2010 (2) TMI 275 - HC - Income Tax

Revision- The Tribunal has set aside the order dated August 28, 2003, passed by the Commissioner of Income-tax, Jalandhar (1) by exercising jurisdiction under section 263 of the Act holding that on the basis of survey report conducted under section 133A of the Act the assessment completed under section 143(3) of the Act on November 14, 2005, by the Assessing Officer cannot be set aside by the Commissioner of Income-tax by exercising revisional jurisdiction. Held that- Tribunal had found that the Assessing Officer had given a categorical finding that the assessee was engaged in the process of manufacture of products and accordingly he had granted concession under section 80-IB. The claim of the assessee had been found be genuine. The Assessing Officer had also examined the various workers of the assessee and then recorded the findings. The Assessing Officer was justified in granting the special deduction under section 80-IB. The order of revision disallowing the special deduction was not valid.

Summary

Issues:
Challenge to Tribunal's order under section 260A of the Income-tax Act, 1961 regarding assessment year 2003-04; Jurisdiction of Commissioner of Income-tax under section 263 of the Act; Eligibility for deduction under section 80-IB (4) of the Act; Manufacturing process undertaken by the assessee; Revisional jurisdiction of the Commissioner of Income-tax under section 263 of the Act.

Analysis:
1. The Revenue challenged the order of the Income-tax Appellate Tribunal under section 260A of the Income-tax Act, 1961, regarding the assessment year 2003-04. The Tribunal had set aside the Commissioner of Income-tax's order under section 263 of the Act, based on a survey report conducted under section 133A of the Act. The Tribunal's decision was supported by precedents from the Hyderabad and Amritsar Benches. The Tribunal found that the Commissioner's order lacked justification and that the power of revision was wrongly exercised.

2. The Tribunal delved into the merits of the issue regarding eligibility for deduction under section 80-IB (4) of the Act. The assessee claimed eligibility for the deduction, citing an expanded definition of small scale industries under section 80-IB (14) (g) of the Act. The Assessing Officer examined whether the assessee was engaged in a manufacturing process, focusing on the production of components for tractors. The Tribunal examined detailed question-answer pro forma to establish the manufacturing process undertaken by the assessee.

3. The Assessing Officer concluded that the assessee was indeed engaged in the manufacturing process and granted the concession under section 80-IB of the Act. The Tribunal relied on judgments from the Supreme Court and the Madras High Court to support the assessee's claim. The Tribunal found the assessee's explanation of the manufacturing processes genuine, especially in relation to the components received from another entity.

4. The Tribunal further analyzed the manufacturing processes undertaken by the assessee, emphasizing the critical machinery operations conducted by the assessee itself. The Tribunal found that the major processes were completed by the assessee, as explained in response to various questions posed during the assessment.

5. The Assessing Officer also examined the workers of the assessee to determine compliance with the provisions of section 80-IB (4) of the Act, which was found satisfactory.

6. The High Court, after hearing the arguments, concluded that the Tribunal's order was legally sound and did not raise any substantive question of law for appeal. The Court upheld that the Commissioner's exercise of revisional jurisdiction was unjustified, emphasizing that revisiting evidence to form a new opinion does not fall within the scope of revisional jurisdiction under section 263 of the Act. Consequently, the appeal was dismissed.