Commissioner of Income Tax vs Arts and Crafts Exports

Three questions of law raised by the Revenue in this appeal read thus : (a) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in allowing deduction under s. 80-IB and under s. 10BA by holding that the undertaking, on which provisions under s. 80-IB and under s. 10BA of the IT Act as the case may be apply, has manufactured or produced eligible articles or things ignoring the fact that the assessee, in fact, outsourced the entire craft and artistic items by outright purchase from the local artists, craftsmen, etc. without any value addition as such ?

(b) Whether on the facts and circumstances of the case, the Tribunal erred in law in allowing deduction under s. 10BA by holding that it satisfies the condition given in s. 10BA by holding that it satisfies the condition given in s. 10BA(2)(e) employing twenty or more workers during the relevant previous year ignoring the fact, that in reality, it employed only two carpenters and other barely labours, only for the purpose of manufacture/production of crafts and artistic articles dissatisfying the condition required by the provision of s. 10BA(2)(e) of the IT Act, 1961 ?

(c) Whether on the facts and circumstances of the case, the Tribunal erred in law in holding DEPB as a profit derived from export business for the purpose of computing deduction under s. 10BA ignoring the ratio of decision in the case of Liberty India Vs. Commissioner of Income Tax, having binding force on facts and circumstances of the case.

The assessment year involved herein is asst. yr. 2005-06.

As regards questions (a) and (b) are concerned, counsel for the Revenue fairly states that the decision of the Tribunal in the case of the assessee for the earlier years in holding that the assessee is engaged in the manufacturing activity and, therefore, entitled to deduction under s. 80-IB of the IT Act, 1961 has been accepted by the Revenue in the earlier years. No argument is advanced to establish that the said decision of the Tribunal for the earlier years is erroneous. In these circumstances, questions (a) and (b) raised by the Revenue cannot be entertained.

As regards question (c) is concerned, counsel for the Revenue fairly states that though the question has been raised by relying upon the decision of the apex Court in the case of Liberty India Vs. Commissioner of Income Tax, , the said decision has no relevance to the facts of the present case. In this view of the matter, the third question raised by the Revenue cannot be entertained. In the result, we see no reason to entertain the appeal. Accordingly, the appeal is dismissed.