I.-T. A. NO. 754/IB OF 1985-86, DECIDED ON 26TH AUGUST, 1986. Versus I.-T. A. NO. 754/IB OF 1985-86, DECIDED ON 26TH AUGUST, 1986.
ORDER
This departmental appeal pertains to charge year 1984‑85. It seeks to call in question the order of the learned Appellate Assistant Commissioner, Range ' B' Multan whereby he has deleted the levy of surcharge on the assessee‑respondent by treating him to be not a manufacturer of gold and silver ornaments. The assessee filed return declaring total income of Rs.18,100. While processing it under section 59 (1) of the Income‑tax Ordinance, 1979, the Income‑tax Officer levied surcharge @ 6% on total income. On appeal, the learned Appellate Assistant Commissioner deleted the levy of surcharge. His order is reproduced below:
"Scrutiny of the relevant record reveals that the appellant is a Jaria 'Gem Setter' and not a manufacturer which fact is also proved from the A.A.C‑B Range's Order Nos.2020 and 2021, dated 9‑5‑1984. As the appellant is a Jaria by profession, levy of jewellers surcharge is, therefore, ordered to be deleted."
2. Relying upon a single Bench decision of the Appellate Tribunal assed in I.T.A. No.885/LB/83‑84, dated 17‑4‑1985 the learned Departmental Representative contended that gem setting is a process of manufacturing of ornaments and, therefore, the assessee‑respondent as rightly subjected to levy of surcharge. The learned authorities representative of assessee‑respondent, on the other hand, submitted hat assessee derives income from setting gems in the ornaments made jewellers on payment of labour charges only.
3. Upon perusal of the abovereferred orders of my learned brother he Judicial Member (Mr. Abrar Hussain Naqvi) I find that he has, in his order, dated 17‑4‑1984 (supra) held that "the gem setting is a part of manufacturing process". whereas in his latter order, dated 23‑1‑1985 passed in I.T.A. No:884/LB/83‑84 he held that "no doubt the process of gem setting is a manufacturing process but the surcharge could only be levied if the assessee has been manufacturing on his own account". I have been able to lay my hand on two other decisions passed by my learned brother, Mian Abdul Khaliq, Judicial Member, wherein he has in unambiguous terms held that the jem setter cannot be a manufacturer. In his order, dated 3‑8‑1986 passed in I.T.A. No.879/LB of 1958‑86 he held as under:‑
"Jeweller's surcharge is leviable in the case of manufacturer or seller of gold/silver ornaments or bullion. The I.T.O. himself having held the nature of the assessee's business to be that of a gem setter, he cannot be termed to be a jeweller. Nature of gem setter's business is that jeweller provides stones etc. alongwith incomplete unfinished ornaments and gem setter returns the same after fixing the stones. In any case the gem setter cannot be a manufacturer as he only charges fixed labour rates for fixing stones in the already manufactured ornaments. The first appellate authority rightly directed the deletion of jeweller's surcharge in the assessee's case. No further interference is called for therein."
4. In another I.T.A. No.880/LB of 1985‑86 decided on 3‑8‑1986 he again held as under:‑
The jeweller's surcharge is leviable on persons engaged in manufacture and sale of gold and silver ornaments. Nature of a Jaria's profession is different from that of a jeweller. In fact the jeweller sends the unfinished ornaments alongwith stones for setting to Jaria. By no stretch of imagination the work done by the Jaria can be determined to be that of a jeweller. Preparation of gold/silver ornaments passes through various stages. After manufacturing, the sets are passed on to Jaria for putting in stones and then the same are sent for polishing to different persons. Neither the Jaria nor the person who undertakes the polish can be determined as a jeweller. In the year under review there being no finding by the I.T.O. regarding the nature of the assessee's business to be of manufacturer of gold/silver ornaments and the first appellate authority having found the nature of the assessee's business to be a Jaria, surcharge was rightly deleted. The impugned order does not suffer from any legal infirmity. The departmental appeal being devoid of any merit is dismissed. "
5. My learned brother Mr. Abrar Hussain Naqvi, Judicial Member while deciding the departmental appeal in the case of the respondent abovenamed observed as under:‑
"The learned D.R. contended that gem setting is manufacturing process. No doubt the process of gem setting is a manufacturing process but the surcharge could only be levied if the assessee has been manufacturing on his own account. If a gem setter only received labour charges and, manufactures for others no surcharge can be levied. No interference is called for in the order of the learned A.A.C. The departmental appeal is dismissed.
6. On my enquiry, the respondent stated that he was setting gems in the ornaments manufactured by the jewellers on receipts of labour charges. The finding of the learned Appellate Assistant Commissioner to the effect that 'appellant is a Jaria' has also not been assailed in the grounds of appeals.
7. Having heard the arguments of the parties' representatives and upon perusal of the abovereferred orders, I am convinced that a person who derives income from setting gems in the ornaments on receipt of labour charges cannot by any stress of reasoning be held to be a person engaged in the business of manufacturing and sale of gold and silver ornaments. The levy of surcharge in the case of a gem setter is, therefore, wholly misconceived. Agreeing, therefore, with my learned brother Mian Abdul Khaliq, Judicial Member, I would hold that 'Jaria' (gem setter) cannot be treated or held to be a jeweller so as to be visited with the levy of surcharge on his income.
8. In the result the departmental appeal fails and the impugned order of the learned Appellant Assistant Commissioner is upheld.
M.Y.H. Appeal dismissed.