Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 1546 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-06-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB-B
Next Hearing Date
20-03-2019
Assessment Year
2014-2015
Appeal Filed On
12-01-2018
Judgement Text
ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 1 OF 31 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1579, 1580/HYD/2016 & 132/HYD/2018 (ASSESSMENT YEARS: 2012-13 TO 2014-15) 3F OIL PALM AGROTECH PRIVATE LIMITED, HYDERABAD PAN: AAACZ4451H VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHANA RAO FOR REVENUE : SHRI NILANJAN DEY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. ALL THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE CIT (A) FOR THE A.YS 2012 -13, 2013-14 & 2014-15 RESPECTIVELY. 2. BRIEF FACTS OF THE CASE AS SEEN FROM THE ASSESSM ENT ORDER FOR THE A.Y 2012-13, ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF EDIBLE OIL PRODUCTS. FOR THE RELEVANT A.Y, THE ASSESSEE FILED ITS RETURN OF INCOME IN WHICH, THE ASSESSEE HAD CLAIMED DEDUCTION U/S DATE OF HEARING : 20.03.2019 DATE OF PRONOUNCEMENT : 14.06.2019 ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 2 OF 31 80IB(11A) OF THE ACT. DURING THE ASSESSMENT PROCEE DINGS U/S 143(3) OF THE ACT, THE A.O OBSERVED THAT THE DEDUCT ION U/S 80IB(11A) OF THE ACT DOES NOT MENTION ANYTHING ABOU T MANUFACTURING AND TRADING OF EDIBLE OIL PRODUCTS. THEREFORE, THE A.O ASKED THE ASSESSEE TO FURNISH THE DETAILS OF DE DUCTION CLAIMED BY IT UNDER CHAPTER-VIA. THE ASSESSEE FILED DETAILE D SUBMISSIONS AS TO HOW THE PALM OIL IS EXTRACTED FROM FRESH FRUI T BUNCHES OF OIL PALM PLANTATIONS, THE DIFFERENT PROCESSES INVOLVED THEREIN AND CLAIMED THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF OIL EXTRA CTED FROM OIL PALM FRUITS AND THEREFORE, IS ELIGIBLE FOR DEDUCTIO N U/S 80IB(11A) OF THE ACT. 3. THE AO OBSERVED THAT U/S 80IB(11A) OF THE ACT, P ROFITS FROM THE BUSINESS OF PROCESSING, PRESERVATION AND P ACKAGING OF FRUITS, VEGETABLES, MEAT AND MEAT PRODUCTS OR POULT RY AND DAIRY PRODUCTS AND PROFIT FROM THE INTEGRATED BUSINESS OF STORAGE AND TRANSPORTATION OF FOOD GRAINS ALONE ARE ELIGIBLE. H E OBSERVED THAT SINCE THE ASSESSEE IS SOURCING THE OIL PALM FRUITS AND AFTER PRESSING THE SAME, PALM OIL IS EXTRACTED AND THAT T HE RESIDUE AFTER EXTRACTION IS ONLY PALM FIBRE WHICH IS NOT USABLE O R CONSUMABLE, THE QUESTION OF PRESERVATION AND PACKAGING OF FRUIT S DOES NOT ARISE IN THE CASE OF THE ASSESSEE. HE HELD THAT THE NOMEN CLATURE OF ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 3 OF 31 FRUITS GIVEN TO OIL PALM ALONE CANNOT MAKE THE AS SESSEE ELIGIBLE FOR DEDUCTION U/S 80IB(11A) OF THE ACT. HE HELD THA T WHAT IS ALLOWABLE IS THE PROFIT DERIVED FROM THE BUSINESS O F PROCESSING PRESERVATION AND PACKAGING OF FRUITS. 4. HE HELD THAT PRESSING THE FRUITS AND GETTING THE OIL THEREFROM CANNOT HELD TO BE PROCESSING AND PRESERVA TION OF FRUITS. HE ALSO CONSIDERED THE DECISION OF THE AUTHORITY FO R ADVANCE RULING (AAR) IN THE CASE OF DELNA RUSTUM BOYCE INRE REPORTED IN (2009) 185 TAXMANN 180 (DEL.) RELIED UPON BY THE AS SESSEE AND HELD THAT SUCH A RULING DOES NOT HAVE THE PRECEDENT IAL VALUE AND THAT IT IS APPLICABLE ONLY TO THE PARTICULAR ASSESS EE WHO HAS APPROACHED THE AUTHORITY AND NOT TO ALL OTHERS. HE FURTHER HELD THAT THE INTENTION OF THE CRUSHING OF OIL PALM IS N OT FOR PRESERVATION OF OIL PALM BUT IT IS TO EXTRACT THE O IL THEREFROM AND THEREFORE, IT DOES NOT FALL UNDER THE PROCESS OF P RESERVATION AS MENTIONED IN SEC. U/S 80IB(11A) OF THE ACT. FURTHER , WITH REGARD TO THE WORD PACKAGING HE HELD THAT THE CRUDE PALM OIL IS STORED IN TANKS AND THAT IT IS IMPOSSIBLE TO PERCEIVE AS T O HOW STORING IN OIL TANKS AMOUNTS TO PACKAGING OF FRUITS. AS REGARD S THE ASSESSEES CONTENTION THAT OIL PALM IS BEING PROCES SED, THE AO CONSIDERED THE OFFICIAL WEBSITE OF AGRICULTURE AND PROCESS FOOD PRODUCTS EXPORT DEVELOPMENT AUTHORITY (APEDE), MINI STRY OF ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 4 OF 31 COMMERCE, GOVT. OF INDIA TO OBSERVE THAT THE PALM O IL IS NOT IN THE LIST OF PROCESSED FOODS. HE ACCORDINGLY DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(11A) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRME D THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: I. THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE A.O. WHEN THE A.O HAD WRONGLY MADE DISALLOWANCE OF DEDUC TION CLAIMED U/S. 80IB (I LA) OF THE INCOME TAX ACT. 2. THE LEARNED CIT (A) ERRED IN UPHOLDING THAT THE APPELLANT COMPANY IS INVOLVED IN THE BUSINESS OF MANUFACTURING AND TR ADING OF EDIBLE OIL PRODUCTS WHEREAS THE OVERWHELMING EVIDENCE SUBM ITTED AND EXPLANATION OFFERED TO ESTABLISH THAT THE APPELLANT IS IN THE BUSINESS OF POSSESSING OF PALM OIL. 3. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THA T APPELLANT COMPANY IS IN THE BUSINESS OF PROCESSING OF FRESH FRUIT BUN CHES BY WAY OF CRUSHING AND EXTRACTING CRUDE PALM OIL. 4. THE LEARNED CIT (A) ERRED IN IGNORING THE FACT T HAT THE COMPANY PURCHASES FRESH FRUIT BUNCHES OF PALM FRUITS FROM T HE FARMERS WHICH ARE CONSIDERED AS FRUITS, IN TERMS OF COMMON PARLANCE AND COMMERCIAL SUBSTANCE. 5. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FACT THAT THE PALM FRUIT CONTAINS MESOCARP, FROM WHICH OIL IS EXTRACTE D, WHICH SIMILAR TO MANGO PULP OF THE MANGO FRUIT AND HENCE PARTAKES THE NATURE AND CHARACTER OF FRUIT. 6. THE LEARNED CIT (A) ERRED IN NOT UNDERSTANDING T HE NATURE OF THE BUSINESS ACTIVITY CARRIED ON BY THE APPELLANT AND E RRONEOUSLY HELD IT IS MANUFACTURE OF EDIBLE OIL. 7. THE LEARNED CIT (A)ERRED IN NOT APPRECIATING THA T THE PRIMARY BUSINESS ACTIVITY OF THE APPELLANT COMPANY IS TO PR ESS AND EXTRACT THE OIL OUT OF THE PALM FRUIT WHICH SIMILAR TO THE ACTIVITY OF EXTRACTING MANGO PULP OR MANGO JUICE FROM MANGOES A ND DOES NOT RESULT IN A NEW; PRODUCE TO BE CALLED A ' MANUFACTU RING ACTIVITY' 8. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE MILL DIVISION OF THE APPELLANT COMPANY SUBJECTS THE FFB'S TO DIFFERE NT ACTIVITIES SUCH AS STERILIZATION, STRIPPING, OIL PURIFICATION DRYING ETC WHICH RUN ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 5 OF 31 AS CONTINUOUS PROCESS, RESULTING IN EXTRACTION OF P ALM OIL, WHICH IS SQUARELY COVERED UNDER THE ACTIVITY OF PROCESSING A S EXPLAINED IN JUDICIAL DECISIONS 9. THE LEARNED CIT(A) HAS MISDIRECTED HIMSELF BY RE FERRED TO THE LIST OF PROCESSED FOOD AS APPEARING IN AGRICULTURAL & PROCE SSED FOOD PRODUCTS EXPORT DEVELOPMENT AUTHORITY (APEDA) WEBSI TE, IGNORING THE FACT THAT APEDA DEALS WITH SCHEDULED PRODUCTS A ND DOES NOT APPLY TO PALM FRUIT OIL. 10. INTEREST UNDER SECTION 234 BAND 234C: THE LEARNED CIT (A) ERRED IN NOT DIRECTING THE A.O TO CHARGE THE INTEREST AS PER PROVISIONS OF SECTION 234 BAND 234 C OF THE INCOME TAX. 11. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ALL OR ANY OF THE ABOVE-STATE GROUNDS OF APPEAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE FILED DETAI LED WRITTEN SUBMISSIONS AND PLACED RELIANCE UPON VARIOU S DECISIONS IN SUPPORT OF HIS CONTENTION. THE CASE OF THE ASSE SSEE IS THAT THE OIL PALM FRUITS ARE GROWN ON TREES AND ARE REFERRED TO AS FRESH FRUIT BUNCHES (FFBS IN SHORT) AND AS THEY ARE HIGHLY PER ISHABLE FRUITS, THEY HAVE TO BE PROCESSED AND THE EXTRACT IS IN THE FORM OF OIL AND TO AVOID FORMATION OF RADICALS, IT IS PRESERVED AT A PARTICULAR TEMPERATURE. ACCORDING TO THE LEARNED COUNSEL FOR T HE ASSESSEE, THE GOVT. OF ANDHRA PRADESH HAS IDENTIFIED OIL PAL M AS A FRUIT U/S 28 OF THE A.P. OIL PALM (REGULATION OF PRODUCTI ON & PROCESSING) ACT OF 1993. OIL PALM FRESH FRUIT B UNCH IS DEFINED AS A FRUIT AND INCLUDES ITS LOOSE FORM ALSO. THE L EARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE INDIAN ACCOUN TING STANDARD ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 6 OF 31 41 ON AGRICULTURE WHEREIN OIL PALM IS DEFINED AS PICKED FRUIT AND THE PRODUCTS THAT ARE THE RESULT OF PROCESSING AFTER HARVEST IS PALM OIL. HE ALSO REFERRED TO THE ANDHRA PRADESH FOOD PROCESSING POLICY ISSUED BY THE GOVT. OF ANDHRA PRA DESH WHEREIN AT PAGE 174, THE OIL PALM IS DEFINED UNDER THE HE AD FRUIT AND IN THE SAID POLICY, THE GOVT. OF A.P. HIGHLIGHTED I NCOME TAX DEDUCTION U/S 80IB(11A) OF THE ACT AS AN INCENTIVE TO GROW OIL PALMS. HE SUBMITTED THAT AFTER READING THE ABOVE, THERE IS NO DOUBT THAT THE OIL PALM FRESH FRUIT BUNCHES ARE N OTHING BUT FRUITS WHICH ARE GROWN ON THE OIL PALM TREES. HE COUNTERED THE MAIN OBJECTION OF THE AO THAT THE ACTIVITIES INVOLV ED IN THE CONVERSION OF OIL PAM FRESH FRUIT BUNCHES INTO PALM OIL ARE NOT PROCESSING, PRESERVATION AND PACKAGING AND TOOK US THROUGH THE PROCESSES CARRIED ON BY THE ASSESSEE FOR CONVERTING FRESH FRUIT BUNCHES INTO THE PALM OIL. THE ASSESSEE IN ITS PAP ER BOOK AT PAGES 107 TO 112 HAS PRODUCED THE FLOW CHART OF VAR IOUS PROCESSES TO SHOW THAT THE ASSESSEE COMPANY SOWS TH E SEEDS FROM THE DOMESTIC AND INTERNATIONAL MARKET AND SOWS THE SAME IN THE NURSERY MANAGED AND OPERATED BY IT AND SUBSEQUENTLY SELLS ONE YEAR OLD SAPLINGS FROM THE NURSERY TO IDENTIFIED FA RMERS AT A SUBSIDIZED RATE (WHICH IS REIMBURSED BY THE GOVT. A T A FIXED RATE IN THE FORM OF SUBSIDY TO THE ASSESSEE), WHO IN TUR N PLANTS THE ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 7 OF 31 SAPLINGS IN THEIR LAND. ONCE THE PALM AND FRESH FRU IT BUNCHES ARE GROWN, THE SAME ARE HARVESTED BY THE FARMERS AND SO LD TO THE COMPANY AT A FIXED PRICE WHICH ARE AGAIN MASHED FOR EXTRACTION OF OIL AND THE ASSESSEE SELLS THE SAME. HE EXPLAINED T HE VARIOUS PROCESSES INVOLVED IN THIS ACTIVITY. IT IS SUBMITT ED THAT AFTER COLLECTION OF FRESH FRUIT BUNCHES, THEY ARE TRANSFE RRED TO FRUIT CAGES AND THE CAGES ARE THEN MOVED INTO A STERILIZE R IN THE ROTATING DRUMS. THEREAFTER, THEY ARE STRIPPED AND P RESSED AND THE OIL IS EXTRACTED AND FILTERED THROUGH OIL MESH AND SUCH OIL IS SEPARATED FROM WATER AND STORED IN TANKS. ANOTHER B YPRODUCT OF THE PROCESSING IS PALM KERNEL AND THE CRACKED MIXTU RE, WHICH CONSISTS OF KERNELS AND SHELLS, WHICH IS THEN PROCE SSED AGAIN TO SEPARATE THE SHELLS FROM KERNELS. THIS IS DONE IN A IR COLUMNS AND BY A WATER BATH IN A HYDRO-CYCLONE. THE SHELL IS SE NT TO THE BOILER HOUSE TO BE USED AS FUEL WHILE THE KERNELS ARE DRIE D IN A SILO AND THEN PACKED IN BAGS FOR SALE. IT IS SUBMITTED THAT OTHER FACTORIES EXTRACT OIL FROM THE KERNEL ALSO. 6. AS REGARDS THE PRESERVATION AND PACKAGING IS CONCERNED, IT IS SUBMITTED THAT OIL HAS TO BE PRESE RVED IN TANKS AT A TEMP. OF 50 DEGREE CELSIUS. IT IS SUBMITTED BY TH E ASSESSEE THAT THE PACKAGING CAN BE DONE IN ANY FORM EITHER IN BOX ES OR CANS/TINS OR TANKS AND SINCE THE ASSESSEE IS MANUFA CTURING AND ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 8 OF 31 PROCESSING OIL IN LARGE QUANTITY, IT IS PRESERVED I N LARGE TANKS AND THEREFORE IT CANNOT BE HELD THAT IT DOES NOT AMOUNT TO PACKAGING. IN SUPPORT OF HIS CONTENTION THAT SUCH PROCESSES AR E ALSO ELIGIBLE FOR DEDUCTION U/S 80IB(11A), THE LEARNED COUNSEL F OR THE ASSESSEE HAD RELIED UPON THE DECISION OF THE AAR IN THE CASE OF DELNA RUSTUM BOYCE INRE (CITED SUPRA). 7. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHO RITIES BELOW AND ALSO FILED WRITTEN SUBMISSIONS AND RAISED AN ARGUMENT UNDER RULE 27 OF ITAT RULES THAT THE ASSESSEE, DOES NOT SATISFY THE BASIC CONDITIONS U/S 80IB OF THE ACT, I.E IT IS FORMED BY DEMERGER AND THEREFORE, IS NOT ELIGIBLE FOR DEDUCTI ON U/S 80IB(11A) OF THE ACT. THE LEARNED DR FURTHER, SUBM ITTED THAT THE ASSESSEE IS ONLY PRESSING THE FRUITS AND EXTRACTING THE OIL WHICH CANNOT BE CONSIDERED AS PROCESSING AND AS THE ASSES SEE ITSELF HAD STATED BEFORE THE AO THAT ONCE THE OIL IS EXTRACTED , IT DOES NOT REQUIRE PRESERVATION AS PALM OIL IS A VERY DURABLE COMMODITY AND REQUIRES VERY LITTLE OR NO PRESERVATION, IT CANNOT BE SAID THAT PRESERVATION IS INVOLVED. HE ALSO REFERRED TO THE P ACKAGING DONE BY THE ASSESSEE AND RELIED UPON THE ORDER OF THE AO TO HOLD THAT THE PALM OIL IS NOT IN THE LIST OF PROCESSED FRUITS AND IT IS NOT THE INTENTION OF THE LEGISLATURE TO PROMOTE OIL INDUSTR Y BY GIVING ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 9 OF 31 DEDUCTION U/S 80IB(11A) OF THE ACT. HE ALSO RELIED UPON THE FOLLOWING CASE LAW IN FAVOUR OF HIS ARGUMENT: 1. M/S MOTIPUR ZAMINDARI CO. (P) LTD. VS. THE STATE OF BIHAR, 1962 AIR 660 (SC); 2. RAMAVATAR BUDHAIPRASAD VS. ASST. SALES TAX OFFIC ER, AKOLA, 1961 AIR 1325;; 3. P.A THILLAI CHIDAMBARA NADAR VS. STATE OF TAMIL NADU, AIR 1958 SC 1644. 8. THE LEARNED COUNSEL FOR THE ASSESSEE OBJECTED TO THE ARGUMENT RAISED BY THE REVENUE UNDER RULE 27 STATIN G THAT THE SAID RULE IS APPLICABLE ONLY WHERE A DECISION HAS B EEN TAKEN BY THE CIT (A) ON AN ISSUE AGAINST THE RESPONDENT BEFO RE HIM AND THE REVENUE HAS NOT FILED ANY CROSS APPEAL / CROSS OBJE CTION AGAINST THE ORDER OF THE CIT (A) ON THE ISSUE DECIDED AGAIN ST THEM. SINCE THERE WAS NO FINDING EITHER BY THE AO OR THE CIT (A ) ON THE ISSUE NOW RAISED BY THE REVENUE UNDER RULE 27, IT CANNOT BE RAISED BEFORE THE ITAT UNDER RULE 27. HE FURTHER SUBMITTED THAT THE REVENUE CANNOT RAISE AN OBJECTION WHICH WAS NOT RAI SED BY THE AO IN AN APPEAL FILED BY THE ASSESSEE BEFORE THE IT AT. THEREFORE, HE PRAYED FOR THE REJECTION OF THE REVENUES OBJECT IONS ABOUT THE ALLOWABILITY OF DEDUCTION U/S 80IB(11A) ON THE GROU ND THAT THE ASSESSEE IS NOT ELIGIBLE FOR SUCH DEDUCTION AT ALL. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE BASIC GRIEVANCE OF THE ASSESSEE IS THAT ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 10 OF 31 THOUGH IT IS ELIGIBLE FOR DEDUCTION U/S 80IB(11A) O F THE ACT, THE SAME HAS BEEN DENIED BY THE AO ON AN ERRONEOUS UNDE RSTANDING THAT THE ASSESSEE IS NOT INVOLVED IN THE PROCESSING , PRESERVATION AND PACKAGING OF FRUITS. LET US THEREFORE, FIRST CO NSIDER THE PROVISIONS OF SECTION 80IB(11A) OF THE ACT. THE SA ME IS REPRODUCED HEREUNDER FOR READY REFERENCE:- [(11A) THE AMOUNT OF DEDUCTION IN A CASE OF 9 [AN UNDERTAKING DERIVING PROFIT FROM THE BUSINESS OF PROCESSING, PRESERVATIO N AND PACKAGING OF FRUITS OR VEGETABLES OR 9A [ MEAT AND MEAT PRODUCTS OR POULTRY OR MARINE OR DAIR Y PRODUCTS OR ] FROM] THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOODGRAINS, SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH UNDERTAKING FOR FIVE ASSESS MENT YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER, TW ENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM THE OPERATION OF SUCH BUSINESS IN A MA NNER THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED TEN CONSECUTIVE ASSESSMENT YEARS AND SUBJECT TO FULFILMENT OF THE CONDITION THAT IT BEGI NS TO OPERATE SUCH BUSINESS ON OR AFTER THE 1ST DAY OF APRIL, 2001.] THE FOLLOWING PROVISO SHALL BE INSERTED AFTER SUB-S ECTION (11A) OF SECTION 80-IB BY THE FINANCE (NO. 2) ACT, 2009, W.E.F. 1-4- 2010 : PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO AN UNDERTAKING ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF MEAT OR MEAT PRODUCTS OR POULTRY OR MA RINE OR DAIRY PRODUCTS IF IT BEGINS TO OPERATE SUCH BUSINESS BEFORE THE 1S T DAY OF APRIL, 2009. 10. FROM A LITERAL READING OF THE ABOVE PROVISIONS AND TO APPLY THE SAME TO THE ASSESSEE, THE ASSESSEE MUST H AVE DERIVED PROFIT FROM THE BUSINESS OF PROCESSING, PRESERVATIO N AND PACKAGING OF FRUITS OR VEGETABLES. LET US THERE FORE EXAMINE THE APPLICABILITY OF THE ABOVE PROVISION, AND THE CASE LAW RELIED UPON BY BOTH THE PARTIES, TO THE FACTS OF CASE BEFORE US . ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 11 OF 31 11. SECTION 80IB(11A) OF THE ACT WAS INITIALLY BROU GHT INTO THE STATUE BOOK BY THE FINANCIAL ACT OF 2001 W.E.F 01.02.2002 BY GRANTING DEDUCTION IN A CASE OF THE INTEGRATED BUSI NESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS . BY VIRTUE OF THE FINANCE ACT OF 2004, THE UNDERTAKING DERIVING P ROFITS FROM THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS OR VEGETABLES WAS ALSO BROUGHT UNDER THE PURVIEW SUB S EC. 11A OF 80IB OF THE ACT W.E.F 01.04.2005. TO UNDERSTAND TH E INTENTION OF THE LEGISLATURE, IT IS PERTINENT TO CONSIDER THE FI NANCE MINISTERS SPEECH WHILE INTRODUCING THE FINANCE BILL 2004. IN PARA 103 OF HIS SPEECH HE HAD STATED AS UNDER: IN ORDER TO PROMOTE AGRO-PROCESSING INDUSTRIES, I PROPOSE TO AMEND SECTION 80IB OF THE ACT TO ALLOW A DEDUCTION OF 100% FOR 5 YEARS AND 25 % OF PROFITS F OR THE NEXT 5 YEARS IN THE CASE OF NEW AGRO-PROCESSING INDUSTRIES SET UP TO PROCESS, PRESERVE AND PACKAGE FRUITS AND VEGETABLES. 12. IN THE MEMORANDUM EXPLAINING THE AMENDMENTS BROUGHT IN BY FINANCE BILL (NO.2 OF 2004) IT HAS BE EN EXPLAINED AS UNDER: UNDER THE EXISTING PROVISION OF SEC. 80IB, DEDUCTI ON IS AVAILABLE IN RESPECT OF PROFITS AND GAINS OF UNDERT AKINGS ENGAGED IN REFINING OR PRODUCTION OF MINERAL OIL, UNDERTAKINGS ENGAGED IN DEVELOPING AND BUILDING ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 12 OF 31 HOUSING PROJECTS AND THOSE ENGAGED IN THE INTEGRATE D BUSINESS OF HANDLING, STORGE AND TRANSPORTATION OF FOOD GRAINS, ETC. THE AGRO BASED INDUSTRY IN THE COURTRY IS AN IMPORT ANT SOURCE OF EMPLOYMENT, ESPECIALLY IN THE RURAL AREAS . THE BILL, THEREFORE, PROPOSE TO PROVIDE HUNDRED PER CENT DEDUCTION FOR FIVE YEARS AND TWENTY FIRE PERCENT FO R THE NEXT FIVE YEARS (THIRTY PERCENT, IN THE CASE OF A C OMPANY) FROM PROFITS DERIVED BY UNDERTAKINGS, ENGAGED IN TH E BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS AND VEGETABLES. THE DEDUCTION IS AVAILABLE FROM THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH THE UNDERTAKING BEGINS SUCH BUSINESS. 13. THUS, IT IS SEEN THAT THE INTENTION OF THE GOVT . IN MAKING THE AMENDMENT WAS TO GRANT DEDUCTIONS FOR PR OMOTING AGRO PROCESSING INDUSTRIES. PRIOR TO THE AMENDMENT THE DEDUCTION WAS FOR PROMOTION OF HANDLING, STORAGE AN D TRANSPORTATION OF FOOD GRAINS AND BY WAY OF THE AME NDMENT W.E.F 01.04.2005, THE GOVT. WANTED TO PROMOTE THE PROCESS ING, PRESERVATION AND PACKAGING OF PERISHABLE GOODS SUCH AS FRUITS, VEGETABLES WHICH ARE ALSO AGRICULTURAL PRODUCTS. 14. THE NEXT QUESTION THAT ARISES IS WHETHER THE AS SESSEE IS DEALING WITH FRUITS. THE LD. COUNSEL FOR THE AS SESSEE HAS FILED THE COPY OF A PHOTOGRAPH OF THE BUNCH OF FRUITS ON THE PALM OIL PLANTS TO DEMONSTRATE THAT THESE ARE NOTHING BUT FR UITS AND THE BUNCH IS CALLED FRESH FRUIT BUNCH. FROM THE LEGI SLATION BY THE ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 13 OF 31 GOVT. OF AP, IN AP OIL PALM REGULATION, PRODUCTION AND PROCESSING ACT OF 1993, OIL PALM IS DEFINED AS A FRUIT AND EVE N THE INDIAN ACCOUNTING STANDARD -41 ON AGRICULTURE, ALSO DEFINE D OIL PALM AS PICKED FRUIT AND ON THE BASIS OF THE ACT FRAMED BY AP FOR REGULATION, PRODUCTION OF OIL PALM, THE GOVT OF AP HAS DEFINED OIL PALM UNDER THE HEAD FRUIT UNDER ITS FOOD PROCESSING POLICY AND HAS ALSO STATED THE INCENTIVE FOR SUCH PROCESSING A S THE INCOME TAX DEDUCTION U/S 80IB(11A) OF THE ACT. THUS, IT IS SEEN THAT THE STATE GOVT. HAS UNDERSTOOD AND ACCEPTED THE FRESH FRUIT BUNCHES OF OIL PALM AS FRUIT ONLY AND EVEN THE CENTRAL GOVE RNMENT IN THE INDIAN ACCOUNTING STANDARD ON AGRICULTURE, HAS RECO GNIZED THE OIL PALM AS FRUITS. 15. THE NEXT QUESTION THAT ARISES IS WHETHER THE FR UITS HAVE TO BE EDIBLE IN ITS RAW OR RIPE FORM ONLY. TH E LD. DR HAD SUBMITTED THAT THE OIL PALM COULD NOT BE EATEN EITH ER IN RAW OR RIPE FORM AND THEREFORE, IT CANNOT BE CONSIDERED AS A FRUIT. FURTHER, HE HAD ALSO PLACED RELIANCE UPON VARIOUS C ASE LAWS WHICH HAVE BEEN CITED SUPRA TO THE EFFECT THAT ONLY SUCH FRUITS WHICH ARE BROUGHT TO THE TABLE AS FRUITS CAN BE CON SIDERED AS FRUITS. THE OLDEST CASE REFERRED TO BY THE LD. DR THE CASE OF RAMAVTAR BUDHAIPRASAD (SUPRA), IN WHICH THE HONBLE SUPREME COURT WAS CONSIDERING WHETHER BETEL LEAVES WERE VEG ETABLES WITHIN ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 14 OF 31 THE MEANING OF CENTRAL PROVISIONS AND SALES TAX ACT OF 1947. IN THE SAID CASE, THE CONTENTION OF THE PETITIONER WAS THAT U/S 6 R.W SECOND SCHEDULE OF SALES TAX ACT, BETEL LEAVES WERE NOT TAXABLE. UNDER SECTION 6 OF THE ACT, ARTICLES MENTIONED IN T HE SAID SCHEDULE WERE EXEMPT FROM SALES TAX AND ARTICLES NO T MENTIONED THEREIN WERE TAXABLE. THERE WERE TWO ITEMS IN THE SCHEDULE, NAMELY ITEM -6, VEGETABLES] AND ITEM 36 BETEL L EAVES BUT SUBSEQUENTLY ITEM 36 WAS OMITTED BY AN AMENDMENT OF THE ACT. THE HONBLE SUPREME COURT HELD THAT THE USE OF TWO DISTINCT AND TWO DIFFERENT ITEMS I.E VEGETABLE AND BETEL LEAVES AND SUBSEQUENT REMOVAL OF BETEL LEAVES FROM THE SCHEDULE WERE INDI CATIVE OF THE LEGISLATIVE INTENTION OF NOT EXEMPTING BETEL LEAVES FROM TAXATION. I WAS HELD THAT THE WORD VEGETABLE MUST BE INTERPRE TED NOT IN THE TECHNICAL SENSE BUT IN IT POPULAR SENSE AS UNDERSTO OD IN COMMON LANGUAGE THAT IS DENOTING A CLASS OF VEGETABLES WHI CH ARE GROWN IN A KITCHEN GARDEN OR IN A FARM AND ARE USED FOR THE TABLE. THIS JUDGEMENT WAS FOLLOWED BY THE HONBLE SUPREME COURT IN THE CASE OF M/S MOTHIPUR ZAMINDARI PVT LTD (SUPRA). IN THIS CASE, THE CASE THE PETITIONER WAS A PRODUCER OF SUGAR CANE, WHICH ACCORDING TO HIM GREEN VEGETABLE AND WAS EXEMPT FROM TAX AND THU S COULD NOT BE ASSESSED TO BIHAR SALES TAX ACT. THE HONBLE SU PREME COURT HELD THAT THE SUGAR CANE WAS NOT A GREEN VEGETABLE AND WAS NOT ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 15 OF 31 EXEMPTED UNDER THE NOTIFICATION. I WAS HELD, THAT THE WORD VEGETABLE IN TAXING STATUE WAS TO BE UNDERSTOOD A S IN COMMON PRACTICE I.E DENOTING CLASS OF VEGETABLES WHICH ARE GROWN IN KITCHEN GARDEN OR IN A FARM AND WERE USED FOR THE T ABLE. IT WAS HELD THAT THE DICTIONARIES DEFINED THE SUGAR CANE A S A GRASS AND NOT AS A VEGETABLE. THE HONBLE SUPREME COURT IN T HE CASE OF PA THILLAI CHIDAMBARA NADAR (SUPRA) WAS CONSIDERING TH E CASE OF PETITIONER WHO CLAIMED COCONUT AS A VEGETABLE OR A FRESH FRUIT AND AS EXEMPT FROM LEVY OF SALES TAX UNDER G.O NO.7064 DATED 05.04.1960 AS AMENDED 22.12.1960 ISSUED UNDER THE T.N GENERAL SALES TAX ACT 1969. THE HONBLE SUPREME CO URT HELD THAT THE EXEMPTION IS NOT AVAILABLE FOR RIPENED COC ONUT AS IT IS NEITHER FRESH FRUIT NOR A VEGETABLE. THE HONBLE SU PREME COURT FOLLOWED ITS RULING IN INDO-INTERNATIONAL INDUSTRIE S VS. CST REPORTED IN AIR 1981 SC 1079, WHEREIN IT WAS HELD A S UNDER: IT IS WELL SETTLED THAT IN INTERPRETING ITEMS IN S TATUTES LIKE THE EXCISE TAX ACT OR SALES TAX ACTS, WHOSE PRIMARY OBJECTS IS TO RAISE REVENUE AND FOR WHICH PURPOSE THEY CLASSIFY DIVERSE PRODUCTS, ARTICLES AN D SUBSTANCES RESORT SHOULD BE HAD NOT TO THE SCIENTIF IC AND TECHNICAL MEANING OF THE TERMS OR EXPRESSIONS U SED BUT TO THEIR POPULAR MEANING, THAT IS TO SAY, THE M EANING ATTACHED TO THEM BY THOSE DEALING IN THEM. IF ANY TERM OR EXPRESSION HAS BEEN DEFINED IN THE ENACTMENT THE N IT MUST BE UNDERSTOOD IN THE SENSE IN WHICH IT IS DEFI NED BUT IN THE ABSENCE OF ANY DEFINITION BEING GIVEN IN THE ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 16 OF 31 ENACTMENT THE MEANING OF THE TERM IN COMMON PARLANC E OR COMMERCIAL PARLANCE HAS TO BE ADOPTED. 16. REFERRING TO THE ABOVE, THE HONBLE SUPREME COU RT HELD THAT THE COCONUT WOULD BE A FRUIT IN THE BOTAN ICAL SENSE BUT UNLESS IT CAN BE SAID TO A FRESH FRUIT, IT WILL NO FALL WITHIN THE EXEMPTION NOTIFICATION. IT WAS ALSO HELD THAT BECA USE IT IS AVAILABLE IN VEGETABLE MARKET, IT WOULD NOT BECOME A VEGETABLE BECAUSE IT CANNOT BE USED AS A SUBSTANTIAL ARTICLE OF FRUIT ON THE TABLE. IT WAS HELD THAT FRESH FRUITS AND VEGETABLE S BEING HOUSE HOLD ARTICLES FOR EVERY DAY USE FOR THE TABLE, THEY WILL HAVE TO BE CONSTRUED IN THE POPULAR SENSE, MEANING THE SENSE I N WHICH EVERY HOUSE HOLDER WILL UNDERSTAND THEM. 17. THUS, ACCORDING TO THE LD. DR, THE FRUITS AND VEGETABLES HAVE TO BE UNDERSTOOD AS UNDERSTOOD BY A COMMON MAN AND THE CLASSIFICATION BY THE GOVERNMENTS AS F RESH FRUIT BUNCHES OF OIL PALM, WILL NOT COVER THE TERM FRU IT MENTIONED IN SECTION 80IB(11A) OF THE ACT. HOWEVER, WE FIND THA T THE ALL THE DECISIONS RELIED UPON BY THE LD. DR ARE RELATING TO EXEMPTIONS UNDER THE SALES TAX. WHETHER THE INTERPRETATION GI VEN TO THE ITEMS UNDER SALES TAX CAN ALSO BE APPLIED TO THE INCOME T AX ACT IS THE QUESTION BEFORE US. THE SALES TAX IS LEVIED BY THE STATE GOVERNMENTS WHILE INCOME TAX IS LEVIED ON THE INCOM E OF THE ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 17 OF 31 ASSESSEE BY THE CENTRAL GOVERNMENT. THE SALES TAX ACT DEFINES OR SPECIFIES ITEMS WHICH ARE EXEMPT FROM SALES TAX AND HAS ACCORDINGLY EXEMPTED FRUITS AND VEGETABLES FROM THE LEVY OF SALES TAX AND IN SOME STATE ACTS, HAS ALSO SPECIFIED SPEC IFIC FRUIT OR VEGETABLE AS EXEMPT FROM TAX. THEREFORE, THE DECIS IONS IN INTERPRETING THE ITEMS IN SALES TAX MAY NOT STRICTL Y IPSO FACTO APPLY TO THE REFERENCE OF SIMILAR ITEMS IN INCOME T AX ACT. THE INTENTION OF THE LEGISLATURE FOR GIVING THE EXEMPTI ON U/S 80IB(11A) OF THE ACT IS TO PROMOTE AGRO PROCESSING INDUSTRIES AS IS EVIDENT FROM THE FINANCE MINISTERS SPEECH AND ALSO MEMORAND UM EXPLAINING THE AMENDMENTS TO THE BILL. THERE IS NO DOUBT THAT OIL PALM FRESH FRUIT BUNCHES ARE AGRICULTURAL PRODUCTS. THEY MAY NOT BE EDIBLE IN THEIR RAW OR RIPE FORM, BUT THEY EXTRA CT THEREFORE AFTER PROCESSING IS EDIBLE. THE LANGUAGE USED IN THE SEC TION ITSELF IS PROCESSING, PRESERVATION AND PACKAGING OF FRUITS OR VEGETABLES. THUS, THE LEGISLATURE WAS AWARE OF THE FACT THAT CE RTAIN FRUITS AND VEGETABLES WOULD REQUIRE PROCESSING AND PRESERVATIO N FOR THEIR LONG SHELF-LIFE. AS LONG AS THE END PRODUCT IS ALS O CONSUMABLE IT CANNOT BE DENIED EXEMPTION U/S 80IB(11A) OF THE AC T. THEREFORE WE ARE SATISFIED THAT THE OIL PALM FRUITS ARE FRUIT S U/S 80IB(11A) OF THE ACT. ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 18 OF 31 18. THE NEXT QUESTION IS WHETHER THE ASSESSEE SATIS FIES ALL THE THREE CONDITIONS OF PROCESSING, PRESERVATION AN D PACKAGING. THE ACTIVITY OF PROCESSING ITSELF MEANS THAT ORIGI NAL ARTICLE UNDERGOES A CHANGE. THE CHANGE MAY NOT ONLY BE VIS IBLE BUT MAY ALSO CHANGE IN ITS FORM. THE HONBLE AUTHORITY FOR ADVANCE RULING IN THE CASE OF DELNA RUSTOM BOYEE (2009) 185 TAXMAN 180 (DELHI) HAS CONSIDERED THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF DELHI COLD STORAGE VS. CIT, [1991] 196 ITR 656 AND IN THE CASE OF CHOGLE AND COMPANY PVT LTD. VS. UNION OF IN DIA, [1981] 7 TAXMAN 71 (SC), TO HOLD THAT IN COMMON LANGUAGE THE WORD PROCESSING IS UNDERSTOOD AS AN ACTION WHICH BRING S FORTH SOME CHANGE OR ALTERATION OF THE GOODS OR MATERIAL WHICH IS SUBJECTED TO THE ACT OF PROCESSING. IT WAS ALSO HELD THAT THE N ATURE AND EXTENT OF PROCESSING MAY VARY FROM CASE TO CASE; IN ONE CA SE, THE PROCESSING MAY BE SLIGHT AND IN ANOTHER IT MAY BE E XTENSIVE, BUT EACH PROCESS SUFFERED, THE COMMODITY WOULD EXPERIEN CE A CHANGE. AFTER CONSIDERING THESE JUDGMENTS, THE AAR HAS HELD THAT PROCESSING OF FRUITS DOES NOT MEAN THAT THE END PRO DUCT ALSO SHOULD BE IN THE FORM OF FRUIT OR IN THE FORM OF SL ICES ONLY. IT WAS HELD THAT THE EXPRESSION SHOULD NOT BE CONFINED TO MINIMUM PROCESS THAT WILL NOT CHANGE THE IDENTITY OF THE FR UIT. LET US ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 19 OF 31 THEREFORE EXAMINE THE APPLICABILITY OF THE SAID DEC ISION TO THE CASE OF ASSESSEE BEFORE US. 19. IN THE CASE OF DELNA RUSTUM BOYCE INRE REPORTED IN (2009) 185 TAXMANN 180 (DEL.), THE AAR WAS CONSIDER ING THE CASE OF AN ASSESSEE, A NON-RESIDENT, WHO PROPOSED TO SET UP AND PROMOTE A UNIT TO PRODUCE FRUIT-BASED DRINK MIXES/C ONCENTRATES DERIVED FROM FRUIT JUICES THROUGH VARIOUS PROCESSES INVOLVING VARIOUS STEPS, SUCH AS PEELING, EXTRACTION OF FRUIT OIL, FRUIT PULPING, SCREENING, EMULSIFYING, HOMOGENIZING, SPRAY DRYING, ADDITION OF PRESERVATIVES, COLOR AND SWEETNESS AND PACKAGING AN D THE SAID ASSESSEE HAD SOUGHT DIRECTION FROM THE AAR ON THE Q UESTION WHETHER THE PROFIT OF HER PROPOSED UNDERTAKING WOUL D BE ELIGIBLE FOR DEDUCTION U/S 80IB(11A) OF THE ACT. THE AAR, A FTER CONSIDERING VARIOUS DECISIONS OF THE HON'BLE SUPREM E COURT ON THE WORD PROCESSING HAS HELD AS UNDER: 10. PROCESSING AND PRESERVATION ARE TWO DISTINCT EX PRESSIONS USED SIDE BY SIDE. PROCESSING MAY BE FOR THE LIMITE D PURPOSE OF PRESERVATION OF FRUITS WITHOUT BRINGING ABOUT MUCH CHANGE IN THE FORM OF THE FRUIT. BUT, PROCESSING IN THE CONTEXT IN WHICH IT OCCURS OUGHT NOT TO BE CONFINED ONLY TO THE OPERATI ONS THAT WOULD ENSURE THE PRESERVATION OF FRUITS AS THEY ARE OR IN THE FORM OF SLICES. IN OTHER WORDS, THE EXPRESSION SHOULD NO T BE CONFINED TO MINIMAL PROCESSING THAT WOULD NOT CHANGE THE IDE NTITY OF THE FRUIT. IF PROCESSING AND PRESERVATION IS TO BE CONF INED ONLY TO FRUITS AS SUCH AND NOT TO THE DERIVATIVES FROM THE FRUITS, THE BENEFIT INTENDED TO BE GIVEN TO AGROPROCESSING INDU STRIES WILL OPERATE IN A VERY LIMITED SPHERE, THEREBY DEFEATING THE VERY OBJECT OF THE PROVISION. THE EXTRACTION OF JUICE AN D OIL FROM THE FRUITS OR FURTHER CONVERTING THE HOMOGENIZED JUICE INTO FRUIT POWDER AND ADDING THE SUBSTANCES MEANT FOR PRESERVA TION ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 20 OF 31 WOULD LEGITIMATELY FALL WITHIN THE SWEEP OF THE EXP RESSION PROCESSING. THE FACT THAT THE FRUIT ASSUMES A DIF FERENT FORM OR THAT A SERIES OF OPERATIONS ARE INVOLVED IN PREPARI NG THE MIXED JUICES AND CONCENTRATES WHICH COULD BE PRESERVED FO R LONG DOES NOT TAKE IT OUT OF BOUNDS OF PROCESSING. PROCESSING IN ITS WIDER SENSE WOULD STILL BE APTLY APPLICABLE. 11. I AM THEREFORE OF THE VIEW THAT THE APPLICANT I S ENTITLED TO THE BENEFIT OF DEDUCTION CONTEMPLATED IN SUB-SECTION (1 1A) OF SECTION 80- IB AND THE QUESTION HAS TO BE ANSWERED IN THE AFFIRMATIVE SUBJECT HOWEVER TO THE CLARIFICATION TH AT THE CONDITIONS LAID DOWN IN SUBSECTION (2) OF SECTION 8 0-IB SHOULD BE SATISFIED. I MAY ADD THAT THE COMMISSIONER IN HIS C OMMENTS HAS VERY RIGHTLY TAKEN THE STAND THAT THE PROFIT OF THE PROPOSED BUSINESS SEEMS TO BE ELIGIBLE FOR DEDUCTION PROVID ED THE ASSESSEE SATISFIES THE OTHER CONDITIONS. 20. THIS DECISION WAS QUOTED BY THE ASSESSEE BEFORE THE AO BUT THE AO HAS HELD IT TO BE NOT APPLICABLE TO T HE CASE OF THE ASSESSEE BEFORE US BY HOLDING THAT THE DECISION OF THE AAR IS BINDING ONLY IN THE CASE DECIDED BY THE AAR AND NOT IN THE OTHER CASES. 21. IN SUPPORT OF HIS CONTENTION THAT A DECISION OF THE AAR IS BINDING ON THE REVENUE DEPARTMENT, THE LEARNED C OUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING C ASE LAWS: I) DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VS. DUN & BRADSTREET INFORMATION SERVICES INDIA (P) LTD REPORTED IN (2012) 20 TAXMANN.COM 695 (BOM.) WHEREIN IT WAS HEL D AS UNDER: HELD THAT THE AUTHORITY FOR ADVANCE RULINGS HELD T HAT THE SALE OF VERY SAME BUSINESS INFORMATION REPORTS BY T HE SUBSIDIARIES OF DUN AND BRADSTREET US IN SPAIN, THE EUROPE AND THE UK TO THE ASSESSEE DID NOT ATTRACT T HE PROVISIONS OF SECTION 195. SINCE THE DECISION OF TH E ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 21 OF 31 AUTHORITY FOR ADVANCE RULINGS RELATED TO THE VERY S AME BUSINESS INFORMATION REPORTS IMPORTED BY THE ASSESS EE AND NO FAULT IN THE DECISION OF THE AUTHORITY FOR A DVANCE RULINGS WAS POINTED OUT, THERE WAS NO REASON TO INT ERFERE WITH THE DECISION OF THE TRIBUNAL. II) CYRIL EUGENE PEREIRA VS. CIT REPORTED IN (19 99) 105 TAXMAN 273 (AAR) NEW DELHI WHEREIN IT WAS HELD AS UNDER: 52. THERE IS ANOTHER ASPECT OF THIS MATTER. ADVANCE RULINGS ARE JUDGMENTS IN PERSONAM AND NOT IN REM. SECTION 245S OF THE INCOME-TAX ACT, 1961, LAYS DOWN AS UNDER : '245S. (1) THE ADVANCE RULING PRONOUNCED BY THE AUT HORITY UNDER SECTION 245R SHALL BE BINDING ONLY- (A) ON THE APPLICANT WHO HAD SOUGHT IT ; (B) IN RESPECT OF THE TRANSACTION IN RELATION TO WH ICH THE RULING HAD BEEN SOUGHT ; AND (C) ON THE COMMISSIONER AND THE INCOME-TAX AUTHORIT IES SUBORDINATE TO HIM, IN RESPECT OF THE APPLICANT AND THE SAID TRANS ACTION. (2) THE ADVANCE RULING REFERRED TO IN SUB-SECTION ( 1) SHALL BE BINDING AS AFORESAID UNLESS THERE IS A CHANGE IN LAW OR FAC TS ON THE BASIS OF WHICH THE ADVANCE RULING HAS BEEN PRONOUNCED.' THUS, SUB-SECTION (2) OF SECTION 245S HAS LIMITED T HE BINDING NATURE OF THE RULING TO THE CASE OF THE APPLICANT IN RESPECT OF THE TRANSACTION IN RELATION TO WHICH THE ADVANCE RULING IS SOUGHT AND TO THE COMMISSIONER AND AUTHORITIES SUBORDINATE TO HIM ONLY IN RESPECT OF THE APPLICANT AND THE TRANSACTION INVOLVED. THIS IS NOT TO SAY THAT A PRINCIPLE OF LAW LAID DOWN IN A CASE WILL NOT BE FOLLOWED IN FUTURE. THE ACT HAS MADE THE RULING BINDING IN THE CASE OF ONE TRANSACTION ONLY AND THE PARTIES INVOLVED IN THAT CASE IN RESPECT OF THAT TRANSACTIO N. FOR OTHER TRANSACTIONS AND FOR OTHER PARTIES, THE RULING WILL BE OF PERSUASIVE NATURE. III) COLUMBIA SPORTS WEAR COMPANY VS. DIRECTOR OF INCOME TAX, BANGALORE REPORTED IN (2012) 25 TAXMANN .COM 470 (S.C): ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 22 OF 31 9. WE ALSO FIND THAT THE DETERMINATION OF THE AUTHO RITY IS NOT JUST ADVISORY BUT BINDING. SECTION 245S IN CHAPTER XIX-B IS QUOTED HE REUNDER: 245S. (1) THE ADVANCE RULING PRONOUNCED BY THE AUT HORITY UNDER SECTION 245R SHALL BE BINDING ONLY (A) ON THE APPLICANT WHO HAD SOUGHT IT; (B) IN RESPECT OF THE TRANSACTION IN RELATION TO WH ICH THE RULING HAD BEEN SOUGHT; AND (C) ON THE COMMISSIONER, AND THE INCOME-TAX AUTHORI TIES SUBORDINATE TO HIM, IN RESPECT OF THE APPLICANT AND THE SAID TRANSACTION. (2) THE ADVANCE RULING REFERRED TO IN SUB-SECTION ( 1) SHALL BE BINDING AS AFORESAID UNLESS THERE IS A CHANGE IN LAW OR FACTS ON THE BAS IS OF WHICH THE ADVANCE RULING HAS BEEN PRONOUNCED. THE BINDING EFFECT OF ADVANCE RUL ING AS PROVIDED IN SECTION 245S HAS BEEN DEALT WITH BY THE AUTHORITY (CHAIRMAN AND TWO MEMBERS) IN CYRIL EUGENE PEREIRA, IN RE. [1999] 239 ITR 650] AND AT P AGE 672 OF THE ITR, THE AUTHORITY HELD: THUS, SUB-SECTION (2) OF SECTION 245S HAS LIMITED THE BINDING NATURE OF THE RULING TO THE CASE OF THE APPLICANT IN RESPECT OF THE TRANSAC TION IN RELATION TO WHICH THE ADVANCE RULING IS SOUGHT AND TO THE COMMISSIONER AN D AUTHORITIES SUBORDINATE TO HIM ONLY IN RESPECT OF THE APPLICANT AND THE TRANSA CTION INVOLVED. THIS IS NOT TO SAY THAT A PRINCIPLE OF LAW LAID DOWN IN A CASE WILL NO T BE FOLLOWED IN FUTURE. THE ACT HAS MADE THE RULING BINDING IN THE CASE OF ONE TRANSACT ION ONLY AND THE PARTIES INVOLVED IN THAT CASE IN RESPECT OF THAT TRANSACTION. FOR OT HER TRANSACTIONS AND FOR OTHER PARTIES, THE RULING WILL BE OF PERSUASIVE NATURE. THE AUTHORITY, THUS, HELD THAT THE ADVANCE RULING OF THE AUTHORITY IS BINDING IN THE C ASE OF ONE TRANSACTION ONLY AND THE PARTIES INVOLVED IN RESPECT OF THAT TRANSACTION AND FOR OTHER PARTIES, THE RULING WILL BE OF PERSUASIVE NATURE. THE AUTHORITY, HOWEVER, HA S CLARIFIED THAT THIS IS NOT TO SAY THAT A PRINCIPLE OF LAW LAID DOWN IN A CASE WILL NO T BE FOLLOWED IN FUTURE. THIS DECISION OF THE AUTHORITY IN CYRIL EUGENE PEREIRA, IN RE.(SUPRA) HAS BEEN TAKEN NOTE OF BY THIS COURT IN UNION OF INDIA & ANR. V. AZADI BACHAO ANDOLAN & ANR. [2003] 263 ITR 706 AT 742] TO HOLD THAT THE ADVANCE RULING OF THE AUTHORITY IS BINDING ON THE APPLICANT, IN RESPECT OF THE TRANSACTION IN REL ATION TO WHICH THE RULING HAD BEEN SOUGHT AND ON THE COMMISSIONER AND THE INCOME-TAX A UTHORITIES SUBORDINATE TO HIM AND HAS PERSUASIVE VALUE IN RESPECT OF OTHER PARTIE S. HOWEVER, IT HAS ALSO BEEN RIGHTLY HELD BY THE AUTHORITY ITSELF THAT THIS DOES NOT MEAN THAT A PRINCIPLE OF LAW LAID DOWN IN A CASE WILL NOT BE FOLLOWED IN FUTURE. 22. FROM THE ABOVE JUDGMENTS, WE FIND THAT THOUGH T HE DECISION OF THE AAR IS NOT BINDING ON THE PERSONS O THER THAN THE APPLICANT BEFORE IT AND THE DEPARTMENT WHEN IT IS D EALING WITH THE CASE OF THAT APPLICANT, AS HELD BY THE HONBLE SUPR EME COURT IN THE CASE OF COLUMBIA SPORTSWEAR COMPANY (CITED SUPR A) THE ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 23 OF 31 PRINCIPLE AND THE RATIO LAID DOWN BY THE AAR IS PER SUASIVE IN THE CASES WITH SIMILAR FACTS. IN THE CASE OF THE ASSESS EE BEFORE US ALSO, THE QUESTION INVOLVED WAS WHETHER THE EXTRACTION OF OIL FROM THE FFBS OF OIL PALM IS PROCESSING OR NOT, AND THE AAR HAS HELD SIMILAR ACTIVITY IN THE CASE OF MANGO PULP OR POWDE R, TO BE SO AND HENCE THE PRINCIPLE AND RATIO OF DECISION OF THE AA R IN THE CASE OF DELNA RUSTUM BOYCE INRE IS, DEFINITELY APPLICABLE I N OTHER SIMILAR CASES ALSO AND WE HAVE TO HOLD THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE FOR EXTRACTION OF OIL FROM FFBS OF OIL PA LM, WILL AMOUNT TO PROCESSING U/S 80IB(11A) OF THE ACT. 23. THE NEXT STEP INVOLVED IS PRESERVATION AND IT I S SUBMITTED BY THE ASSESSEE THAT SINCE THE RATE OF O XIDATION OF THE OIL INCREASES, WITH THE TEMPERATURE OF STORAGE, THE TEMPERATURE OF THE OIL IS NORMALLY MAINTAINED AROUND 50 DEGREE CEN TIGRADE USING LOW PRESSURE STEM HEATING COILS TO PREVENT SOLIDIFI CATION AND FRACTIONATION. ACCORDING TO HIM, THIS ACTIVITY SAT ISFIES THE CONDITION OF PRESERVATION. 24. THE MEANING AND PURPOSE OF PRESERVATION IS, TO SEE THAT THE PRODUCT DOES NOT DETERIORATE AND MAINTAINS THE REQUIRED QUALITY AND STANDARD. IT IS NOT REQUIRED THAT ALL THE PROCESSES OR THE STEPS OF PRESERVATION, SHOULD BE COMPLICATED. SOME ITEMS MAY REQUIRE THE LEAST THE STEPS WHILE, SOME MAY REQ UIRE A ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 24 OF 31 COMPLICATED PROCEDURE. AS LONG AS THE ASSESSEE IS MAINTAINING THE STANDARDS AND IS TAKING STEPS TO MAINTAIN SUCH STANDARDS, IT CAN BE SAID THAT IT SATISFIES THE CONDITION OF PRES ERVATION. THE LD. DR HAD RELIED UPON THE CONTENTION OF THE ASSESSEE B EFORE THE A.O THAT THE CRUDE PALM OIL REQUIRES THE LEAST PRESERVA TION AS IT IS A DURABLE COMMODITY. BUT THIS CONTENTION OF THE ASSE SSEE ALONE CANNOT MEAN THAT THE ASSESSEE IS NOT TAKING ANY STE PS FOR PRESERVATION OF THE OIL. IT IS COMMON KNOWLEDGE TH AT ALL ITEMS, PARTICULARLY FOOD ITEMS, HAVE AN EXPIRY DATE UNLESS THEY ARE PRESERVED IN THE REQUIRED CONDITIONS. THEREFORE, W E ARE SATISFIED THAT THE ASSESSEE IS ALSO PRESERVING THE PALM OIL E XTRACTED FROM THE FRESH FRUIT BUNCHES OF OIL PALM FRUITS, AFTER T HE PROCESS OF PRESSING AND EXTRACTION OF OIL. 25. THE THIRD CONDITION TO BE SATISFIED IS PACKAGIN G. THE ASSESSEE IS PRESERVING AND MAINTAINING THE PALM OIL IN LARGE CONTAINERS / TANKS. AS RIGHTLY POINTED OUT BY THE L EARNED COUNSEL FOR THE ASSESSEE, PACKAGING CAN BE VARIED AND INCLU DES THE SIMPLE BOXES TO LARGE CONTAINER/VESSEL. SINCE THE ASSESSE E IS INVOLVED IN LARGE SCALE OPERATION, IT HAS TO STORE THE EXTRACTE D OIL IN TANKS. THEREFORE, WE ARE SATISFIED THAT ALL THE THREE PROC ESSES NECESSARY FOR CLAIMING DEDUCTION U/S 80IB(11A) ARE SATISFIED BY THE ASSESSEE. ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 25 OF 31 26. THE LAST OBJECTION OF THE REVENUE IS THAT THE E ND PRODUCT IS NOT A FRUIT BUT IT IS EDIBLE OIL OR KERN ELS AND SHELLS WHICH ARE NOT CONSUMABLE GOODS, AND HENCE IT DOES N OT SATISFY THE CONDITION OF SECTION 80IB(11A). IN THE CASE OF DELNA RUSTUM BOYCE INRE, THE AAR HAS ALSO HELD THAT THE END PROD UCT NEED NOT REMAIN IN THE SAME FORM AS THE RAW MATERIAL. IT MAY BE IN THE FORM OF JUICE OR CUT FRUITS OR EVEN OIL OR POWDER. AS LONG AS THE END PRODUCT IS DERIVED FROM THE FRUITS OR VEGETABLES, T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(11A) OF THE ACT. IN THESE CIRCUMSTANCES, WE ARE SATISFIED THAT THE OIL PALM I S A FRUIT AND THAT IT UNDERGOES DIFFERENT PROCESSES BEFORE EXTRAC TION OF OIL, AND THE PALM OIL IS PRESERVED UNDER ADJUSTED TEMPERATUR E AND THEY ARE PACKED IN LARGE CONTAINER OR TANKS AND THEREFOR E, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(11A) OF THE ACT. THE ASSESSEES APPEALS ARE ACCORDINGLY ALLOWED. 27. THE OBJECTIONS OF THE REVENUE UNDER RULE 27 OF ITAT RULES CANNOT BE ENTERTAINED BECAUSE UNDER RULE 27, THE RESPONDENT CAN ONLY ARGUE AGAINST THE ORDER OF THE CIT (A) ON THE GROUNDS DECIDED AGAINST THE REVENUE, EVEN THOUGH IT HAS NOT FILED AN APPEAL / CROSS OBJECTION. FOR THE SAKE OF READY REFERENCE, RULE 27 OF ITAT RULES IS REPRODUCED HEREUNDER: ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 26 OF 31 RULE 27 THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. 28. THE LD. COUNSEL FOR THE ASSESSEE HAD RELIED UPO N THE UNREPORTED DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIVINE INFRACON PVT LTD., IN ITA 771 OF 2014 AND 18 5 OF 2018 DATED 30.08.2015 AND THE DECISION OF ITAT KOLKATA I N THE CASE OF TONGANI TEA CO. LTD., [2018] TAXMANN.COM 47. THE HONBLE DELHI HIGH COURT IN THE CASE OF DIVINE INFRACON PVT LTD., (SUPRA) IN PARAS 11, 12 & 13 OF ITS ORDER HAS HELD AS UNDER: 11. THE AFORESAID PASSAGES WERE REFERRED TO BY A DI VISION BENCH OF THIS COURT IN CIT VS. EDWARD KEVENTER (SUCCESSORS) PVT. LTD (SUPRA) AND THE COURT FURTHER REITERATED THE PRINCIPLE THAT A PARTY WHO HAS NOT APPEALED CANNOT BE PERMITTED TO RAISE A GROUND, WHICH WILL W ORK ADVERSELY TO THE APPELLANT. 12. INDISPUTABLY, THE REVENUE COULD ALSO NOT TAKE R ECOURSE TO RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. BY VIR TUE OF THE SAID RULE, A RESPONDENT BEFORE THE TRIBUNAL CAN SUPPORT THE DECI SION APPEALED AGAINST NOT ONLY ON THE GROUNDS DECIDED IN FAVOUR OF THE RE SPONDENT BUT ALSO ON GROUNDS DECIDED AGAINST IT. HOWEVER, RULE 27 OF THE SAID RULES WOULD NOT EXTEND TO PERMITTING THE RESPONDENT TO EXPAND THE S COPE OF AN APPEAL AND ASSAIL THE DECISION ON ISSUES, WHICH ARE NOT SU BJECT MATTER OF THE APPEAL. IN CIT VS. EDWARD KEVENTER (SUCCESSORS) PVT . LTD (SUPRA), THIS COURT HAD REITERATED THAT 'IT WOULD NOT BE OPEN TO A RESP ONDENT TO TRAVEL OUTSIDE THE SCOPE OF THE SUBJECT MATTER OF THE APPEAL UNDER THE GUISE OF INVOKING R 27' 13. THE LEARNED COUNSEL FOR THE REVENUE HAS REFERRE D TO THE DECISION OF THE SUPREME COURT IN NATIONAL THERMAL POWER CORPORATION LTD. VS. COMMISSIONER OF INCOME TAX: 229 ITR 383 (SC) IN SUP PORT OF THE CONTENTION THAT IT IS OPEN FOR THE TRIBUNAL TO CONSIDER ALL QU ESTIONS OF LAW WHERE NO INVESTIGATION INTO FACTS ARE NECESSARY. WE FIND THA T THE AFORESAID DECISION IS ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 27 OF 31 WHOLLY INAPPLICABLE TO THE FACTS OF THE PRESENT CAS E. IT IS TRITE LAW THAT THE TRIBUNAL MAY, UNDER SECTION 254(1) OF THE ACT, PASS SUCH ORDERS AS IT THINKS FIT; NONETHELESS, THE DECISION MUST BE IN RESPECT O F THE SUBJECT MATTER OF THE DISPUTE. INDISPUTABLY, THE TRIBUNAL CAN EXAMINE ALL QUESTIONS WHICH RELATE TO THE SUBJECT MATTER OF AN APPEAL BUT, ONCE AN ISSUE HAS ATTAINED FINALITY AND IS NOT A SUBJECT MATTER OF THE DISPUTE BEFORE THE TRIB UNAL, IT WOULD NOT BE OPEN FOR THE TRIBUNAL TO REOPEN THE ISSUE ON THE PRETEXT OF EXAMINING A QUESTION OF LAW. 29. THE COORDINATE BENCH OF THIS TRIBUNAL, IN THE C ASE OF TONGANI TEA CO. LTD., (CITED SUPRA) ALSO CONSIDERED THE SCOPE AND AMBIT OF RULE 27 OF ITAT RULES AT PARA 11 OF ITS O RDER AND HAS HELD AS UNDER: THE RATIO LAID DOWN IN THE VARIOUS JUDICIAL PRONOUN CEMENTS AS DISCUSSED ABOVE MAKES IT CLEAR THAT THE SCOPE OF RU LE 27 OF THE ITAT RULES, 1963 IS LIMITED AND THE RESPONDENT IN A N APPEAL BEFORE THE TRIBUNAL CAN INVOKE THE SAID RULE 27 OF THE ITAT RULES ONLY TO SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM AND CANNOT SEEK ANY FUR THER OR MORE RELIEF THAN WHAT HAS BEEN GRANTED TO HIM BY TH E LD. CIT(A). WE THEREFORE, FIND NO MISTAKE IN THE ORDER O F THE TRIBUNAL DATED 2306.2017 (SUPRA) IS NOT GRANTING SU CH MORE RELIEF TO THE ASSESSEE BY RELYING ON RULE 27 OF THE ITAT RULES. IN OUR OPINION, THERE IS THUS NO MISTAKE MUCH LESS A MISTKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL D ATED 23.06.2017 (SUPRA) AS ALLEGED BY THE ASSESSEE IN TH E PRESENT MISCELLANEOUS APPLICATION. WE, THEREFORE, DISMISS THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSE E BEING DEVOID OF ANY MERIT. 30. THUS, IT IS CLEAR THAT THERE SHOULD BE A DECISI ON TAKEN BY THE CIT(A) AGAINST WHICH THE RESPONDENT HAS NOT APPEALED, BUT CAN ARGUE AGAINST THE SAME IN AN APPEAL FILED AGAIN ST THE ORDER OF THE CIT(A). IN THE CASE BEFORE US, THOUGH THE DECIS ION IS ON THE ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 28 OF 31 ALLOWABILITY OF DEDUCTION U/S 80IB(11A), THE AO HAS NOT CONSIDERED OR DECIDED WHETHER THE ASSESSEE IS ELIGI BLE FOR DEDUCTION U/S 80IB(11A) BECAUSE OF ITS FORMATION BY DEMERGER. 31. THE LD. COUNSEL FOR THE ASSESSEE HAD ALSO PLACE D RELIANCE UPON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS THAT THE REVENUE CANNOT EXTEND ITS SCOPE BEYOND ASS ESSMENT ORDER AND THE ORDER OF THE CIT(A), AS IT CANNOT TAK E BACK THE BENEFIT GIVEN BY THE A.O. 1) M/S. AISWARYA K RAI, [2010] 127 ITD 204 (ITAT MUM); 2) ERICSSON AB, ITA NO. 1735 TO 1740 (ITAT DEL); 3) MCORP GLOBAL (P) LTD., [2009] 178 TAXMAN 347 (SC ); 4) ANANT Y. CHAVAN, [2009] 126 TTJ 984 (ITAT PUNE); 5) HUKUMCHAND MILLS LTD., [1967] 63 ITR 232 (SC). 32. IN THE CASE OF MCORP GLOBAL (P) LTD., (SUPRA) THE HONBLE SUPREME COURT WAS CONSIDERING THE CASE OF A N ASSESSEE, WHERE THE A.O IN THE ORIGINAL ASSESSMENT HAD GRANTE D DEPRECIATION IN RESPECT OF 42,000 BOTTLES ONLY ON T HE GROUND THAT TILL END OF FINANCIAL YEAR, ONLY 42,000 BOTTLED WER E RECEIVED BY THE ASSESSEE AND THE REMAINING BOTTLES WERE RECEIVED AF TER 31.03.1991. ON APPEAL, THE CIT(A) AFTER FORMULATIN G USER TEST, REMANDED THE MATTER TO THE A.O, WHO ON REMAND, HELD THAT ALL 5,46,000 BOTTLES STOOD DISPATCHED BEFORE 31.03.1991 AND ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 29 OF 31 THEREFORE THE ASSESSEE WAS ENTITLED TO 100% DEPRECI ATION ON ALL THE 5,46,000 OF THE BOTTLES AND SAID FINDING OF THE A.O WAS NOT IN CHALLENGED BY THE REVENUE AUTHORITY. IN THE APPEAL AGAINST THE ORDER OF THE CIT(A), THE TRIBUNAL HELD THAT THE TRA NSACTION IN QUESTION WAS ONLY A FINANCIAL ARRANGEMENT AND NOT A LEASE AND THEREFORE THE DEPRECIATION CLAIMED BY THE ASSESSEE COULD NOT BE ALLOWED. THE HONBLE SUPREME COURT WAS CONSIDERING WHETHER WHEN THE A.O IN ORIGINAL ASSESSMENT ORDER HAD GRANT ED DEPRECIATION IN RESPECT OF 42,000 BOTTLES, THE TRIB UNAL COULD TAKE BACK THE SAID BENEFIT. THE HONBLE SUPREME COURT H ELD THAT THE TRIBUNAL HAS NO POWER OF ENHANCEMENT AND THE RELIEF GRANTED BY THE A.O COULD NOT BE WITHDRAWN BY THE TRIBUNAL AND IN HOLDING SO THE HONBLE SUPREME COURT HAS RELIED UPON ITS EA RLIER DECISION IN THE CASE HUKUMCHAND MILLS LTD., (SUPRA). THEREF ORE, IT IS SETTLED LAW THAT THE ASSESSEE CANNOT BE PUT TO DISA DVANTAGE ONLY BECAUSE HE HAS APPEALED AGAINST THE ORDER OF THE CI T(A), MEANING THEREBY THAT THE RELIEF GRANTED BY THE AO CANNOT BE WITHDRAWN IN AN APPEAL FILED BY THE ASSESSEE. THE INCOME TAX ACT HAS PROVIDED SUFFICIENT SAFEGUARDS TO SECURE THE TAXES DUE TO IT , EVEN IF THERE IS A MISTAKE COMMITTED BY THE AO, IN THE ASSESSMENT OR DER. U/S 147 THE AO CAN REOPEN AN ASSESSMENT IF HE FORMS AN OPIN ION THAT THERE IS AN ESCAPEMENT OF INCOME OR THE CIT U/S 263 , CAN REVISE ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 30 OF 31 THE ASSESSMENT ORDER, IF THE ASSESSMENT ORDER IS FO UND TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REV ENUE. IN THE CASE BEFORE US, THE REVENUE HAS NOT RESORTED TO ANY OF T HESE PROVISIONS AND CANNOT DO SO NOW IN AN APPEAL FILED BY THE ASSE SSEE BY RELYING ON RULE 27 OF ITAT RULES. THE DECISION IN THE CASE OF VEEN PROMOTERS PVT LTD IN ITA NO. 788/HYD/2015 DATED 17. 09.2018 RELIED UPON BY THE REVENUE IN SUPPORT OF THESE OBJE CTIONS UNDER RULE 27 IS DISTINGUISHABLE ON FACTS. 33. IN THE CASE OF VREEN PROMOTERS, THE COORDINATE BENCH OF THIS TRIBUNAL (TO WHICH BOTH OF US ARE SIGNATORI ES) WAS CONSIDERING THE MERITS OF THE PENALTY LEVIED U/S 27 1(1)(C) OF THE ACT, WHICH WAS DELETED BY THE CIT(A). THE APPEAL W AS FILED BY THE REVENUE AND THE ASSESSEE HAD RAISED ADDITIONAL GROU ND OF APPEAL UNDER RULE 27 OF THE IT RULES CHALLENGING THE VALID ITY OF THE NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT ON THE GROUND TH AT THE IRRELEVANT PORTION OF THE ORDER OF THE NOTICE WAS N OT STRUCK OFF. THE LD. DR THEREIN HAD OBJECTED TO SUCH ADDITIONAL GROUND STATING THAT THE RESPONDENT ASSESSEE IS NOT ENTITLED TO RAI SE ANY GROUND OF APPEAL IN THE APPEAL FILED BY THE REVENUE. THE ASS ESSEE HAD ARGUED THAT THE GROUND RAISED BY THE ASSESSEE IS PU RELY A LEGAL GROUND AND CAN RAISE SUCH A GROUND EVEN IN THE REVE NUES APPEAL UNDER RULE 27 OF ITAT RULES. THE COORDINATE BENCH HAS ITA NOS 1579 1580 OF 2016 AND 132 OF 2018. PAGE 31 OF 31 CONSIDERED THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HAZARIMAL NAGJI & CO, 46 ITR 1168 ( BOM.) TO ADMIT THE ADDITIONAL GROUND OF APPEAL, BECAUSE BY S UCH ADDITIONAL GROUND OF APPEAL, THE APPELLANT WAS NOT ADVERSELY A FFECTED. THEREFORE, THE SAID DECISION IS DISTINGUISHABLE ON FACTS AND IS NOT RELEVANT TO THE CASE ON HAND. THEREFORE, THE OBJEC TIONS OF THE REVENUE MADE IN WRITING ALLEGEDLY UNDER RULE 27 ARE NOT SUSTAINABLE AND THEY ARE ACCORDINGLY REJECTED. 34. IN THE RESULT, ASSESSEES APPEALS FOR ALL THE T HREE YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 14 TH JUNE, 2019. VINODAN/SPS / RAVI KUMAR, PS COPY TO: 1 M/S. 3F OIL PALM AGROTECH P LTD, 6-3-569/2 1 ST FLOOR, ROCKDATE COMPOUND, SOMAJIGUDA, HYDERABAD 500082 2 ACIT, CIRCLE 2(2) SIGNATURE TOWERS, MADHAPUR, HYD ERABAD 500081 3 CIT (A)-2 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER
