M/s Goa Natural Foods Private Limited, Kundaim V. ACIT, Circle - 2(1), Panaji

ITA 188/PAN/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8770 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 28-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM आयकर अपील सं. / ITA No.188/PAN/2017 िनधाᭅरण वषᭅ / Assessment Year : 2009-10 M/s. Goa Natural Foods Pvt. Ltd., Plot No.37 & 38, Kundaim Industrial Estate, Kundaim, Panaji- 403001. PAN : AACCG7564Q .......अपीलाथᱮ / Appellant बनाम / V/s. ACIT, Circle-2(1), Panaji. ......ᮧ᭜यथᱮ / Respondent Assessee by : None Revenue by : Shri Sourabh Nayak सुनवाई कᳱ तारीख / Date of Hearing : 08.11.2021 घोषणा कᳱ तारीख / Date of Pronouncement : 11.11.2021 आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Panaji (‘CIT(A)’ for short) dated 08.02.2017 for the assessment year 2009-10. 2. The appellant raised the following grounds of appeal :- “1) The order of the learned CIT(A) is bad in law and is void-ab-initio. 2) The Assessment Order passed by the ld.AO u/s 143(3) of the Income Tax Act, 1961, is without jurisdiction and bad in law. 3) The ld.CIT(A) has erred in sustaining the disallowance of Rs.2,77,54,053/- made by the AO, whereas the deduction claimed by the assessee u/s 80IB was only Rs.1,64,18,999/-. 4) The ld AO has erred in disallowing the profit as per profit and loss account of Rs.2,77,54,053/- whereas the profit as per the Income Tax Act, 1961 was only Rs.1,64,18,999/- which was claimed as deduction u/s 80IB in the return of income filled by the assessee. Hence the maximum addition by way of disallowance of assessee claim of deduction u/s 80IB can be only Rs.1,64,18,999/-. 2 ITA No.188/PAN/2017 5) The ld.CIT(A) has failed to allow the eligible deduction u/s 80IB of the Income Tax Act, 1961 to the assessee, inspite of complying with all the conditions as prescribed under the Act. 6) The ld. AO and CIT(A) has failed to understand the manufacturing / processing activities carried out by the assessee, which inturns qualify them for availing the deduction u/s 80IB of the Income Tax Act, 1961. 7) The ld AO and CIT(A) has ignored the fact that due inspection was carried out of the manufacturing / processing units of the assessee by the department. 8) The appellant craves leave to add, amend, alter, delete or withdraw any or all the grounds of appeal.” 3. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of pasteurized milk and purchase of milk and sale. The return of income for the assessment year 2009-10 was filed on 28.09.2009 disclosing a total income of Rs.Nil after claiming deduction u/s 80IB of the Income Tax Act, 1961 (‘the Act’) of Rs.2,77,54,050/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Circle-2(1), Panaji (‘the Assessing Officer’) vide order dated 26.12.2011 passed u/s 143(3) of the Act at a total income of Rs.2,77,54,050/- denying the claim of deduction u/s 80IB(11A) of the Act on the ground that (i) the assessee had not been engaged the process of producing vegetables or fruits as it is engaged in the business of pasteurized of milk and its sale; (ii) the business of dairy products was eligible for deduction under sub-section (11A) of section 80IB of the Act only from the assessment year 2010-11. 4. Being aggrieved by the above assessment order, an appeal was preferred before the ld. CIT(A), who vide impugned order placing reliance on the decision of Pune ITAT Special Bench in the case of B. J. Chitale, 116 TTJ 658 rendered in the context of provisions of section 80-I and section 80HHA of the Act held 3 ITA No.188/PAN/2017 that the term “processing” does not include production. Accordingly, he denied the claim of deduction u/s 80IB of the Act. 5. Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us in the present appeal. 6. When the matter was called on for hearing, none appeared on behalf of the assessee despite due service of notice. 7. On the other hand, ld. Sr. DR placed heavy reliance on the order of the ld. CIT(A) and submitted that the order of the ld. CIT(A) should be upheld. 8. We heard the ld. Sr. DR and perused the material on record. The issue in the present appeal relates to the eligibility of claim of deduction under sub- section (11A) of section 80IB of the Act. The provisions of sub-section (11A) of section 80IB of the Act are extracted below :- “80-IB. ......... (11A) The amount of deduction in a case of an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or meat and meat products or poultry or marine or dairy 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 assessment years beginning with the initial assessment year and thereafter, twenty-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 manner that the total period of deduction does not exceed ten consecutive assessment years and subject to fulfilment of the condition that it begins to operate such business on or after the 1st day of April, 2001 : 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 marine or dairy products if it begins to operate such business before the 1st day of April, 2009.” 4 ITA No.188/PAN/2017 9. On perusal of the above provisions, it is clear that an undertaking which is engaged in the dairy products, is eligible to claim of deduction u/s 80IB(11A) of the Act only w.e.f. assessment year 2011-12 i.e. in respect of undertaking which commenced the activity on or before 01.04.2010. Admittedly, in the present case, the appellant is engaged in the pasteurization of milk and its sale which clearly falls under the dairy products and the activities of the appellant company does not fall under the processing, preservation and packaging of fruits and vegetables. In the circumstances, the profits of undertaking is not eligible for claiming deduction u/s 80IB(11A) of the Act prior from assessment year 2011-12. Since we are only concerned with the assessment year 2009-10 (present case of the assessee), we find that the lower authorities are correct in denying the claim of deduction u/s 80IB(11A) of the Act. However, amount of addition should be restricted to the actual amount of deduction claimed by the appellant company. Accordingly, the matter is remanded back to the file of the Assessing Officer with a direction to restrict the disallowance u/s 80IB(11A) of the Act to the extent of actual claim made by the assessee. Thus, the grounds raised by the assessee are partly allowed. 10. In the result, the appeal filed by the assessee stands partly allowed. Order pronounced on this 11 th day of November, 2021. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) ᭠याियक सद᭭य/JUDICIAL MEMBER लेखा सद᭭य/ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 11 th November, 2021. Sujeet 5 ITA No.188/PAN/2017 आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-1, Panaji. 4. The Pr. CIT, Panaji. 5. DR, ITAT, Panaji. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.