was demanded by the department from the assessee during the survey proceedings. Only statement of Smt. Ranjana Johri was recorded. Copy of the statement had not been provided by the department. The survey team was satisfied with the claiming of exemption U/s 10BA of the Act. He drawn our attention on the finding given by the Hon'ble ITAT Jaipur in assessee's own case at paragraph No. 12 of its order on this issue. Therefore, he prayed to dismiss the revenue's appeal and confirm the order of the learned CIT(A). 6. We have heard the rival contentions of both the parties and perused the material available on the record. The Coordinate Bench in assessee's own case in ITA Nos. 1111, 1112 and 1113/JP/2010 for A.Y. 2004-05, 2005-06 and 2006-07 on identical facts and circumstances has held that the assessee's activities is manufacturing or production as defined by the Act in Section 10BA of the Act. The operative portion of the order is reproduced as under:- "12. We have heard rival submissions and considered them carefully. We have also perused various evidences filed before ld. CIT (A) in support of the case of the assessee and also the detailed written submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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