M/S. KASHMIR TUBES,JAMMU vs. THE DY. COMMISSIONER OF INOCME-TAX, JAMMU

Per Sanjay Arora, AM: This is a set of two Appeals by the Assessee raising identical grounds and, thus issues arising for determination, in respect of two consecutive years, i.e., Assessment Years (AYs.) 2003-04 and 2004-05, qua assessments u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter), since confirmed by the Commissioner of Income Tax (Appeals), Jammu ('CIT(A)', for short) vide his orders of even date, i.e., 17.01.2014. 2. The first issue, agitated per Grounds 2 and 3; Gd. 1 being general in nature, warranting no adjudication, is the denial claim for deduction u/s. 80IB of the Act on galvanisation charges earned by the assessee on job-work basis. The matter, it was claimed by the ld. Authorized Representative (AR), the assessee’s counsel, (AYs 2003-04&2004-05) Kashmir Tubes v. Dy. CIT Shri Bansal, is no longer res integra as the same stands since decided by the Hon'ble jurisdictional High Court vide its judgment dated 31.08.2017 in the assessee’s own case, adducing a copy thereof (ITA No. 05/2008). He would then take us through the operating part of the judgment. The Hon'ble High Court has, after noting the case of either side, including the case law relied upon, held the process of galvanizing to constitute ‘manufacture’ as the activity of galvanization converts a raw iron pipe (say) into a galvanized pipe, a different commercial commodity. The ld. Departmental Representative (DR) could not bring to our notice any contrary decision by either the larger bench of the jurisdictional High Court or by the Apex Court, so as to impact the binding nature of the afore-referred decision in Kashmir Tubes (supra). In fact, as we observe, the Hon'ble Court in the said decision has also considered the decision by the Apex Court in Gujarat Steel Tubes Ltd. v. State of Kerala AIR [1990] (SC) 1779, wherein its stands held that galvanizing an iron pipe only makes it weather-proof, so as it still remains a steel tube, and that therefore the process does not bring any new commodity into existence, so as to regard galvanizing as an manufacturing activity. The same stands distinguished by the Hon'ble Court, stating it to be rendered under the sales- tax law and, therefore, not applicable, as indeed it found the decision by the Apex Court in Siddhartha Tubes Ltd. v. CCCE [2005] (8) Supreme 511, being rendered under the Central Excise Act. We decide accordingly, upholding the assessee’s claim for deduction u/s. 80IB on galvanizing charges.