TMI Blog2013 (6) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated to be made to a sister concern based in USA. However, it was noted by the AO that during the year under consideration sales worth of ₹ 15,37,683/- were made to an another SEZ unit. The assessee has claimed those sales as an export sales and claimed deduction under Section 10B of the IT Act. According to AO since those sales were made to another SEZ Unit in India and the amount was also received in Indian rupees, therefore, the claim of deduction under Section 10B was not to be allowed. Against the said disallowance the matter was carried before the first appellate authority who had affirmed the action of the AO by following his predecessor s view taken in A.Y. 2004-05. 1.3 Now before us an order of ITAT D Bench Ahmedabad pronounced in the case of assessee, i.e., M/s. Fine Line Circuit s Company, Plot No. E-8, GIDC, Manjusar, Salvi, Baroda Vs. ACIT, Circle-3, Baroda, bearing ITA No.1144/Ahd/2008 for A.Y:2004-05, ITA No.1899/Ahd/2010 for A.Y:2005-06 and ITA No.3110/Ahd/2009 for A.Y:2006-07, dated 5th day of April, 2011 wherein an another order of the Tribunal was discussed by reproducing relevant paragraphs and the issue was decided in favour of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g deduction u/s. 10B on production of CCGL on irrelevant grounds and relying on extraneous material which is not germane to decide the issue of allowability of deduction u/s 10B. 2.1 Facts in brief as emerged from the corresponding assessment order passed under Section 143(3) for A.Y. 2007-08 dated 31.12.2009 were that it was noted by the AO that the assessee had claimed the deduction in respect of sales made to its two sisters concern situated in USA. It was not disputed that assessee firm and those firms situated in USA are the sister concerns. It was noted by the AO that the raw material was Copper Cladded Epoxy Glass laminate (in short CCGL ). It was claimed that the PCB s were manufactured as per the specific drawings supplied by the end users. According to the AO, facts have revealed that although the PCB s were exported to the sisters concern in USA but those were actually meant for some others end users. The AO has also noted that in the Audit Report, the raw material is mentioned as X instead of stating the raw material as CCGL . According to the AO by mentioning X the assessee had tried to consciously hide the information in respect of the raw material. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The activity of manufacturing of CCGL was undertaken by the assessee in the month of May 2002. The assessee has been paying excise on the manufacture of the CCGL on domestic sales. Before giving submissions on the issue whether the assessee is into manufacture of CCGL or not, we invite your kind attention to the various processes carried out by the assessee to convert the raw material into Claded Glass Epoxy Laminates/Sheets (CCGL). a. Receipt of purchase order from customers b. Issuance of Job Travel Card for manufacturing, which would include instructions for manufacture as per the specific design and the production process to be deployed. c. Job Card goes to Store Department for identity and issuance of required material to production department viz. Copper Claded Glass Epoxy Laminates d. Raw material is sent to Shearing Department. e. The shearing machine is set for desired size and the laminates are cut into specified sizes decided by the customer. f. After shearing, production inspection takes place where laminates are checked for oxidation effect. g. A thorough surface cleaning is done to remove the ox ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of Printed Circuit Board but the exemption is claimed in respect of CCGL which is not mentioned as the item manufactured. After a detailed discussion of certain case laws and terminology defined in dictionary; the AO had arrived at the conclusion that in the absence of any reference of manufacture of CCGL in Form 56-G of IT Act, the assessee was not manufacturing CCGL. Resultantly, the claim of deduction under Section 10B in respect of export of CCGL was denied. 2.4 Being aggrieved the matter was carried before the first appellant authority. Before CIT(A), the assessee has explained that the assessee is engaged in the business of manufacture and sale of PCB as also manufacture and sale of CCGL. Therefore, the assessee had claimed deduction on sale of PCB and CCGL of ₹ 1,67,47,045/- against the claim of total deduction. The AO restricted the claim under Section 10B at ₹ 1,37,55,955/-. It was reiterated that CCGL was purchased in the form of long sheets. Those long sheets were cutted into different small sixes. Those sheets were then cleaned by removing oxidization effect. CCGL sold is called as PCB General Blank Board So the claim of the assessee was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (2007) 109 ITD 181 (Ahd) (TM). Learned AR has also placed reliance on Midas Polymer Compounds Pvt. Ltd. Vs. ACIT (2011) 331 ITR 68 (Ker) (FB) for the legal proposition that even intermediary product is to be considered as an activity of manufacturing. 4. From the side of the Revenue, learned Sri Sumit Kumar, Sr. D.R. appeared and placed reliance on the view taken by the AO and CIT(A). He has argued that the assessee has not undertaken any manufacturing activity. In fact, it was simply a processing through which sheets were cleaned and exported. The AO has rightly distinguished the export sales, therefore, deduction on export of PCB was allowed but not on the export of CCGL. He has also explained that the AO had examined the purchase of the said product and thereupon came to the conclusion that there was no change happened after the alleged manufacturing activity because the description of the purchase and the description of the export sales of the said product were identical. 5. We have heard both he sides. We have also perused the material placed before us. According to us, these technical questions about the manufacturing activity cannot be decided merely on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, the assessee is required to clearly specify the specification of the CCGL sheets purchased. The specification such as size of the sheets, surface of the sheets and thickness of the sheets are the subject matter of scrutiny. In this regard, an Inspection Report can also be procured from a specialized person. The Inspection Report which is now part of the paper book only mentioned that oxidization was done on the sheets. Meaning thereby the product in question has only passed the test of cleanliness. As we have opined, the process of oxidization can only be held as processing and not manufacturing . An another argument has been raised that a Central Excise Department has given a registration certificate to the assessee. It has also been mentioned that a certificate has been issued by Kandla Special Zone, Gandhinagar. In this regard, we have noted that there is no denial of fact that the assessee as a whole is a manufacturing-unit because a deduction was claimed in respect of the items manufactured of ₹ 1,67,47,045/-. But the dispute is only in respect of those sales which have not undergone manufacturing process. Even this argument is not very convincing that the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w in this regard has already been expressed hereinabove in favour of the revenue. Resultantly, ground no.1 is dismissed. As far as grounds no.2, 3 and 4 are concerned, the matter requires re-adjudication as per the directions made hereinabove. Hence, these grounds may be treated as allowed only for statistical purpose. 1.1 Resultantly, the appeal for A.Y. 2008-09 is partly allowed that too for statistical purpose. C. For A.Y. 2004-05 (ITA No.2273/Ahd/2012) First two grounds are in respect of re-opening of the assessment, reproduced below:- 1. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of AO in reopening the assessment u/s. 147 of the Income Tax Act, 1961, beyond 4 years from the date of assessment. 2. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of AO in reopening the assessment without satisfying the conditions mentioned in proviso to section 147, especially when there was regular assessment u/s. 143(3) framed on 29.12.2006 and notice u/s. 148 was issued beyond the period of 4 years from the end of the relevant assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has already been restored back as per the above paragraphs. On the same lines for this year as well this issue can be decided afresh, hence this ground may be treated as allowed but for statistical purpose only. 1.4 In the result, the appeal for A.Y. 2004-05 may be treated as allowed for statistical purpose only. D. For A.Y. 2005-06 (ITA No.2636/Ahd/2011) Ground No.1 is in respect of the re-opening of the assessment, reproduced below: The learned Commissioner of Income Tax (Appeals) erred in fact and in confirming the action of AO in reopening the assessment u/s 147 of the Income Tax Act, 1961. 1.1 An assessment was made under Section 143(3) read with Section 147 vide order dated 24.12.2010 after a survey action under Section 133A(1)(b) carried out on the assessee on 25.3.2010. The argument of the assessee is that the AO reopened the assessment on the same material which was available at the time of the original assessment. According to learned AR, the reopening was made within four years. The Revenue made assessment under Section 143(3) on 28.12.2007 in the regular assessment. The claim of deduction under Section 10B was exam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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