M/s Bisseswariall Mannalal & Sons, Kolkata V. DCIT, CIR-33, KOLKATA, Kolkata

ITA 1140/KOL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1599 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 31-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: P J BHIDE
• Keywords: Business income; Source of fund; Question of law
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI N.V. VASUDEVAN, JM &DR. A.L.SAINI, AM ./ITA NO.1140/KOL/2015 ( / ASSESSMENT YEAR: 2011-12) M/S BISSESWARLALL MANNALAL & SONS 12, PRETORIA STREET, 5 TH FLOOR, KOLKATA 700 071. VS. DCIT, CIR-33, KOLKATA 10B, MIDDLETON ROW,3 RD FLOOR, KOLKATA 71. ./ ./PAN/GIR NO. : AACFB 7736 L (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI P.J. BHIDE, FCA RESPONDENT BY :SHRI S. DASGUPTA, ADDL. CIT / DATE OF HEARING : 05/12/2017 /DATE OF PRONOUNCEMENT : 31/01/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST AN ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS)-10, KOLKATA IN APPEAL NO.37/CIT(A)- 10/CIR-34/2014-15/KOL, DATED 24.07.2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), DATED 10.03.2014. 2.THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT THE PROVISION OF SECTION 14A OF THE I.T. ACT, READ WITH INCOME TAX RULES 8D WERE APPLICABLE TO THE APPELLANT FOR THE ASSESSMENT YEAR IN APPEAL. 2. THAT FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD., REPORTED IN 313 ITR PG. 340 HELD THAT THE PROVISION OF SECTION 14A OF THE ACT READ WITH RULE 8D WERE APPLICABLE TO THE APPELLANT FOR THE ASSESSMENT YEAR IN THE APPEAL. 3. THAT THE LD. CIT(A), CALCUTTA ERRED IN CONFIRMING THE DISALLOWANCE BY THE ASSESSING OFFICER OF THE APPELLANTS CLAIM FOR DEDUCTION U/S 80IC OF THE ACT IN RESPECT OF PROFIT OF RS.34,73,556/- DERIVED INCOME OF THE APPELLANT ON SALE OF BLACK TEA MANUFACTURED FROM GREEN LEAF PURCHASED. M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 2 4. THAT THE ORDER PASSED BY THE AUTHORITIES BELOW IS BAD IN LAW. 5. THAT THE APPELLANT CRAVES LEAVE TO URGE FURTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. GROUND NO. 1 AND 2 RAISED BY THE ASSESSEE RELATE TO DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT, READ WITH RULE 8D OF THE I.T. RULES. 3.1 TH BRIEF FACTS APROPOS THIS ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD TAKEN ONLY DEMAT CHARGES WHILE COMPUTING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT, WHICH WAS NOT IN ACCORDANCE WITH RULE 8D OF THE I.T. RULES.THEREFORE, AO COMPUTED THE DISALLOWANCE BY APPLYING RULE 8D (2) (III) OF THE I.T. RULES AT RS.4,62,001/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3.2 IN THIS CONTEXT, WHEN THE MATTER TRAVELLED TO THE LD CIT(A), THE LD CIT(A) HELD THAT ASSESSEE HAD ADEQUATE OWN CAPITAL TO MEET THE COST OF INVESTMENTS, THEREFORE, HE RESTRICTED THE DISALLOWANCE TO RS.1,14,747/-, THAT IS, THE AMOUNT OF DISALLOWANCE COMPUTED BY THE ASSESSEE BY APPLYING SECTION 14A READ WITH RULE 8D. 3.3 NOT BEING SATISFIED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT NOTHING SHOULD BE DISALLOWED UNDER SECTION 14A, R.W.RULE 8D, BECAUSE PARTNERS ARE WORKING WITHOUT SALARY. ON THE OTHER HAND, LD DR FOR THE REVENUE SUBMITTED BEFORE US THAT SINCE THE ASSESSEE HAD A LARGE INVESTMENT PORTFOLIO AND TO HANDLE IT SOME EXPENSES MUST HAVE BEEN INCURRED BY THE ASSESSEE. THE ADMINISTRATIVE EXPENSES, LIKE WHEN TO PURCHASE, WHEN TO SALE AND WHICH INVESTMENT IS TO BE HELD FOR LONG TIME, AND DECISION MAKING EXPENSES MUST HAVE BEEN INCURRED BY THE ASSESSEE AND THEREFORE, DISALLOWANCE UNDER RULE 8D(2) (III) IS TO BE MADE. WE NOTE THAT THE SAME IDENTICAL ISSUE IN ASSESSEE`S OWN CASE, IN ITA NO.1259/KOL/2014: M/S BISSESWARLALL MANNALAL& SONS FOR A.Y. 2010-11, IS FULLY COVERED BY THE JUDGMENT OF THE COORDINATE BENCH KOLKATA, WHEREIN IT WAS HELD THAT DISALLOWANCE UNDER SECTION 14A R.W.RULE 8D SHOULD BE COMPUTED AFTER TAKING INTO ACCOUNT THOSE INVESTMENTS/SHARES WHICH HAVE M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 3 YIELDED DIVIDEND INCOME, AS PER THE PRINCIPLE LAID DOWN IN THE JUDGMENT OF REI AGRE 144 ITD 141 (KOL). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE DISALLOWANCE ONLY TAKING INTO ACCOUNT THOSE INVESTMENTS WHICH HAVE YIELDED THE DIVIDEND INCOME. 3.4 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE (GROUND NO.1 AND 2) ARE ALLOWED FOR STATISTICAL PURPOSES. 4. GROUND NO.3 RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IC OF THE ACT IN RESPECT OF PROFIT OF RS. 34,73,556/-, DERIVED INCOME OF THE ASSESSEE ON SALE OF BLACK TEA MANUFACTURED FROM GREEN LEAF PURCHASED. 4.1 THE BRIEF FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE'S BUSINESS PREMISE PLACED IN THE STATE OF ASSAM. HENCE AS PER THE SECTION 80-IC2(B) WHICH PROVIDES TAX DEDUCTION FOR THE INCOME ARISING FROM MANUFACTURE OR PRODUCE ANY OFTHAT ARTICLE OR THING VIDE THE ITEM NO: 12 IN THE FOURTEENTH SCHEDULE OF ACT, FOR THE ACTIVITY OFPROCESSING AND RAISING OF PLANTATION CROPS IN THE NORTH-EASTERN STATES, THE ASSESSEE HAS CLAIMED THE DEDUCTION AS DETAILED BELOW UNDER THE HEAD 'INCOME FROM BUSINESS'. SL.NO SOURCE OF INCOME AMOUNT (RS) 1. BUSINESS INCOME (CULTIVATION OF TEA) 40% 14193182 2. PROFIT FROM BOUGHT LEAF MANUFACTURED 3473556 3. HOUSE RENT RECEIVED 33900 4. INSURANCE CLAIM RECEIVED 14000 5. MISC LNCOME 602895 6. TOTAL 18317534 THE ASSESSING OFFICER OBSERVED THAT TO DECIDE UPON WHETHER THE ASSESSEE IS ELIGIBLE TO HAVE THE DEDUCTION UNDER 80-LC, IT ISIMPERATIVE TO CONFIRM THAT SOURCES OF INCOME ARE ACTUALLY ARISING FROM THE ACTIVITY OFPROCESSING AND RAISING OF PLANTATION CROPS-[TEA IN THIS CASE] AND THERE SHOULD BE M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 4 NEXUSBETWEEN INCOME AND ACTIVITY OF PROCESSING AND RAISING OF PLANTATION CROPS [TEA]. A) THE ASSESSEE IN CORE HAS TWO SOURCES OF LNCOME, ONE INCOME IS ARISING FROM CULTIVATION,MANUFACTURING AND SALE OF TEA [SOURCE ONE (1)] AND SECOND IS INCOME ARISING FROM BOUGHT LEAFMANUFACTURE [SOURCE TWO (2)]. ALTHOUGH THE ELIGIBILITY OF THE SOURCE ONE (1) IS APPARENTLYVALID ON RECORD BY LAW, IT IS THE SOURCE TWO (2), WHOSE ELIGIBILITY FOR DEDUCTION UNDER THESECTION 80-IC OF THE ACT IS ASCERTAINABLE IN FACT AND QUESTIONABLE IN LAW. THE ASSESSEE MAINTAINS TWO CHANNELS OF BUSINESS AND DISTINGUISH THE INCOME ARISING FROM TWO DIFFERENT SOURCES (1&2). IT IMPLIES THAT ASSESSEE ON ONE SIDE ENGAGED IN PROCESSING AND RAISING PLANTATION CROPS, ALSOADDITIONALLY INVOLVES ONLY IN PROCESSING OF PLANTATION CROPS (TEA) [IN A SEPARATE ANDINDEPENDENT MODE], BY PURCHASING BOUGHT LEAF FROM NEARBY GARDEN. THE KEY WORD IS'SEPARATE AND INDEPENDENT' .THE ASSESSEE ALSO MAINTAINS THE SALE PROCEEDS OF THE BOTH THESOURCES IN A SEPARATE BOOK OF ACCOUNTS AND BRINGS BOTH THE INCOME UNDER ONE ROOF AND CLAIMSDEDUCTION UNDER 80-LC. IN VIEW OF ABOVE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE VALIDITY OF THE CLAIMING DEDUCTION FOR THESOURCE SL.NO 2.I.E INCOME FROM BOUGHT LEAF MANUFACTURE. IN RESPONSE TO THAT THE ASSESSEE SUBMITTEDTHAT HE USED TO PURCHASEGREEN LEAF FROM OTHER GARDENS WHEN THERE IS A LESS PRODUCTION OF GREEN LEAF FROM THEIROWN GARDEN AND TO UTILIZE THE FACTORY PRODUCTION CAPACITY BY PROVIDING THE REQUIRED GREENTEALEAFS. IT CAN'T BE DIFFERENTIATE THE INCOME DERIVED FROM BOUGHT LEAF ANDOWN LEAF, THAT'S WHY THE TOTAL INCOME WAS TREATED AS BUSINESS INCOME AND CLAIMED UNDERSECTION 80-1C.SINCE ALL THE ABOVE INCOMES WERE GENERATED BY THEIR GARDEN, AND SHOULD BE TREATED AS BUSINESSLNCOME. THE ASSESSING OFFICER OBSERVED THAT RESPONSE BY THE ASSESSEE WAS CONSIDERED IN VIEW OF OPERATIONAL REQUIREMENT, BUSINESSDYNAMICS AND COMMERCIAL NECESSITY. HOWEVER,THE QUESTION OF LAW IN THIS MATTER WAS OF SCOPEAND AMBIT OF THE ITEM NO. 12 OF THE FOURTEEN SCHEDULE OF THE ACT THAT ALLOW DEDUCTION FOR THEINCOME ARISING FROM THE ACTIVITY OF PROCESSING AND M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 5 RAISING OF THE PLANTATION CROPS. THE AO NOTED THAT FUNDAMENTAL QUESTION HERE WAS WHETHER, IN ORDER TO CLAIM THE TAX DEDUCTION UNDER SECTION 80-IC(2) (B), I) IS ASSESSEE REQUIRED TO CARRY ON BOTH ACTIVITIES I.E. PROCESSING AS WELL AS RAISING OF PLANTATION CROP- TEA TO CLAIM DEDUCTION UNDER SECTION 80-IC (2)(B)? OR CARRY ONEITHER ONE OF THE ACTIVITY I.E. PROCESSING OR RAISING AND II) IS PROCESSING AND RAISING AN INTEGRATED SCOPE OR INDEPENDENT ENTITIES? FROM THE RESPONSE OF THE ASSESSE ,IT WAS UNDERSTOOD THAT ASSESSEE HAS TAKEN VIEW THAT WORD'AND' BETWEEN 'PROCESSING' AND 'RAISING' SHOULD BE READ AS 'OR'. THE DEDUCTION IS AVAILABLETO ANY PERSON ENGAGED EITHER IN PROCESSING OR RAISING OF THE PLANTATION CROPS. THE ASSESSE ISNOT REQUIRED TO CARRY ON BOTH THE ACTIVITIES I.E. PROCESSING AS WELL AS RAISING OF THE PLANTATIONCROPS. THE PERUSAL THAT NOMENCLATURE OF THE ARTICLE OR THINGS HAS BEEN GIVENFIRST AND ACTIVITY IS GIVEN LATTER IN MANY OF THE ITEMS THAT ARE REFERRED IN FOURTEENTH SCHEDULE OFTHE ACT I.E. ITEM NO.1[FRUIT AND VEGETABLE], 2[MEAT AND POULTRY],4.[FOOD AND BEVERAGE] AND 14[AGRO BASED INDUSTRIES].HOWEVER FOR THE ITEM NO. L2[PROCESSING AND RAISING PLANTATION CROPS], WHICH IS THE SUBJECT MATTER, IT IS AN ACTIVITY WHICH HAS BEEN MENTIONED FIRST, NOT THENOMENCLATURE AND ARTICLE AND THINGS HAS BEEN MENTIONED SUBSEQUENTLY TO THAT. THEREFOREIMPORTANCE SHALL BE ACCORDED TO THE ACTIVITY. ALSO LEGISLATURE HAS CAREFULLY EXERCISED THEWORD 'OR' IN THE PLACE WHEREVER CHOICE/ALTERNATIVES HAS TO BE PROVIDED OR WARRANTED. FOREXAMPLE ITEM NO. 9[CATTLE OR POULTRY OR FISHERY], ITEM 10.[EDIBLE OIL PROCESSING OR VANASPATIINDUSTRY].SIMILARLY IN ITEM NO. 2, MANUFACTURING OR PRODUCING MEAT AND POULTRY INDUSTRIES.IT IS EXPLICIT FROM THE ABOVE THAT IF THERE SHOULD BE AN ELIGIBILITY CONSIDERATION FOR PROCESSINGOF PLANTATION CROPS INDEPENDENT OF RAISING, LEGISLATURE WOULD HAVE ENACTED AS PROCESSING ORRAISING OF PLANTATION CROPS. LT CLEARLY DENOTES THAT BOTH THE CONDITIONS I.E PROCESSING ANDRAISING OF PLANTATION CROPS MUST BE M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 6 SPECIFIED BY, AN ASSESSE ELIGIBLE FOR DEDUCTION UNDER SECTION 80-LC(2)(B) OF THE ACT.HERE,THE CLEAR AIM AND OBJECT OF THE LEGISLATURE IS TO PROVIDE TAX BENEFIT TO THE ASSESSEE WHO ARE ENGAGED BOTH IN CULTIVATION AND PROCESSING. FURTHER, IT IS THE SETTLED LAW THAT A FISCAL STATUE SHALL HAVE TO BE INTERPRETED ON THE BASIS OF THELANGUAGE USED THEREIN AND NOT DEHORS THE SAME. THERE IS NO AMBIGUITY IN THE PROVISION AS STIPULATED UNDERTHE SAID SCHEDULE L4 AND THIS IS ASETTLED LAW IN VIEW OF THE DECISION OF THE APEX COURT IN THE CASE OF IPCA LABORATORY LTD VDY,CIT[2004] 266 ITR 521/135 TAXMAN594 THAT WHEN THERE IS NO AMBIGUITY IN THEPROVISIONS OF THE STATURE, THE PROVISIONS CANNOT BE INTERPRETED TO CONFER THE BENEFIT ON THEASSESSEE. EVEN MUMBAI HIGH COURT IN THE CASE OF LNDIAN RAYON CORP.LTD VS CIT[1998]23ITR26/97TAXMAN.501(BOM), HAS CATEGORICALLY HELD THAT PRINCIPLES' OF BENEFICIALINTERPRETATION WOULD APPLY ONLY IN A CASE WHERE THERE IS A DOUBT ABOUT THE TRUE SCOPE ANDAMBIT OF THE PROVISIONS. IN VIEW OF ABOVE, THE AO NOTED THAT UNLESS CONDITIONS OF ENGAGING IN PROCESSING AND RAISING OF PLANTATION CROPS IS MET OR COMPLIED, DEDUCTION UNDER SECTION 80- IC(2)(B) OF THE ACT CANNOT BEALLOWED TO THE ASSESSEE. THEREFORE, THE INCOME OF RS. 34,73,556/- ARISING FROM BOUGHT LEAF MANUFACTUREDWAS NOT CONSIDERED AS ELIGIBLE BUSINESS INCOME AND EXCLUDED FROM THE BENEFIT OF DEDUCTIONUNDER SECTION 80-IC OF THE ACT AND ADDED TO THE TOTAL OF INCOME OF THE ASSESSEE UNDERHEAD INCOME FROM BUSINESS. 4.2 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO HAS CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER. THE LD CIT(A) OBSERVED THAT T HE AO HAD INTERPRETED THE FOURTEENTH SCHEDULE WITH THE NECESSARYDILIGENCE, AND FOUND THAT THERE IS MEANING IN THE USE OF THE WORDS 'AND'AND 'OR' IN DIFFERENT PLACES, AND THIS HAS BEEN DONE SO BY LEGISLATURE SOTHAT THE INTENTIONS ARE WELL AND TRULY EMBEDDED IN THE LAW. THE AO HASINTERPRETED STRICTLY THE WORD 'AND', AND THEREBY CONCLUDED THAT TO BEELIGIBLE THE ASSESSEE HAS TO 'PROCESS AND RAISE' THE CROP BEING PROCESSED,TEA IN THIS CASE.BY SUCH INTERPRETATION THE AO FOUND THAT SINCE A PORTION OF THE TEA LEAFWAS PURCHASED M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 7 DIRECTLY AND NOT RAISED IN THE ASSESSEE'S OWN GARDEN(S),THE PROFITS EMANATING FROM THAT COMPONENT WOULD NOT BE ELIGIBLE FOR THEBENEFIT UNDER SEC 80-IC.ON EXAMINATION OF THE FOURTEENTH SCHEDULE, PART A, RELEVANT FOR THENORTH-EASTERN STATES, IT WAS OBSERVED THAT THE SCHEDULE HAD BEEN INSERTEDBY THE FINANCE ACT, 2003 W.E.F. 01.04.2004, AND COVERS THE LIST OFARTICLES OR THINGS OR OPERATIONS, THE PURSUIT OF WHICH WOULD RENDER THEINCOMES SO DERIVED TO BE ELIGIBLE FOR THE BENEFITS SPELT OUT IN SEC 80-LC OFTHE INCOME TAX ACT, 1961. IT WAS OBSERVED BY AO THAT THERE WERE 18 DIFFERENTITEMS, WHICH MAY COVER 'ARTICLES', 'THINGS' OR 'OPERATIONS'. IT MAY BEWORTHWHILE TO REPRODUCE THE ENTIRE SCHEDULE, AS FOLLOWS: [THE FOURTEENTH SCHEDULE] SEE SECTION 80-IC(2) LIST OF ARTICLES OR THINGS OR OPERATIONS PART A FOR THE NORTH EASTERN STATES 1. FRUIT AND VEGETABLE PROCESSING INDUSTRIES MANUFACTURING ORPRODUCING- (I) CANNED OR BOTTLED PRODUCTS; (II) ASEPTIC PACKAGED PRODUCTS; (III) FROZEN PRODUCTS; (IV) DE-HYDRATED PRODUCTS; (V) OLEORESINS. 2. MEAT ANDPOULTRY PRODUCT INDUSTRIES MANUFACTURING OR PRODUCING- (1)MEAT PRODUCTS( BUFFALO, SHEEP, GOAT AND PORK); ( II)POULTRY PRODUCTION; (III) EGG POWDER PLANT. 3. CEREAL BASED PRODUCT INDUSTRIES MANUFACTURING OR PRODUCING- (I) MAIZE MILLING INCLUDING STARCH AND ITS DERIVATIVES; (II) BREAD, BISCUITS, BREAKFAST CEREAL. 4. FOOD AND BEVERAGE INDUSTRIES MANUFACTURING OR PRODUCING - (I) SNACKS; (II) NON-ALCOHOLIC BEVERAGES; (III) CONFECTIONERY INCLUDING CHOCOLATE; (IV) PASTA PRODUCTS; M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 8 (V) PROCESSED SPICES, ETC.; (VI) PROCESSED PULSES; (VII) TAPIOCA PRODUCTS. 5. MILK AND MILK BASED PRODUCT INDUSTRIES MANUFACTURING OR PRODUCING- (I) MILK POWDER; ( II) CHEESE; ( III) BUTTER/ GHEE; (IV) INFANT FOOD; (V) WEANING FOOD; (VI) MALTED MILK FOOD. 6. FOOD PACKAGING INDUSTRY. 7. PAPER PRODUCTS INDUSTRY. 8. JUTE AND MESTA PRODUCTS INDUSTRY. 9. CATTLE OR POULTRY OR FISHERY FEED PRODUCTS INDUSTRY. 10. EDIBLE OIL PROCESSING OR VANSAPATI INDUSTRY, 11. PROCESSING OF ESSENTIAL OILS OR FRAGRANCES INDUSTRY. 12. PROCESSING AND RAISING OF PLANTATION CROPS, TEA, RUBBER, COFFEE, COCONUTS ETC. 13.GAS BASED INTERMEDIATE PRODUCTS INDUSTRY MANUFACTURING OR PRODUCING - (I)GAS EXPLORATION AND PRODUCTION; ( II)GAS DISTRIBUTION AND BOTTLING; (III)POWER GENERATION (IV)PLASTICS; (V)YARN RAW MATERIALS; (VI)FERTILIZERS; (VII)METHANOL; (VIII)FORMALDEHYDE AND FR RESIN MELAMINE AND MF RESIN; (IX)METHYLAMINE, HEXAMETHYLENE TETRAMINE, AMMONIUM BI-CARBONATE; (X)NITRIC ACID AND AMMONIUM NITRATE; (XI)CARBON BLACK; (XII) POLYMER CHIPS. M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 9 14.AGRO FORESTRY BASED INDUSTRY. 15.HORTICULTURE INDUSTRY. 16.MINERAL BASED INDUSTRY. 17.FLORICULTURE INDUSTRY. 18. AGRO BASED INDUSTRY. ** OR' AND 'AND' HAVE BEEN HIGHLIGHTED IN THE FOURTEENTH SCHEDULE FOREFFECT ONLY. IT IS APPARENT FROM THE SCHEDULE THAT THE 'ACTIVITIES' OR 'OPERATIONS'COVERING THE ARTICLES TO BE 'MANUFACTURED' OR 'PROCESSED' HAVE BEENCLEARLY SPELT OUT, AND IS HIGHLY EXHAUSTIVE. IN CERTAIN SITUATIONS THEBENEFITS ARE TO BE GIVEN WHEN THE TAXPAYER MAY BE 'MANUFACTURING' OR'PRODUCING', SUCH AS THOSE LISTED AT SERIAL NUMBERS 1,2,3,4 AND 5. HEREOR APPEARS TO QUALIFY THE 'ACTIVITY', AND MAY MEAN THAT THE ELIGIBILITYWOULD BE CONFERRED IF EITHER THERE IS 'MANUFACTURE' OR 'PRODUCTION', INCERTAIN OTHER SITUATIONS THE WORD OR SEEMS TO POINT OUT THAT THE ELIGIBILITYWOULD BE COVERED IF ANY ONE OR MORE OF THE PRODUCTS ARE BEING MADE,WHETHER 'MANUFACTURING' OR 'PROCESSED' OR BOTH HAS NOT BEEN MENTIONED.THESE ARE MORE EASILY DISCERNIBLE FOR ITEMS AT SERIAL NUMBERS 9, 10 AND11. 4.3. WITH THIS BACKDROP, THE CIT(A) NOTED THAT IF THE ITEM APPEARING AT SERIAL NO. 12 OF THE FOURTEENTHSCHEDULE (PROCESSING AND RAISING OF PLANTATION CROPS, TEA, RUBBER, COFFEE,COCONUTS ETC.) IS EXAMINED, IT APPEARS THAT 'PROCESSING AND RAISING' WOULDBE A COMPOSITE AND CONJOINT ACTIVITY, AND OUGHT TO BE TREATED AS SUCHWHILE INTERPRETING THE POSSIBLE BENEFITS TO THE TAXPAYER. THE AO'SOBSERVATION THAT FOR THIS PARTICULAR POINT OF ACTIVITY AT SERIAL NO. 12 OF THE SCHEDULE, THE 'ACTIVITY' HAS BEEN MENTIONED FIRST, AND THEN THE 'ARTICLE' OR'THING' FOLLOWS APPEARS TO BE ENTIRELY LOGICAL AND CORRECT. THE AO'SOBSERVATION THAT BOTH THE CONDITIONS, I.E., PROCESSING AND RAISING OFPLANTATION CROPS MUST BE UNDERTAKEN BY AN ASSESSEE TO BE ELIGIBLE FORDEDUCTION U/S 80-IC OF THE ACT, APPEARS TO BE THE CORRECTINTERPRETATION. HEREIN, IT HAS TO BE NOTED THAT AN EXEMPTION IS CLEARLY ANEXCEPTION TO THE GENERAL RULE AND AS THE SAME IS OPPOSED TO THE NATURALTONE AND TENOR OF THE TAXING STATUTE, THE ENTITLEMENT FOR EXEMPTION OUGHTNOT TO BE READ WITH ANY LATITUDE TO THE TAXPAYER OR EVEN WITH A WIDER CONNOTATION, BUT TO RESTRICT ITS APPLICATION TO THE SPECIFIC LANGUAGE USEDDEPICTING THE INTENTION OF THE LEGISLATURE. THIS APPEARS TO BE THE RATIONEMANATION IN THE FOLLOWING JUDGMENTS: M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 10 A. ORISSA STATE WAREHOUSING CORPORATION VS CIT (SC) 237 ITR 589 B. RENUKA DATLA VS CIT &ANR. (AP) 240ITR 463 C. NOVOPAN INDIA LTD VS COMMISSIONER OF CENTRAL EXCISE 1994 (73)E.L.T. 769(SC) D. BOMBAY CHEMICALS PVT LTD VS CCE (SC) 1995 AIR 1469 4.4. THE KEY THEREFORE APPEARS TO BE TO ASCERTAIN WHETHER IN TERMS OF THESCHEDULE, 'PROCESSING' AND 'RAISING' OF PLANTATION CROPS WOULD BE ACOMBINED ACTIVITY TO BE CARRIED OUT TOGETHER TO BE ELIGIBLE FOR THE INTENDEDBENEFIT OF THE LEGISLATION. IT IS TO BE NOTED THAT ONCE IT IS A BENEFICIALLEGISLATION TO MAKE CERTAIN INCOME GENERATING ACTIVITIES FREE FROM THEBURDEN OF TAXATION, IT IS CLEAR THAT THE SECTION ITSELF IS A BENEFICIAL SECTIONTO THE TAXPAYER. THEREFORE, IT NEEDS A STRICTER INTERPRETATION, SO THAT NOUNDUE BENEFITS ARE CONFERRED. ANY HARDSHIP THAT MAY ARISE OUT OF A STRICTINTERPRETATION CANNOT COME IN THE WAY OF THE 'CORRECT' INTERPRETATION. 4.5. IT IS OF A CERTAIN IMPLIED IMPORTANCE THAT FOR ITEM NO.12, THE ACTIVITY(PROCESSING AND RAISING OF PLANTATION CROPS) HAS BEEN MENTIONED FIRST, ANDTHEN IT HAS BEEN QUALIFIED BY THE NOMENCLATURE OF THE ARTICLE OR THINGS,NAMELY TEA COFFEE, RUBBER, COCONUTS AND SIMILAR ARTICLES. IN SHORT THE ITEMCOVERS PLANTATION CROPS, WITHOUT BEING EXHAUSTIVE ABOUT THE TYPES OFCROPS. HOWEVER, IT IS SPECIFIC THAT THE PLANTATION CROPS ARE TO BEPROCESSED AND RAISED BY THE PERSON CLAIMING THE DEDUCTION. AS BOTH THECONDITIONS HAVE BEEN STIPULATED, NON-OBSERVANCE OF ANY ONE CONDITIONWOULD, RENDER THE TAXPAYER INELIGIBLE. IN CONSTRUCTION OF THEMEANING OF THE SCHEDULE AND IN CONFORMITY OF A LITERAL CONSTRUCTION, IT ISVERY CLEAR THAT BOTH THE ACTIVITIES ARE TO BE PURSUED TO BE ELIGIBLE FOR THEEXEMPTION. IT IS A WELL SETTLED RULE OF CONSTRUCTION THAT, IN THE FIRSTINSTANCE, THE GRAMMATICAL SENSE OF THE WORD IS TO BE ADHERED TO. IF SUCHADHERENCE APPEARS TO BE CONTRARY TO OR INCONSISTENT WITH THE EXPRESSED INTENTION, OR DECLARED PURPOSE OF THE STATUTE, OR IF IT WOULD INVOLVE ANYABSURDITY, REPUGNANCY OR INCONSISTENCY, THEN ONLY THE GRAMMATICAL SENSEMAY NEED TO BE MODIFIED, EXTENDED OR ABRIDGED, SO FAR AS TO AVOID SUCHINCONVENIENCE, BUT NO FURTHER. THE ELEMENTARY RULE IS THAT WORDS USED IN ASECTION MUST BE GIVEN THEIR PLAIN GRAMMATICAL MEANING. IN SAYING SOSTRENGTH IS DRAWN FROM THE FOLLOWING JUDGMENTS: A. CIT VS GAUTAM SARABHAI TRUST ( GUJ) 173 ITR 216 B. CBDT VS COCHIN GOODS TRANSPORT ASSOCIATION (KER) 236 ITR 993 M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 11 C. M.P.PODDAR (HUF( &ANR. VS APPROPRIATE AUTHORITY &ANR ( DEL) 240ITR 372 4.6. IT APPEARED FROM THE SCHEDULE, THAT THE ASSESSEE MUST BE ENGAGED IN BOTHTHE ACTIVITIES, AND THERE CANNOT BE ANY CONCESSION IN THE MATTER, AS THELAW APPEARS TO BE CLEAR AND WITHOUT ANY AMBIGUITY. AS THE REASONABLE,UNEQUIVOCAL AND UNAMBIGUOUS CONCLUSION IS THAT THE ASSESSEE MUST CARRY OUT BOTH THE ACTIVITIES, THERE CANNOT BE ANY OTHER ALTERNATE POSSIBILITY. THIS IS SETTLED POSITION OF LAWIN VIEW OF THE CASE OF IPCA LABORATORY LTD V DCIT(2006)(SC)(266 ITR 521) , THAT WHERE THERE IS NO AMBIGUITY IN THE PROVISIONS OF THE STATUTE,THE PROVISIONS CANNOT BE INTERPRETED TO CONFER ANY BENEFIT TO THE ASSESSEE. ALSO IN THE CASE OF INDIAN RAYON CORPORATION LTD V CIT (231 ITR26), THE HON'BLE MUMBAI HIGH COURT HAS ADJUDICATED THAT WHERE ITCONCERNS THE PRINCIPLES OF BENEFICIAL INTERPRETATION, THEY WOULD APPLY ONLYIN A CASE WHERE THE COURT IS IN DOUBT ABOUT THE TRUE SCOPE AND THE AMBITOF THE PROVISIONS, OR FINDS TWO EQUALLY REASONABLE INTERPRETATIONS WHERETHE WORDS OF THE STATUTE ARE PLAIN, PRECISE AND UNAMBIGUOUS. 4.7 THE LD CIT(A) RELIED ON THE JUDGMENT OF THE HON'BLEITAT, 'C'- BENCH, KOLKATA IN ITA NO.740 &741/KOL/2010 (DCIT,CIRCLE-4, KOLKATA VS M/S SEWAJPUR TEA COMPANY PVT LTD. DATED 21 ST MARCH, 2013, WHEREIN IN A SIMILAR SET OF FACTS AND CIRCUMSTANCES, THEHON'BLE ITAT HAS INTERPRETED SECTION 80-IC AND THE FOURTEENTH SCHEDULE ANDCONCLUDED THAT UNTIL AND UNLESS THE ASSESSEE ENGAGES WITH BOTH THECONDITIONS OF PROCESSING AND RAISING OF THE PLANTATION OF TEA, THE ASSESSEE CANNOT BE ALLOWED THE DEDUCTION UNDER SECTION 80-IC(2)(B) OF THE LNCOME TAX ACT. THE RELEVANT PORTION OF THE JUDGMENT IS ASFOLLOWS: 5.1 WE HAVE ALSO GONE THROUGH THE DECISION OF BAJAJ TEMPO LTD. -VS- CIT 196 ITR PAGE 188 (SC) (SUPRA). THE ISSUE INVOLVED IN THIS CASE WAS ENTIRELY DIFFERENT. IN THIS CASE, THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTION 15C(1) AND THE AO DID NOT DISPUTE THAT THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS STIPULATED THEREIN BUT IN VIEW OF SECTION 15C(2) , THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS FORMED BY SPLITTING BY TRANSFER TO A NEW BUSINESS OF BUILDING, MACHINERY OR PLANT, PREVIOUSLY USED IN OTHER BUSINESS. SUB-SECTION (2) IS A RESTRICTIVE CLAUSE AND DENIES THE BENEFIT EVEN IF AN UNDERTAKING COMPLIES WITH ALL THE CONDITIONS AS GIVEN UNDER SECTION 15C(1) . THE ASSESSEE IN THIS CASE HAS TAKEN THE BUILDING ON PAYMENT OF MONTHLY RENT ON LEASE. THE AO TOOK THE VIEW THAT THE UNDERTAKING WAS FORMED BY TRANSFER TO A NEW BUSINESS OF BUILDING. IN THIS CONTEXT, WHEN THE MATTER TRAVELED TO THE SUPREME COURT, THE SUPREME COURT TOOK THE VIEW THAT THE TRANSFER, TO TAKE THE NEW UNDERTAKING, OUT OF THE M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 12 PURVIEW OF SUB-SECTION (1), MUST BE SUCH THAT, BUT FOR THE TRANSFER, THE NEW UNDERTAKING COULD NOT HAVE COME INTO BEING AND HELD THAT IN THEIR OPINION ON THE FACTS FOUND BY THE TRIBUNAL, THE PART PLAYED BY TAKING THE BUILDING ON LEASE WAS NOT DOMINANT IN THE FORMATION OF THE COMPANY. IN THIS CONTEXT, THE HON'BLE SUPREME COURT HAS OBSERVED THAT BY THAT CLAUSE, THE LEGISLATURE INTENDED TO CONTROL ANY ATTEMPT OR EFFORT TO ABUSE THE BENEFIT INTENDED FOR NEW UNDERTAKING BY CHANGING THE LABEL. THE INTENTION WAS NOT TO DENY THE BENEFIT TO GENUINE NEW INDUSTRIAL UNDERTAKING BUT TO CONTROL THE MISCHIEF, WHICH MIGHT HAVE OTHERWISE TAKEN PLACE. ADOPTING A LITERAL PERCEPTION WOULD RESULT IN DEFEATING THE VERY PURPOSE OF SECTION 15C . IN THE CASE BEFORE US, THE QUESTION IS WHETHER THE ASSESSEE COMPLIED WITH THE PRIMARY CONDITIONS OF CARRYING ON THE ACTIVITIES AS STIPULATED UNDER ITEM 12 OF SCHEDULE 14. THINGS AND ARTICLES ARE DIFFERENT FROM THE ACTIVITIES. THIS DECISION, IN OUR OPINION, IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. THE STRESS GIVEN UNDER ITEM 12 OF SCHEDULE 14 IS THAT THE ASSESSEE MUST BE ENGAGED IN BOTH THE ACTIVITIES I.E. PROCESSING AND RAISING OF PLANTATION CROPS- TEA, RUBBER, ETC. IN THIS CASE, EVEN THE THEORY BENEFICIAL CONSTRUCTION WILL NOT APPLY AS THERE IS ONLY ONE INTERPRETATION THAT THE ASSESSEE MUST CARRY OUT BOTH THE ACTIVITIES. WE ARE OF THE VIEW THAT THERE IS NO AMBIGUITY IN THE PROVISION AS STIPULATED UNDER THE SAID SCHEDULE 14 AND THIS IS A SETTLED LAW IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF IPC A LABORATORY LTD. -VS- DCIT 266 ITR 521 THAT WHEN THERE IS NO AMBIGUITY IN THE PROVISIONS OF THE STATUTE, THE PROVISIONS CANNOT BE INTERPRETED TO CONFER BENEFIT ON THE ASSESSEE. EVEN MUMBAI HIGH COURT IN THE CASE OF INDIAN RAYON CORPORATION LTD. -VS- CIT 231 ITR 26 HAS CATEGORICALLY HELD THAT PRINCIPLES OF BENEFICIAL INTERPRETATION WOULD APPLY ONLY IN A CASE WHERE THE COURT IS IN DOUBT ABOUT THE TRUE SCOPE AND AMBIT OF THE PROVISIONS OR FINDS TWO EQUALLY REASONABLE INTERPRETATIONS WHERE THE WORDS OF THE STATUTE ARE PLAIN, PRECISE AND UNAMBIGUOUS. IN VIEW OF OUR AFORESAID DISCUSSIONS, WE ARE OF THE FIRM VIEW THAT UNTIL AND UNLESS COMPLIED WITH THE CONDITIONS OF ENGAGING IN PROCESSING AND RAISING OF THE PLANTATION OF TEA, THE ASSESSEE CANNOT BE ALLOWED DEDUCTION UNDER SECTION 80IC(2)(B) . IN VIEW OF THE ABOVE, THE CIT(A) HELD THAT ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80-IC OF THE ACT. 4.8 NOT BEING SATISFIED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE HAS PRIMARILY REITERATED THE SUBMISSIONS MADE BY HIM BEFORE THE CIT(A). ON THE OTHER HAND THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 4.9 WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT A S THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF THE COORDINATE BENCH, KOLKATA IN ITA M/S BISSESWARLALL MANNALAL& SONS ITA NO.1140/KOL/2015 ASSESSMENT YEAR: 2011-12 PAGE | 13 NO.740 &741/KOL/2010 (DCIT,CIRCLE-4, KOLKATA VS M/S SEWAJPUR TEA COMPANY PVT LTD. DATED 21 ST MARCH, 2013, WHEREIN IN A SIMILAR SET OF FACTS AND CIRCUMSTANCES, THE COORDINATE BENCH HAS INTERPRETED SECTION 80-IC AND THE FOURTEENTH SCHEDULE ANDCONCLUDED THAT UNTIL AND UNLESS THE ASSESSEE ENGAGES WITH BOTH THECONDITIONS OF PROCESSING AND RAISING OF THE PLANTATION OF TEA, THE ASSESSEE CANNOT BE ALLOWED THE DEDUCTION UNDER SECTION 80-IC(2)(B) OF THE LNCOME TAX ACT. WE NOTE THAT THERE IS NO CHANGE IN FACTS AND LAW AND THE ASSESSEE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS OF LD CIT(A), WHO HAS CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER.WE FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE LD CIT(A) AND THE SAME IS HEREBY UPHELD. THEREFORE, GROUND NO.3 OF APPEAL OF ASSESSEE IS DISMISSED. 4.10 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE (GROUND NO.3), IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31/01/2018. SD/- (N.V. VASUDEVAN) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 31/01/2018 ( RS, SPS) / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. / THE APPELLANT M/S BISSESWARLALL MANNALAL & SONS 2. / THE RESPONDENT- DCIT, CIR-33, KOLKATA 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE.