M.K. Industries, Kolkata V. CIT, Central - II, Kolkata, Kolkata

ITA 1173/KOL/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7542 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 10-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: R SALARPURIA
• Keywords: Corroborative evidences; Benefit of exemption
• Section: 143(3); 10AA; 80HHC; 10B; 263; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1173/KOL/2007 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2002-03 M. K. INDUSTRIES VS. DEPUTY COMMISSIONER OF IN COME-TAX, (PAN: AAFFM 3708 E) CENTRAL CIRCLE-XIII, KOLKATA . (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 13.12.2011 DATE OF PRONOUNCEMENT: 09.01.2012 FOR THE ASSESSEE: SHRI R. SALARPURIA. FOR THE REVENUE: SHRI NIRAJ KUMAR . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT, CENTRAL-II, KOLKATA PASSED U/S. 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT) VIDE NO CIT(C)-II/ORDER U/S.263/M.K.IND/06-07/19914-16 DATED 30.03.2007. AS SESSMENT WAS FRAMED BY DCIT, CC-XII, KOLKATA U/S. 143(3) OF THE ACT FOR ASSESSMENT YEAR 2002-03 VIDE DATED 31.03.2005. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT REVISING THE ASSESSMENT U/S. 263 OF THE ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROUNDS: 1. THAT THE LD. CIT WAS UNJUSTIFIED IN HOLDING THA T THE ASSESSMENT ORDER PASSED UNDER 143(3 OF THE INCOME TAX ACT, 1961 BY THE LD. ASSESS ING OFFICER (AO) ON 31.03.2005 IN THE CASE OF THE APPELLANT FOR THE ASSESSMENT YEAR 2002- 03 WAS ERRONEOUS AND CONSEQUENTLY PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THER EBY SETTING ASIDE THE SAID ASSESSMENT ORDER UNDER SECTION 263 OF THE SAID ACT. 2. THAT THE LD. CIT FAILED TO APPRECIATE THAT THE A SSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE SAID ACT BY THE LD. A.O ON 31.03.2005 FOR THE ASSESSMENT YEAR 2002-03 WAS NOT ERRONEOUS IN LAW AND CONSEQUENTLY, WAS NOT PREJ UDICIAL TO THE INTEREST OF THE REVENUE AND AS SUCH, THE LD. CIT HAD NO JURISDICTION TO INT ERFERE WITH THE SAID ASSESSMENT ORDER, DATED 31.03.2005, OF THE LD. A.O. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND, WHI CH IS ALTERNATIVE GROUND AND READS AS UNDER: THAT WITHOUT PREJUDICE TO THE APPELLANTS/THE PETI TIONERS CLAIM FOR EXEMPTION UNDER SECTION 10B OF THE INCOME TAX ACT, 1961, THE LD. CI T ERRED IN NOT CONSIDERING THE DEDUCTION UNDER THE PROVISIONS OF SECTION 80HHC OF THE ACT WHILE DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE ASSESSED INCOME BY ADDING BACK THE EXEMPTION CLAIMED BY THE APPELLANT/THE PETITIONER UNDER SECTION 10B OF THE A CT THROUGH HER ORDER DATED 27.03.2007, PASSED UNDER SECTION 263 OF THE ACT. 2 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 3. BRIEF FACTS ARE THAT ASSESSEE IS ENGAGED IN BLEN DING OF DIFFERENT VARIETIES OF TEA AND PACKAGING OF THE SAME. ASSESSEE FILED ITS RETURN O F INCOME ON 31.10.2002 CLAIMING EXEMPTION U/S. 10B OF THE ACT ON ACCOUNT OF INCOME DERIVED FR OM 100% EXPORT ORIENTED UNIT, ASSESSEE BEING ENGAGED IN EXPORT OF MANUFACTURED PACKED TEA. ASSESSMENT WAS FRAMED U/. 143(3) OF THE ACT AFTER ISSUING NOTICE U/S. 143(2) OF THE ACT AND ASSESSING OFFICER WHILE COMPLETING ASSESSMENT ALLOWED EXEMPTION U/S. 10B OF THE ACT IN RESPECT OF INCOME DERIVED FROM 100% EOU, ASSESSEE BEING ENGAGED IN EXPORT OF BLENDED/MA NUFACTURED TEA. SUBSEQUENTLY, CIT, CENTRAL-II, KOLKATA AFTER GOING THROUGH THE RECORDS NOTICED THAT THE ASSESSMENT FRAMED BY ASSESSING OFFICER APPEARS TO BE ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF REVENUE, HENCE NOTICE U/S. 263 OF THE ACT WAS ISSUED TO ASSESSEE F IRM, REQUIRING IT, TO SHOW CAUSE, AS TO WHY THE CLAIM OF EXEMPTION U/S. 10B OF THE ACT BE NOT WITHD RAWN. THE CIT, CENTRAL-II, KOLKATA ISSUED SHOW CAUSE NOTICE DATED 10.01.2007. RELEVANT ISSUE AS MENTIONED IN THE NOTICE READS AS UNDER: AS PER THE PROVISION OF SECTION 10B OF I. T. ACT 1 961 THE UNDERTAKING CLAIMING EXEMPTION UNDER THAT SECTION SHOULD MANUFACTURE OR PRODUCE A NY ARTICLE OR THING. IN VIEW OF THIS AND HONBLE CALCUTTA HIGH COURTS DECISION IN APEEJ AY PVT. LTD., (IN 206 ITR 367) AS WELL AS THE APEX COURTS DECISION IN CIT VS. BUDHIRAJA & CO. (204 ITR 412), IT IS APPARENT THAT THE ASSESSEE . IS NOT ENGAGED IN AN ACTIVITY WHICH IS COVERED UNDER THE PROVISIONS OF SECTION 10B AND HENCE IT APPEARS THAT THE DEDUCTION U/S. 10B OF THE INCOME TAX ACT HAS BEEN WRONGLY ALLOWED TO THE ASSESSEE THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOTICE, FILE D REPLY AND PAPER BOOK WITH SUPPORTING EVIDENCE ON 22.01.2007 IN RESPECT OF ITS CLAIM U/S. 10B OF THE ACT. THE SUBMISSIONS ARE SUMMARIZED AS UNDER: A) THE ASSESSEE FIRM HAS CLAIMED THAT ITS UNITS AT FALTA AND MUMBAI HAVE BEEN PERMITTED TO FUNCTION AS EOU BY THE DEVELOPMENT COM MISSIONERS OF THE RESPECTIVE EXPORT PROCESSING ZONES. THE ASSESSEE HA S BEEN FURTHER GRANTED GREEN CARD BY THE DEVELOPMENT COMMISSIONERS OF TH E EXPORT PROCESSING ZONES FOR THE PROJECT OF MANUFACTURE OF TEA. THE FI RM HAS ALSO POINTED OUT THAT IT IS A REGISTERED UNIT FOR THE PURPOSES OF CENTRAL EXCIS E. B) THE ASSESSEE HAS ELABORATELY DESCRIBED THE PROCE DURE OF TEA BLENDING IN WHICH IT IS ENGAGED, VIZ, BLENDING OF VARIOUS TEAS PURCHA SED FROM THE MARKET, FILLING IT IN PAPER SACKS, MARKING OF PAPER SACKS, WEIGHMENT, STA CKING AND CONTAINER STUFFING, PRE-PACKING INSPECTION FOR EXPORT ETC. THE ASSESSEE S SUBMISSION MENTIONS THAT IT PURCHASES TEA FROM AUCTION CENTERS, RATHER THAN ITS ELF ENGAGING IN THE ACTIVITY OF MANUFACTURING THE FRESHLY PLUCKED LEAVES INTO FINIS HED TEA. C) THE ASSESSEE HAS MADE AN ANALYSIS OF THE STATUTO RY PROVISIONS OF SECTION 10B. IT HAS MAINLY BEEN HIGHLIGHTED THAT PRIOR TO THE AMEND MENT OF THE SECTION BY THE FINANCE ACT, 2000, W.E.F 1.4.2001, THE SECTION CONT AINED AN EXPLANATION WHICH DEFINED MANUFACTURE TO INCLUDE ANY PROCESS, OR AS SEMBLING, OR RECORDING OF PROGRAMS ON ANY DISC, TAPE, PERFORATED MEDIA OR OTH ER INFORMATION STORAGE DEVICE. EVEN WHILE ACKNOWLEDGING THAT THE ENTIRE SECTION 10 B HAS BEEN SUBSTITUTED BY THE NEW PROVISIONS INTRODUCED THROUGH THE FINANCE A CT, 2000, THE ASSESSEE HAS- GONE ON TO CLAIM THAT THE EXPRESSIONS MANUFACTURE AND/OR PRODUCE HAVE NOT BEEN DEFINED IN THE INCOME TAX ACT, 1961 IN ANY EXH AUSTIVE MANNER. FOR THE 3 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 PURPOSES OF SECTION 10B OF THE SAID ACT, AN INCLUSI VE DEFINITION HAS BEEN GIVEN IN RESPECT OF THE SAID TWO WORDS. THE EXPRESSION MANU FACTURE FOR THE PURPOSES OF SECTION 10B HAS BEEN DEFINED TO INCLUDE INTER ALIA ANY PROCESS. D) THE ASSESSEE HAS PLACED EMPHASIS ON SECTION 2(R) OF THE SPECIAL ECONOMIC ZONES ACT, 2005, WHICH DEFINES MANUFACTURE AS T O MAKE, PRODUCE, FABRICATE, ASSEMBLE, PROCESS OR BRING INTO EXISTENCE, BY HAND OR BY MACHINE, A NEW PRODUCT HAVING A DISTINCTIVE NAME, CHARACTER OR USE AND SHA LL INCLUDE PROCESSES SUCH AS REFRIGERATION, CUTTING, POLISHING, BLENDING...ETC. E) THE ASSESSEE HAS QUOTED EXHAUSTIVELY FROM CASE L AWS TO DISCUSS WHAT CONSTITUTES PROCESSING/ PRODUCTION/MANUFACTURING IN VARIOUS KINDS OF ACTIVITIES E.G., BLENDING OF ORE [CHOWGULE & CO. (P) LTD. VS. UNION OF INDIA (1981) 1 SCC 653 AIR 1981SC 1014]; PROCESSING OF MARINE PRODUCTS [CIT VS. BARAKA OVERSEAS TRADERS (1993) 201 ITR 827 (KAR) AND CIT VS. MARWEL L SEA FOODS (1987) 166 ITR 624 (KER)]; AND, MOST IMPORTANTLY, BLENDING OF TEA [NILGIRS CEYLON TEA SUPPLY CO. VS. STATE OF BOMBAY (1959) 10 STC 500 (B OM), BADRINARAYAN VS. STATE OF M.P. (1988) 70 STC 12, BROOKE BOND INDIA L TD. VS. U.O.I.(1984) TAX LR 2593, G.A. RENDERIAN LTD. VS. CIT (1984) 145 ITR 387 CAL. IN SUPPORT OF ITS CONTENTION OF WHAT CONSTITUTES PRODUCTION, IT HAS DEPENDED ON THE CASE LAWS OF CHRESTIAN MICA INDIA LTD. VS. STATE OF BIHAR (1961) 12 STC 150 SC, CIT VS. N.C. BUDHIRAJA AND CO. (1993) 204 ITR 412 (SC) ETC. F) THE ASSESSEE CONCLUDED ITS ARGUMENTS IN THE PAPE R BOOK BY STATING THAT THE TWO CASE LAWS CITED IN THE NOTICE U/S.263 DATED 10.1.07 , VIZ. N.C. BUDDHIRAJA & CO. (1993) 204 ITR 412 (SC) AND THE HONBLE CALCUTTA HI GH COURTS DECISION IN APEEJAY PVT. LTD. VS. CIT (1994) 206 ITR 367 (CAL) ARE DISTINGUISHABLE ON FACTS, AND THAT NONE OF THEM HAVE ANY APPLICATION IN THE F ACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE. THE ASSESSEE HAS INSTEAD RELI ED PRINCIPALLY ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN BROOKE BOND LIP TON INDIA LTD. VS. STATE OF KARNATAKA (1998) 109 STC 265 (KAR) AND HAS MENTIONE D THAT THE DEPARTMENTAL SLP IN THIS CASE HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. FURTHER, THE ASSESSEE HAD ADDED THAT IN DECIDING THE CASE OF APE EJAY PVT. LTD. VS. CIT, THE HONBLE CALCUTTA HIGH COURT DID NOT HAVE THE BENEFI T OF THE SUBSEQUENT TWO DECISIONS OF THE HONBLE KARNATAKA HIGH COURT IN BR OOKE BOND LIPTON INDIA LID. VS. STATE OF KARNATAKA (1998) 109 TC 265 (KAR) AND LIPTON INDIA LTD. VS. STATE OF KARNATAKA, REPORTED IN 109 STC 535 (KAR.). BUT CIT, CENTRAL-II, KOLKATA FINALLY CONCLUDED AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT THE FACTS OF THIS CASE ARE IDENTICAL WITH THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF APEEJAY PVT. LTD. VS. CIT (1994) 206 ITR 36 7 (CAL) AND BROOK BOND INDIA LTD. VS. U.O.I 269 ITR 232, HENCE FOLLOWING THESE TWO JUDGME NTS CIT, CENTRAL-II, KOLKATA SET ASIDE THE ASSESSMENT BY HOLDING THE ASSESSMENT FRAMED U/S. 14 3(3) OF THE ACT VIDE ORDER DATED 31.03.2005 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND DIRECTED THE ASSESSING OFFICER TO DISALLOW DEDUCTION U/S. 10B OF THE ACT BY GIVING FOLLOWING F INDINGS VIDE PARA 9 AND 10 AS UNDER: 9.TO CONCLUDE, SINCE THE FACTS AND CIRCUMSTANCES O F THE ASSESSEES CASE ARE IDENTICAL WITH THE CITED DECISION OF APEEJAY PVT. LTD. (206 I TR 367, CAL) AND BROOKE BOND INDIA LTD. VS. CIT (2004) 269 ITR 232 (CAL), I HEREBY HOL D THAT THE RATIO OF THESE TWO CASES, BEING DECISIONS OF THE JURISDICTIONAL HIGH COURT, A RE FULLY APPLICABLE TO THE ASSESSEE. FOR THE SAID REASON, I REITERATE THAT THE ACTIVITY OF T HE ASSESEE CANNOT BE SAID TO BE 4 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, WHICH IS A NECESSARY PREREQUISITE FOR CLAIM OF BENEFIT U/S. 10B. 10. AS AN UNDESERVED BENEFIT IN THE FORM OF CONCESS ION U/S. 10B HAS BEEN WRONGLY EXTENDED TO THE ASSESSEE, I HOLD THAT THE ASSESSMEN T ORDER DATED 31.3.2005 HAS BEEN RENDERED ERRONEOUS AND IS PREJUDICIAL TO THE INTERE ST OF REVENUE. ACCORDINGLY, AS THE CONDITIONS FOR EXERCISE OF REVISIONARY POWERS U/S. 263 OF THE INCOME-TAX ACT ARE SATISFIED IN THE INSTANT CASE, I DIRECT THE ASSESSING OFFICER TO MODIFY THE ASSESSMENT ORDER TO THE EXTENT AS MENTIONED ABOVE. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE SHRI R. S ALARPURIA EXPLAINED THE PROCESS OF ALL THE STAGES NAMELY, PRODUCTION, MANUFACTURING AND PR OCESSING OF TEA. HE ENUMERATED THE THREE PROCESSES. ACCORDING TO HIM, THE TEA IS PRODUCED I N THE TEA GARDEN AND CALLED THE FIRST STAGE OF PRODUCTION OF TEA. THE SECOND STAGE IS MANUFACTURI NG OF TEA AS IN THIS STAGE, TEA LEAVES ARE PLUCKED FROM THE TEA BUSHES AND BY THIS PROCESS TEA LEAVES ARE CONVERTED INTO TEA. THIS SECOND STAGE IS CONSIDERING AS MANUFACTURING OF TEA. FINA LLY, HE STATED THAT THE THIRD STAGE IS BLENDING OF DIFFERENT QUALITIES OF TEA IN ORDER TO SMOOTHEN ITS MARKETABILITY AND THIS THIRD STAGE IS CONSIDERED AS PROCESSING OF TEA. LD. COUNSEL FOR T HE ASSESSEE STATED THAT BY INTRODUCTION OF SECTION 10AA OF THE ACT W.E.F. 10.02.2006, DEFINITI ON OF MANUFACTURE HAS BEEN INSERTED BY THE SPECIAL ECONOMIC ZONE ACT 2005 IN EXPLANATION (1) T O SECTION 10AA SUB-CLAUSE (III), WHICH PROVIDES THE DEFINITION OF MEANING AS UNDER: (III) MANUFACTURE SHALL HAVE THE SAME MEANING AS ASSIGNED TO IT IN CLAUSE (4) OF SECTION 2 OF THE SPECIAL ECONOMIC ZONES ACT, 2005. LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT TH IS DEFINITION OF MANUFACTURE HAS BEEN CONSIDERED AS RETROSPECTIVE BY HONBLE KERALA HIGH COURT IN THE CASE OF GIRNAR INDUSTRIES VS. CIT (2011) 338 ITR 277 (KER) AND ALSO IN TATA TEA L TD. VS. ACIT (2011) 338 ITR 285 (KER). 5. ON THE OTHER HAND, LD. CIT, DR SHRI NIRAJ KUMAR RELIED ON THE ORDER OF CIT REVISING THE ASSESSMENT U/S. 263 OF THE ACT. HE ARGUED THAT 'BLENDING' DID NOT ANSWER THE DESCRIPTION OF MANUFACTURE OR PROCESSING AND THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 10A OF THE ACT AND FURTHER CLARIFIED SPECIFICALLY THAT IT IS THE CASE OF THE DEPARTMENT THAT BLENDING COULD BE TREATED AS A MANUFACTURING ACTIVITY ONLY A FTER THE DEFINITION CLAUSE OF 'MANUFACTURE' CONTAINED IN SECTION 2(R) OF THE SPECIAL ECONOMIC Z ONES ACT, 2005, WAS INCORPORATED IN THE PROVISIONS OF SECTION 10AA OF THE ACT WITH EFFECT F ROM FEBRUARY 10, 2006. HE EXPLAINED THAT DEPARTMENT'S STAND IS THAT MANUFACTURE OR PRODUCTIO N HAD A LIBERAL MEANING UNDER THE DEFINITION CLAUSE CONTAINED IN SECTION 10B UNTIL ITS DELETION WITH EFFECT FROM ASSESSMENT YEAR 2001-02 WHICH COVERED EVEN PROCESSING AND, THEREFORE, BLEND ING AND PACKING OF TEA FOR EXPORT WAS TREATED AS MANUFACTURE OR PRODUCTION OF AN ARTICLE QUALIFYING FOR EXEMPTION. HOWEVER, ONCE THE DEFINITION CLAUSE IS DELETED, 'PROCESSING' DOES NOT QUALIFY FOR EXEMPTION FROM THE ASSESSMENT 5 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 YEAR 2001-02 ONWARDS AND SO MUCH SO, THE ASSESSEE'S ACTIVITY BEING ONLY PROCESSING NOT AMOUNTING TO MANUFACTURE OR PRODUCTION, IS NOT ENTI TLED TO EXEMPTION UNDER SECTION 10B OF THE ACT. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. TARA AGENCIES (2007) 292 ITR 444 (SC) AND ALSO ON HONBLE CALCUTT A HIGH COURT DECISIONS IN THE CASES OF APEEJAY PVT. LTD. AND BROOK BOND INDIA LTD. (SUPRA) . 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT HONBLE KERALA HIGH COURT IN THE CASE OF TATA TEA LTD. (SUPRA) AND GIRNAR INDUSTRIES LTD. (SUPRA) HAS CONSIDERED EXACTLY THE SAME ISSUE OF CLAIM OF EXEMPTION U/S. 10B OF THE ACT I.E. WHETHER THE ASSESSEE IS ENTITLED FOR E XEMPTION U/S. 10B OF THE ACT IN CASE OF BLENDING, PACKAGING AND EXPORT OF TEA BAGS, TEA PAC KETS AND BULK TEA PACKS INCLUDING PROCESSING BEING 100% EXPORT ORIENTED UNIT. HONBLE KERALA HI GH COURT IN TATA TEA LTD. (SUPRA) HAS DECIDED THE ISSUE AFTER CONSIDERING THE FACTS AS UN DER: 1. IN THE CONNECTED APPEALS FILED BY THE ASSESSEE- COMPANY THE QUESTION RAISED IS WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTI FIED IN REVERSING THE ORDER OF THE FIRST APPELLATE AUTHORITY BY HOLDING THAT THE APPELLANT I S NOT ENTITLED TO EXEMPTION FROM PAYMENT OF TAX UNDER SECTION 10B OF THE INCOME-TAX ACT, 196 1, ON THE PROFITS DERIVED FROM ITS 100 PER CENT. EXPORT ORIENTED UNIT ENGAGED IN BLENDING, PACKING AND EXPORT OF TEA BAGS AND TEA PACKETS. WE HAVE HEARD SENIOR COUNSEL SRI JOSEPH VE LLAPPALLY APPEARING FOR THE ASSESSEE- APPELLANT AND SENIOR STANDING COUNSEL SRI P. K. R. MENON APPEARING FOR THE RESPONDENT- REVENUE. 2. THE APPELLANT-ASSESSEE HAS A DIVISION EXCLUSIVEL Y ENGAGED IN BLENDING, PACKING AND EXPORT OF TEA BAGS, TEA PACKETS AND BULK TEA-PA CKS. THIS DIVISION ENJOYS RECOGNITION AS A 100 PER CENT. EXPORT ORIENTED UNIT WHICH IS GRAN TED BY THE DEVELOPMENT COMMISSIONER, MINISTRY OF COMMERCE AND INDUSTRY, GOVERNMENT OF I NDIA. INCOME-TAX EXEMPTION UNDER SECTION 10B OF THE ACT CLAIMED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 1996-97 ONWARDS WAS GRANTED UP TO THE ASSESSMENT YEAR 2000-01. HOWE VER, FOR THE ASSESSMENT YEARS 2001- 02 AND 2002-03 TO WHICH THESE APPEALS RELATE, EXEMP TION WAS DECLINED FOR THE REASON THAT BY THE FINANCE ACT, 2000, THE DEFINITION OF 'MANUFA CTURE' WHICH INCLUDED 'PROCESSING' CONTAINED IN SECTION 10B WAS DELETED WITH EFFECT FR OM APRIL 1, 2001. THE DEPARTMENT'S STAND IS THAT MANUFACTURE OR PRODUCTION HAD A LIBER AL MEANING UNDER THE DEFINITION CLAUSE CONTAINED IN SECTION 10B UNTIL ITS DELETION WITH EF FECT FROM THE ASSESSMENT YEAR 2001-02 WHICH COVERED EVEN PROCESSING AND, THEREFORE, BLEND ING AND PACKING OF TEA FOR EXPORT WAS TREATED AS MANUFACTURE OR PRODUCTION OF AN ARTICLE QUALIFYING FOR EXEMPTION. HOWEVER, ONCE THE DEFINITION CLAUSE IS DELETED, 'PROCESSING ' DOES NOT QUALIFY FOR EXEMPTION FROM THE ASSESSMENT YEAR 2001-02 ONWARDS AND SO MUCH SO, THE ASSESSEE'S ACTIVITY BEING ONLY PROCESSING NOT AMOUNTING TO MANUFACTURE OR PRODUCTI ON, IS NOT ENTITLED TO EXEMPTION UNDER SECTION 10B. HOWEVER, SENIOR COUNSEL APPEARING FOR THE ASSESSEE HAS RELIED ON A RECENT DIVISION BENCH JUDGMENT OF THIS COURT IN I. T. A. N O. 100 OF 2009, DATED AUGUST 17, 2009, IN THE CASE OF GIRNARINDUSTRIES V. CIT ([2011] 338 ITR 277 (KER)) DECLARING ELIGIBILITY FOR EXEMPTION FROM PAYMENT OF TAX IN RESPECT OF THE INC OME FROM THE SAME ACTIVITY CARRIED ON BY A UNIT IN THE SPECIAL ECONOMIC ZONE AT KAKKANAD FOR THE ASSESSMENT YEAR 2004-05. THE CONTENTION OF COUNSEL FOR THE ASSESSEE IS THAT THE SCHEME OF INCOME-TAX EXEMPTION AVAILABLE TO UNITS IN THE SPECIAL ECONOMIC ZONE UNDER SECTION 10A AND UNITS IN THE FREE TRADE ZONE PROVIDED UNDER SECTION 10AA AND THE EXEMPTION AVAIL ABLE TO 100 PER CENT. EXPORT ORIENTED UNITS UNDER SECTION 10B ARE VERY SIMILAR IN NATURE AND THE WORDINGS OF THE STATUTORY PROVISIONS ARE SIMILAR IN NATURE AND SO MUCH SO, G OING BY THE EARLIER DIVISION BENCH JUDGMENT OF THIS COURT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 10B IN RESPECT OF THE PROFIT DERIVED BY IT FROM THE 100 PER CENT. EX PORT ORIENTED UNIT. SENIOR COUNSEL FOR THE 6 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 ASSESSEE ALSO STATED THAT THE ASSESSEE'S CASE ON TH E FACTS IS BETTER BECAUSE THE ASSESSEE IS NOT ONLY ENGAGED IN PACKING OF BLENDED TEA IN RETAI L AND WHOLESALE PACKS, BUT IS ALSO MAKING A PRODUCT CALLED 'TEA BAG' WHICH IS A PRODU CT IN ITSELF BECAUSE IT IS NOT JUST PACKING OF BLENDED TEA IN PACKETS. ON GOING THROUGH THE PRO VISIONS OF SECTIONS 10A, 10AA AND 10B, WE FEEL THE SCHEME OF EXEMPTION IS VERY SIMILAR IN NATURE AND THE WORDINGS USED IN ALL THE SECTIONS ARE SIMILAR IN NATURE. SO MUCH SO, OUR DEC ISION ABOVEREFERRED TO SHOULD APPLY TO THIS CASE AS WELL. HOWEVER, WE NOTICE FROM OUR JUDG MENT THAT THERE WAS AN OMISSION BY THIS COURT TO CONSIDER IN THAT JUDGMENT THE DECISION OF THE SUPREME COURT IN CIT V. TARA AGENCIES REPORTED IN [2007] 292 ITR 444 (SC) RELIE D ON BY THE SENIOR STANDING COUNSEL FOR THE REVENUE WHEREIN THE SUPREME COURT HAS CLEARLY HELD THAT BLENDING OF TEA DOES NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF AN ARTICLE, BUT IS ONLY PROCESSING. EVEN THOUGH PROCESSING ALSO QUALIFIED FOR EXEMPTION UNDER THE D EFINITION CLAUSE OF 'MANUFACTURE' CONTAINED IN SECTION 10B AND THE ASSESSEE WAS IN FA CT GRANTED EXEMPTION UP TO THE ASSESSMENT YEAR 2001-02, THE CONTENTION OF COUNSEL FOR THE REVENUE IS THAT ONCE THE DEFINITION CLAUSE OF 'MANUFACTURE' IS DELETED FROM THE ASSESSMENT YEAR 2001-02, THE PROCESSING THAT WAS UNTIL THEN COVERED IN THE DEFIN ITION CLAUSE, NO LONGER QUALIFIES FOR EXEMPTION. THE QUESTION, THEREFORE, TO BE CONSIDERE D IS WHETHER THE REMOVAL OF THE DEFINITION CLAUSE ON MANUFACTURE BY THE LEGISLATURE THROUGH THE AMENDMENT INTRODUCED BY THE FINANCE ACT, 2000, WITH EFFECT FROM THE ASSESS MENT YEAR 2001-02 ONWARDS IS WITH THE OBJECT OF RESTRICTING THE BENEFIT OF EXEMPTION TO 100 PER CENT. EXPORT ORIENTED UNITS, ONLY TO GOODS MANUFACTURED OR PRODUCED BY THEM OTHER THAN THROUGH PROCESSING. IN THE DECISION OF THIS COURT ABOVEREFERRED, THIS COURT CONSIDERED THE EXEMPTION CLAUSE IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN CIT V . GWALIOR RAYON SILK MFG. CO. LTD. REPORTED IN [1992] 196 ITR 149 (SC), WHEREIN THE S UPREME COURT HELD AS FOLLOWS (HEAD NOTE) : 'IT IS SETTLED LAW THAT THE EXPRESSIONS USED IN A T AXING STATUTE WOULD ORDINARILY BE UNDERSTOOD IN THE SENSE IN WHICH IT IS HARMONIOU S WITH THE OBJECT OF THE STATUTE TO EFFECTUATE THE LEGISLATIVE INTENTION. IT IS EQUALLY SETTLED LAW THAT, IF THE LANGUAGE IS PLAIN AND UNAMBIGUOUS, ONE CAN ONLY LOO K FAIRLY AT THE LANGUAGE USED AND INTERPRET IT TO GIVE EFFECT TO THE LEGISLA TIVE INTENTION. NEVERTHELESS, TAX LAWS HAVE TO BE INTERPRETED REASONABLY AND IN CONSO NANCE WITH JUSTICE ADOPTING A PURPOSIVE APPROACH. THE CONTEXTUAL MEANI NG HAS TO BE ASCERTAINED AND GIVEN EFFECT TO. A PROVISION FOR DEDUCTION, EXE MPTION OR RELIEF SHOULD BE CONSTRUED REASONABLY AND IN FAVOUR OF THE ASSESSEE. ' 3. IN THIS CONTEXT WE NOTICE THAT THE DECISION OF T HE SUPREME COURT IN TARA AGENCIES' CASE [2007] 292 ITR 444 (SC) ABOVEREFERRED TO WAS O N THE ASSESSEE'S ENTITLEMENT FOR WEIGHTED DEDUCTION ON EXPORT MARKETS DEVELOPMENT A LLOWANCE PROVIDED UNDER SECTION 35B(1A) OF THE ACT WHICH IS NO LONGER IN THE STATU TE. IN OUR VIEW, THE SCHEME OF DEDUCTION OF EXPORT MARKETS DEVELOPMENT ALLOWANCE EARLIER AVA ILABLE AND THE SCHEME OF EXEMPTION ON EXPORT PROFITS ARE DIFFERENT IN NATURE. IT MAY BE N OTICED THAT EXEMPTION ON EXPORT PROFIT IS AVAILABLE EVEN TO MERCHANT EXPORTERS BY VIRTUE OF T HE PROVISIONS CONTAINED UNDER SECTION 80HHC OF THE INCOME-TAX ACT. BESIDES THE EXEMPTION AVAILABLE ON PROFITS EARNED IN EXPORT BUSINESS BY TRADERS, SPECIFIC PROVISIONS ARE INCOR PORATED IN SECTIONS 10A, 10AA AND 10B PROVIDING FOR EXEMPTION TO THE ENTIRE PROFITS EARN ED BY INDUSTRIAL UNITS IN FREE TRADE ZONES, SPECIAL ECONOMIC ZONES AND INDUSTRIES WHICH ARE DEC LARED 100 PER CENT. EXPORT ORIENTED UNITS. WHILE DECIDING THE ISSUE IN THE CASE OF THE INDUSTRY LOCATED IN THE SPECIAL ECONOMIC ZONE IN THE CASE ABOVEREFERRED TO, THIS COURT HAS T AKEN INTO ACCOUNT THE DEFINITION OF 'MANUFACTURE' CONTAINED IN CHAPTER IX OF THE EXPORT IMPORT POLICY 2002-2007, WHICH IS AS FOLLOW: 'MANUFACTURE' MEANS TO MAKE, PRODUCE, FABRICATE, ASSEMBLE, PROCESS OR BRING INTO EXISTENCE, BY HAND OR BY MACHINE, A NEW PRODUCT HAVING A DISTINCTIVE NAME, CHARACTER OR USE AND SHALL INCLUD E PROCESSES SUCH AS REFRIGERATION, REPACKING, POLISHING, LABELLING, REC ONDITIONING, REPAIR, REMAKING, REFURBISHING, TESTING CALIBRATION, RE-ENGINEERING. MANUFACTURE, FOR THE PURPOSE 7 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 OF THIS POLICY, SHALL ALSO INCLUDE AGRICULTURE, AQU ACULTURE, ANIMAL HUSBANDRY, FLORICULTURE, HORTICULTURE, PISCICULTURE, POULTRY, SERICULTURE, VITICULTURE AND MINING.' THIS COURT ALSO NOTICED THAT THE DEFINITION OF 'MAN UFACTURE' CONTAINED IN SECTION 2(R) OF THE SPECIAL ECONOMIC ZONES ACT, 2005, WAS I NCORPORATED LATER UNDER SECTION 10AA OF THE INCOME-TAX ACT WITH EFFECT FROM FEBRUARY 10 , 2006, WHICH IS AS FOLLOWS : ''MANUFACTURE' MEANS TO MAKE, PRODUCE, FABRICATE, A SSEMBLE, PROCESS OR BRING INTO EXISTENCE, BY HAND OR BY MACHINE, A NEW PRODUC T HAVING A DISTINCTIVE NAME, CHARACTER OR USE AND SHALL INCLUDE PROCESSES SUCH AS REFRIGERATION, CUTTING, POLISHING, BLENDING, REPAIR, REMAKING, RE ENGINEERING AND INCLUDES AGRICULTURE, AQUACULTURE, ANIMAL HUSBANDRY, FLORIC ULTURE, HORTICULTURE, PISCICULTURE, POULTRY, SERICULTURE, VITICULTURE AN D MINING.' THE FINDING OF THIS COURT IS THAT THE PURPOSE OF IN CORPORATION OF SECTION 2(R) OF THE SPECIAL ECONOMIC ZONES ACT, 2005, INTO SECTION 10AA OF THE INCOME-TAX ACT IS TO PROVIDE A LIBERAL MEANING TO THE WORD 'MANUFACTURE' WHICH TAKES IN EV EN BLENDING, REFRIGERATION, ETC. IT WAS NOTICED BY THIS COURT THAT THE DEFINITIONS OF 'MANU FACTURE' CONTAINED IN THE ABOVE DEFINITION CLAUSES ARE VERY LIBERAL WHICH TAKES IN EVEN PROCES SING LIKE BLENDING. THE CONTENTION OF COUNSEL FOR THE ASSESSEE IS THAT THE PURPOSE OF REM OVAL OF THE DEFINITION OF 'MANUFACTURE' FROM SECTION 10B WAS NOT TO PROVIDE A RESTRICTED ME ANING FOR THAT TERM CONTAINED IN THE MAIN SECTION BECAUSE IF THAT WAS SO, THEN THE LEGIS LATURE WOULD HAVE ONLY MODIFIED THE DEFINITION CLAUSE. FURTHER, THE DEFINITION OF 100 PER CENT. EXPORT ORIENTED UNIT EVEN AFTER THE AMENDMENT IS RETAINED IN THE SAID SECTION, WHIC H DEFINES IT AS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A 100 PER CENT. EXPORT ORIENTE D UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCIS E OF POWERS CONFERRED BY SECTION 40 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1 951, AND THE RULES MADE UNDER THAT ACT. IT IS PERTINENT TO NOTE THAT THE PRODUCTS FOR WHICH THE ASSESSEE'S UNIT IS RECOGNISED AS A 100 PER CENT. EXPORT ORIENTED UNIT ARE TEA BAGS, TE A IN PACKETS AND TEA IN BULK PACKS. IN FACT, THE ASSESSEE IS EXCLUSIVELY ENGAGED IN BLENDI NG AND PACKING OF TEA FOR EXPORT AND IS NOT MANUFACTURING OR PRODUCING ANY OTHER ARTICLE OR THING. STILL IT IS RECOGNISED AS A 100 PER CENT. EXPORT ORIENTED UNIT BY THE CONCERNED AU THORITY WITHIN THE MEANING OF THAT TERM CONTAINED IN THE DEFINITION CLAUSE OF SECTION 10B O F THE INCOME-TAX ACT AND THE DEPARTMENT HAS NO CASE THAT THE ASSESSEE'S UNIT ENGAGED IN EXP ORT OF TEA BAGS AND TEA PACKETS IS NOT A 100 PER CENT. EXPORT ORIENTED UNIT. SO MUCH SO, IN OUR VIEW, IF EXEMPTION IS DENIED ON THE GROUND THAT PRODUCTS EXPORTED ARE NOT PRODUCED OR M ANUFACTURED IN THE INDUSTRIAL UNIT OF THE ASSESSEE'S 100 PER CENT. EXPORT ORIENTED UNIT, THE SAME WOULD DEFEAT THE VERY OBJECT OF SECTION 10B. FURTHER, INDUSTRIAL UNITS ENGAGED IN T HE VERY SAME ACTIVITY ; I.E., BLENDING, PACKING AND EXPORT OF TEA IN THE SPECIAL ECONOMIC ZONES AND FREE TRADE ZONES, WILL CONTINUE TO ENJOY TAX EXEMPTION UNDER SECTION 10A AND SECTI ON 10AA RESPECTIVELY. THE STILL WORSE POSITION IS THAT THE APPELLANT WOULD BE DENIED OF E XPORT EXEMPTION AVAILABLE UNDER SECTION 80HHC EVEN TO A MERCHANT EXPORTER. IN OUR VIEW, THE DECISION OF THE SUPREME COURT IN TARA AGENCIES' CASE [2007] 292 ITR 444 (SC) IS NOT APPLICABLE FOR THE PURPOSE OF CONSIDERING EXEMPTION FOR INDUSTRIES IN THE EXPORT PROCESSING ZONES, FREE TRADE ZONES AND TO 100 PER CENT. EXPORT ORIENTED UNITS COVERED BY S ECTIONS 10, 10AA AND 10B OF THE INCOME- TAX ACT. THEREFORE, FOLLOWING THE JUDGMENT OF THIS COURT ABOVEREFERRED TO WE HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION ON THE PROFIT DER IVED BY ITS 100 PER CENT. EXPORT ORIENTED UNIT ENGAGED IN BLENDING, PACKING AND EXPORT OF TE A BAGS AND TEA PACKETS. CONSEQUENTLY, WE ALLOW THE APPEALS BY REVERSING THE ORDERS OF THE TRIBUNAL AND BY RESTORING THE ORDERS OF THE FIRST APPELLATE AUTHORITY DECLARING THE APPELLA NT'S ENTITLEMENT FOR EXEMPTION. 7. FURTHER, THE ASSESSEE CLAIMED EXEMPTION UNDER ER STWHILE PROVISIONS OF SECTION 10B OF THE ACT AS THE ASSESSEES EOU UNITS WERE SET UP DUR ING PREVIOUS YEAR 1999-2000 RELEVANT TO AY 2000-01 AND DURING THE SAID PERIOD DEFINITION OF M ANUFACTURE INCLUDES PROCESSING AS PER THE 8 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 DEFINITION OF CLAUSE 3 OF EXPLANATION TO SECTION 10 B OF THE ACT. ALTHOUGH THE SAID SECTION WAS SUBSTITUTED BY FINANCE ACT 2000 W.E.F. 01.04.2001 T HE ASSESSEE CLAIMED EXEMPTION UNDER EOU UNIT, WHICH WAS SET UP IN VIEW OF THE PROVISIONS IN CLUDING PROCESSING IN THE DEFINITION OF MANUFACTURE FOR THE PURPOSE OF SECTION 10B OF THE A CT. THE ASSESSEE FIRMS UNITS ARE SITUATED AT FALTA AND MUMBAI AND HAVE BEEN PERMITTED TO FUNCTIO N AS EOU BY THE DEVELOPMENT COMMISSIONERS OF THE RESPECTIVE EXPORT PROCESSING Z ONES AND ALSO GRANTED GREED CARD BY THE DEVELOPMENT COMMISSIONERS OF THE EXPORT PROCESSING ZONES FOR THE PROJECT OF MANUFACTURING OF TEA. IT IS ALSO REGISTERED WITH THE CENTRAL EXC ISE AUTHORITIES. THE ASSESSEE HAS DESCRIBED THE PROCEDURE OF TEA BLENDING IN WHICH IT IS ENGAGED I. E. BLENDING OF VARIOUS TEAS PURCHASED FROM MARKET, FILLING IN PAPER SACKS, MARKING OF PAPER SA CKS, WEIGHMENT, STAKING AND CONTAINER STUFFING, PRE PACKING INSPECTION FOR EXPORTS ETC. E TC. WE ALSO FIND THAT THE HONBLE KERALA HIGH COURT IN TATA TEA LTD. (SUPRA) HAS CONSIDERED THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF TARA AGENCIES (SUPRA). WHETHER IN SUCH CIR CUMSTANCES CIT CAN REVISE THE ASSESSMENT FRAMED U/S. 143(3) OF THE ACT DATED 31.03.2005 FOR THE AY 2002-03 BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. FIRST OF ALL, AS ARGUED BY ASSESSEES COUNSEL SHRI R. SALARPURIA THAT THE AO HAS CONSIDERED THE ISSUE IN DETAILS AND NOW AFTER THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF TATA TEA LTD. (SUPRA), THE ISS UE HAS BECOME HIGHLY DEBATABLE AND TWO VIEWS ARE POSSIBLE ON THIS ISSUE. FOR THIS, LD. CO UNSEL FOR THE ASSESSEE REFERRED TO THE REVISION ORDER OF CIT WHEREIN HE ADMITTED THAT THE ASSESSEE IS ENGAGED IN THE ACTIVITY OF BLENDING, PACKAGING AND EXPORT OF TEA BUT ACCORDING TO CIT TH IS CANNOT BE DESCRIBED AS MANUFACTURE OR PRODUCE OF ANY ARTICLE OR THING AND AT THE MOST TH IS CAN BE DESCRIBED AS A PROCESS OR BLENDING. AS HONBLE KERALA HIGH COURT HAS TAKEN NOTE OF THE FACT THAT THE DEFINITION OF MANUFACTURE CONTAINED IN SECTION 2 (R) OF THE SPECIAL ECONOMIC ZONES ACT, 2005 WAS INCORPORATED IN SECTION 10AA OF THE ACT W.E.F. 10.02.2006 AND IT INCLUDES P ROCESSING OR BLENDING WITHIN ITS AMBIT. HONBLE KERALA HIGH COURT HAS ALSO CONSIDERED THE F ACT THAT THE INDUSTRY IS LOCATED IN THE SPECIAL ECONOMIC ZONE AND HENCE, THE DEFINITION OF MANUFACTURE AS CONTAINED IN CHAPTER IX OF THE EXPORT IMPORT POLICY 2002-2007 WAS ALSO CONSIDE RED FOR DECIDING THE ISSUE FOR THE AYS 2001-02 AND 2002-03. IN THE PRESENT CASE BEFORE US ALSO ASSESSMENT YEAR INVOLVED IS 2002-03 AND AO IN ASSESSMENT YEAR 2001-02 HAS ALREADY ALLOW ED EXEMPTION U/S. 10B OF THE ACT. SIMILARLY, HONBLE KERALA HIGH COURT IN GIRNAR INDU STRIES (SUPRA) HAS CONSIDERED THE INTRODUCTION OF SECTION 2(R) OF SPECIAL ECONOMIC ZO NES ACT, 2005 IN THE PROVISIONS OF SECTION 10AA OF THE ACT AS APPLICABLE TO SECTION 10A OF THE ACT READING WITH THE DEFINITION OF MANUFACTURE AS PROVIDED IN EXIM POLICY AS APPLICABL E TO AY 2004-05. AND IN THE CASE OF TATA TEA LTD. (SUPRA) IS MADE APPLICABLE EVEN TO AY S 2001-02 AND 2002-03. WE FIND THAT IN THE PRESENT CASE BEFORE US ALSO THE AO HAS TAKEN A POSSIBLE VIEW BY ALLOWING THE EXEMPTION U/S. 10B OF THE ACT FOR THE AY 2002-03 I.E. THE PRESENT ASSESSMENT YEAR AND THE SAME WAS UNDER 9 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 REVISION BEFORE CIT. EVEN THE AO HAS ALLOWED EXEMP TION U/S. 10B OF THE ACT FOR THE FIRST ASSESSMENT YEAR 2001-02, WHICH IS NOT IN DISPUTE. 8. IN VIEW OF THE ABOVE FACTS AND CASE LAWS OF TATA TEA LTD. AND GIRNAR INDUSTRIES (SUPRA), AS REFERRED BY THE LD. COUNSEL THE CASE LAW OF HON BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC), IS APPLICABLE TO THE FACTS OF THIS CASE. HONBLE SUPREME COURT HAS CONSIDERED THE PHRASE PR EJUDICIAL TO THE INTEREST OF THE REVENUE, AND INTERPRETED THAT IT HAS TO BE READ IN CONJUNCTI ON WITH AN ERRONEOUS ORDER PASSED BY THE AO AND EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN OR DER OF AO, IT CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. HONBLE SU PREME COURT DISCUSSED EXAMPLE, WHERE THE AO ADOPTED ONCE OF THE COURSES PERMISSIBLE IN LAW A ND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND HE HAS TAKEN ONE V IEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED THAT THE ASSESSMENT ORDER IS ERRONEOUS SO AS TO PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY AO IS UNSUSTAINABLE IN LAW. WE HAVE GONE THROUGH THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE O F MALABAR INDUSTRIAL CO. LTD. (SUPRA) AND FIND THAT THIS PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE, WHERE ONE OF THE POSSIBLE VIEWS IS TAKEN BY THE AO, HAS BEEN INTERPRETED AS UNDER: THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFF ICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CA NNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCO ME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE V IEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-T AX OFFICER IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY THIS COURT THAT WHERE A SUM NOT E ARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING, THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 (SC) AND IN SMT. TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC). 9. WE FIND FROM THE ASSESSMENT ORDER PASSED U/S. 14 3(3) OF THE ACT AFTER DUE CONSIDERATION OF FACTS AS WELL AS THE REVISION ORDER OF CIT PASSE D U/S. 263 OF THE ACT THAT THERE IS NO DISPUTE REGARDING THE FACT THAT THE ASSESSEE IS EXCLUSIVELY ENGAGED IN BLENDING AND PACKAGING OF TEA FOR EXPORT AND IS NOT MANUFACTURING OR PRODUCING ANY OT HER ARTICLE OR THING BUT STILL IT IS RECOGNISED AS A 100% EOU UNIT BY A BOARD APPOINTED BY CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONFERRED U/S. 40 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951 AND THE RULES MADE THEREUNDER. THIS RECOGNITION IS WITHIN THE MEANING OF TERM CONTAINED IN THE DEFINITION CLAUSE OF SECTION 10B OF THE ACT AND IT IS NOT THE CASE OF RE VENUE THAT ASSESSEES UNIT IS NOT ENGAGED IN EXPORT OF TEA BAGS OR TEA PACKETS OR IS NOT A 100% EOU UNIT. FURTHER, IT IS A WORSE POSITION THAT THE ASSESSEE WAS EVEN DENIED DEDUCTION U/S. 80HHC O F THE ACT WHICH IS AVAILABLE TO MERCHANT 10 ITA 1173/K/2007 M. K. INDUSTRIES A.Y.2002-03 EXPORTER, WHICH THE ASSESSEE IS. HENCE, WE ARE OF T HE VIEW THAT THE AO WHILE FRAMING ASSESSMENT HAS TAKEN A POSSIBLE VIEW AND IN TERM OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA), TH E AO HAS TAKEN THE COURSE PERMISSIBLE IN LAW AND WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAK EN ONE VIEW, WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE SAID THAT THE ASSESSMENT ORDER IS ERRONEOUS SO AS TO PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE PRESENT CASE ALSO THE VIEW TAKE N BY THE AO IS NOT UNSUSTAINABLE RATHER IT IS A VIEW WHICH IS SUSTAINABLE IN VIEW OF THE DECISION O F HONBLE KERALA HIGH COURT IN THE CASES OF TATA TEA LTD. AND GIRNAR INDUSTRIES (SUPRA). IN VIE W OF THE ABOVE FACTS AND CIRCUMSTANCES, WE HOLD THAT REVISION ORDER PASSED U/S. 263 OF THE ACT IS NOT SUSTAINABLE IN LAW AND HENCE, QUASHED. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 11. ORDER PRONOUNCED IN OPEN COURT ON 09.01.2012. SD/- SD/- . '# '#'# '# . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED : 9 TH JANUARY, 2012 /0 %12 3 JD.(SR.P.S.) . 4 , 5 '6- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M. K. INDUSTRIES, 2/2, JUSTICE DWARKANA TH ROAD, KOLKATA-700 020. 2 ,-*+ / RESPONDENT, DCIT, CC-XIII, KOLKATA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . => ,% / DR, KOLKATA BENCHES, KOLKATA - ,/ TRUE COPY, .%?/ BY ORDER, 2 /ASSTT. REGISTRAR .