2012 (6) TMI 355 - HC - Income Tax

Validity and essentially, of the order of remand made by the ITAT for finding out the nature of activities undertaken by the appellant and whether it amounts to manufacturing - assessee carrying on the activity of converting heavy marble blocks into slabs and tiles - Held that - Subsequent events placed on record reveal that core issue on merits have been recorded in favour of the assessee after remand. hence, questions of law as formulated in this case on the validity of the order of remand, now could only be considered rather redundant. Appeal is treated as infructuous and is dismissed as such.

Summary

Issues:
1. Appeal under Section 260-A of the Income Tax Act, 1961 against the judgment and order dated 20.07.2009 by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur.
2. Claim of exemption under Section 10B of the Act for the assessment year 2005-06.
3. Disagreement between the Assessing Officer and the Commissioner of Income Tax (Appeals) regarding the manufacturing activity of the appellant-assessee.
4. Order of remand by the ITAT for de novo consideration of the nature of activities carried out by the appellant-assessee.
5. Substantial questions of law regarding the justification of remitting the matter and the necessity of further examination of the appellant-assessee's activities.
6. Compliance with the ITAT order by the Assessing Officer, leading to a favorable decision for the appellant-assessee.
7. Consideration of the appeal as infructuous due to subsequent events and findings in favor of the appellant-assessee.

Analysis:
1. The appeal (ITA No. 70/2009) was filed under Section 260-A of the Income Tax Act, 1961 against the judgment of the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur, related to the assessment year 2005-06. The appellant, engaged in sawing marble blocks into slabs and tiles, claimed exemption under Section 10B of the Act, which was initially rejected by the Assessing Officer but later allowed by the Commissioner of Income Tax (Appeals), leading to an appeal by the revenue before the ITAT.
2. The ITAT remanded the case to the Assessing Officer for a detailed inquiry into the nature of activities carried out by the appellant-assessee, emphasizing the need for physical verification and adherence to principles of natural justice. The questions of law raised in the subsequent appeal primarily focused on the validity of the remand order and the necessity of further examination despite certain findings.
3. Subsequently, the Assessing Officer conducted the necessary inquiry, visited the factory premises, and examined the manufacturing process, leading to a favorable decision in favor of the appellant-assessee. The order passed by the Assessing Officer, dated 30.12.2010, accepted the claim of the appellant-assessee under Section 10B of the Income Tax Act based on the findings and submissions made during the inquiry.
4. Due to the subsequent events and the favorable decision for the appellant-assessee following the compliance with the ITAT's remand order, the High Court considered the appeal as infructuous and dismissed it. The Court noted that since the core issue had been resolved in favor of the appellant-assessee post-remand, the questions of law regarding the validity of the remand order became redundant and did not require further consideration.