PR COMMISSIONER OF INCOME TAX-VI vs. M/S SAINT GOBAIN CRYSTALS

- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF FEBRUARY, 2018 PRESENT HON’BLE MR.JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE AND HON’BLE MR.JUSTICE S. SUNIL DUTT YADAV

ITA No.493 OF 2016 Between: 1. Pr.Commissioner of Income Tax-VI, Revenue Buildings, Kormangala, Bangalore.

(By Sri: E I Sanmathi, Advocate)

And:

M/s Saint Gobain Crystals & Detectors (I) Limited Sy.No.171/2, Maruthi Industrial Estate, Hoodi Rajaplaya, White Field Main Road, Bangalore-48 Pan:AAACB6794R ... Respondent

(By Sri: T.Suryanarayana, Advocate)

- 2 - This ITA is filed Under Section 260-A of Income Tax Act 1961, arising out of order dated 19/02/2016 passed in ITA No.54/Bang/2015, for the Assessment Year 2009-2010 praying to (a) decide the foregoing question of law and/or such other questions of law as may be formulated by the Hon'ble Court as deemed fit, (b) set aside the appellate order dated 19/02/2016 passed by the ITAT, 'A' Bench, Bengaluru, in appeal proceedings ITA No.54/Bang/2015 for Assessment Year 2009-2010 as sought for in this appeal and to grant such other relief as deemed fit.

This ITA coming on for orders, this day S.Sunil Dutt Yadav. J., delivered the following:

JUDGMENT

This appeal has been filed by the Revenue challenging the order of the Income Tax Appellate Tribunal, Bangalore Bench “A”, which has affirmed the order of the Commissioner of Income Tax (Appeals) pertaining to the Assessment Year 2009-2010, wherein the order of the Assessing Officer disallowing deduction was set aside and deduction was granted to the assessee under Section 10B of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’).

The assessee’s claim for deduction under Section 10B of the Act for the Assessment Year 2009-2010 was disallowed by the Assessing Officer on the ground that the assessee Company is merely engaged in ‘processing and assembling and not

- 3 - manufacturing’ as stipulated under the provisions of Section 10B. In appeal, against the order of Assessing Officer before the Commissioner of Income Tax (appeals), the assessee placed reliance on the decision of the Tribunal for the Assessment Years 2003-2004, 2004-2005 in ITA Nos.15 and 720/Bang/2008 dated 30.01.2009; for Assessment Year 2005–2006 in ITA 1059/Bang/2011 dated 27.06.2012; and for Assessment Year 2006-2007 in ITA No.1504/Bang/2010 dated 22.11.2011 wherein, it has been held that the assessee was entitled to deduction under Section 10B, as its activities amounted to manufacturing. Accordingly, the assessee was held to be entitled for deduction.

The Revenue challenged the said order before the Income Tax Appellate Tribunal which decided the appeal in favour of the assessee by following the earlier decision of Tribunal in the assessee’s own case for the Assessment Year 2003–2004 onwards wherein, the deduction to the assessee under Section 10B of the Act was allowed.

- 4 - It is that order of the Income Tax Appellate Tribunal which is now called in question before this Court under Section 260A of the Act. The Revenue, in its appeal memorandum, has suggested the following substantial question of law:

“Whether in the facts and circumstances of the case, the Tribunal is justified in law in holding that assessee is eligible to claim deduction under Section 10B of I.T. Act even when the tenure to claim deduction under Section 10B of the Act is for 10 consecutive years which expired in case of assessee on A.Y.2006-07 and as such the assessee is ineligible to make claim under section 10B of the Act?”

Meanwhile, an application – I.A.No.1/2018 has been filed on 23.01.2018 seeking to amend the appeal by suggesting the following substantial question of law- “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that assessee had not fulfilled ingredients/conditions for making claim under Section 10B of Act as assessee is not involved in the activity of manufacturing?”

It is seen from the affidavit that the principal contention regarding availability of tenure of deduction of 10 years is given up, as the Revenue had filed an application –

- 5 - M.P.No.128/Bang/2016 seeking for rectification of the impugned order on the said issue which has been rejected vide order dated 23.01.2017, noting that the Assessing Officer had found that the Assessment Year 2009-2010 was the 5th Assessment Year, for which, the deduction under Section 10B of the Act was being claimed, which is a finding of fact, which has attained finality.

The only other question sought to be now canvassed by way of amendment application is as to whether the assessee is involved in the activity of manufacturing. The said question has been decided by the Income Tax Appellate Tribunal in ITA Nos.15 and 720/Bang/2008 for the Assessment Years 2003-2004 and 2004-2005 respectively, in favour of the assessee and has been upheld by this Court in ITA No.351/2009 c/w ITA No.352/2009 by an order dated 19.01.2015. The process of manufacture and the product remaining the same, the decision above-mentioned squarely applies to the case of assessee for the Assessment Year 2009-2010. Hence, no substantial question of law arises. Accordingly, the appeal is dismissed.

- 6 - In view of what is stated above, there is no need to consider I.A.No.1/2018 and accordingly, I.A.No.1/2018 is disposed of as being redundant.

Sd/- CHIEF JUSTICE

Sd/- JUDGE

VGR