COMMISSIONER OF INCOME TAX JAI vs. M/S AGARWAL MARBLE INDUSTRIES

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 839 / 2008 Commissioner Of Income Tax Jaipur-II,Jaipur. ----Appellant Versus M/S Agarwal Marble Industries LTD. F-282-283, Road No. 9, Vki Area, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. K. D. Mathur on behalf of Mr. R. B. Mathur For Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 20/09/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department. 2. This court while admitting the appeal on 18.02.2009 framed the following question of law:- “Whether in the facts and circumstances of the case, the assessee is entitled for benefit of deductions u/s. 801/1A when admittedly assessee is not involved in any manufacturing activity and is only engaged in cutting and polishing of the marble and granite?” 3. The facts of the case are that the Assessing Officer issued notice u/s. 154 for rectification on the ground that the MAT Credit u/s. 115 JA cannot be allowed before charging

(2 of 3) [ITA-839/2008] interest u/s. 234 B and 234 C of he Act. The assessee did not submitted reply and after considering the matter the assessing officer passed the order u/s. 154 of the Act and did not allowed the MAT credit u/s. 115 JA of the Act before charging interest u/s. 234 and 234C of the Act. 4. While considering the matter as pointed out by the counsel for the respondent, the Tribunal Para in 10,11 observed as under:- “The ld. Counsel for the assessee,on the other hand, while replying on the order of the CIT(A), firstly brought to our notice that as against the original order passed by the AO under Section 143(3), the Revenue has raised a ground of appeal regarding the very action of the AO in allowing deduction under Section 801A. Accordingly to him, in the light of the aforesaid stand of the Revenue, which is pending for determination before this Tribunal in ITA No. 157/JP/2002, the rectification order passed by the AO was not sustainable. Consequently, he brought to our notice the provisions of Section 154(1A) of the Act and submitted that where a matter has been considered and decided by way of an apapeal against the order of the AO, then the AO cannot exercise power of rectification in respect of such matter. He pointed out that the quantum of deduction allowed under Section 801A in the original assesssment proceedings has been subject-matter of dispute before the CIT(A) and the CIT(A) has already decided the matter. In such circumstances, it was submitted by him that the exercise of jurisidction under Section 154 by the AO was not valid. Besides the above, he also brought to our notice a recent decision of the Hon’ble Supreme Court in the case of CIT vs. Sesa Goa ltd., 271 ITR 331 (SC), wherein the Hon’ble Supreme Court has held that extraction and proceedings of iron ore need not be a commercially new project. This decision was rendered in the context of Section 801 of the Act. It was pointed out by him that this decision of the Hon’ble Supreme Court does not throw a debate as the eligibility of the assessee to claim deduction under Section 801(A) of the Act. Even on this ground, it was pleaded by him that the order of the CIT(A) should be sustained.

(3 of 3) [ITA-839/2008] 11. We have considered the rival submissions. It is observed that when the original assessment was completed under Section 143(3), the AO did not go into the question as to whether the activity of the assessee amounts to manufacture in respect of which it would be entitled to deduction under Section 801A of the Act. The only issue was as to whether from the gross total income on which deduction under Section 801 HHC has to be deducted. We have already extracted the ground of Appeal of the Revenue in ITA No. 157/JP/2002, which arises out of the original order passed by the AO under Section 143 (3). We fail to understand as to how the Revenue has raised the dispute with regard to the question whether the activities of the assessee would amount to manufacture or not and as to whether the assessee would be entitled to exemption under Section 801A of the Act. Be that as it may. The argument of the ld. Counsel for the assessee that in vew of the provisions of Section 154(1A), the AO cannot exercise powers under Section 154 cannot be would amount to manufacture or not enabling it to claim deduction under Section 801A was never decided by the AO when he passed the original order of assessment under Section 143(3).” 5. We are in complete agreement with the view taken by the Tribunal. Hence no case is made out for interference. 6. The issue is answered in favour of the assessee against the department. 7. The appeal stands dismissed. (VIJAY KUMAR VYAS),J.

(K.S. JHAVERI),J. B.M.G./Gourav-44