M/S SHAH NANJI NAGSI EXPORTS P. LTD., Nagpur V. ACIT, CIRCLE-3, Nagpur

ITA 193/NAG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3094 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 08-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Retrospective amendment
• Section: 143(3); 80IB; 10B; 147; 131; 263; 10

Judgement Text

1 ITA NO. 193/NAG/2013 . IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 193 /NAG/2013 ASSESSMENT YEAR : 200 6 - 07. M/S SHAH NANJI NAGSI EXPORTS P. LTD., ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CIRCLE - 3, NAGPUR. PAN AADCS2306R. (APPELLANT) (RESPONDENT) APPELL ANT BY : SHRI C.J. THAKAR. RESPONDENT : SHRI NARENDRA KANE. DATE OF HEARING : 2 2 - 02 - 2016 DATE OF PRONOUNCEMENT : 31 ST MARCH, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - 19, MUMBAI (CAMP AT NAGPUR) DATED 11 - 02 - 2013 AND THE GROUNDS RAISED ARE REPRODUCED BELOW: 1) LEARNED CIT(A) ERRED IN HOLDING THAT THE NIGER SEEDS WHICH ARE PRODUCED AFTER APPLYING VARIOUS PROCESSES INCLUDING CHEMICAL PROCESSES FOR VALUE ADDITION FROM OUT OF RAW SEEDS WITH HUSK DOES NOT AMOUNT TO MANUFACTURE OF A NEW COMMERCIAL ARTICLE AND THEREFORE NOT ELIGIBLE FOR DEDUCTION U/S.10B. 2) LEARNED CIT(A) FAILED TO SEE THAT ON THE SAME FACTS THE REVENUE ITSELF HAD ALLOWED DEDUCTION U/S.10B FOR EARLIER A.Y.2004 - 2005 AND 2005 - 06 AND HENCE ON THE SAME FACTS REVENUE CANNOT TAKE TOTALLY DIFFERENT STAND FOR THE YEAR IN QUESTION VIZ.A.Y.2006 - 07. 2 ITA NO. 193/NAG/2013 . 3) ON THE FACTS AN D CIRCUMSTANCES OF THE CASE LEARNED CIT(A) ERRED IN DISALLOWING EXEMPTION OF RS.56,24,127/ - U/S.10B CLAIMED BY THE ASSESSEE. 4) LEARNED CIT(A) ERRED IN NOT CONSIDERING ITS (I.E.ASSESSEES) GROUND NO.4 THAT ITS UNIT WAS 100% EXPORT ORIENTED UNIT WITHIN THE MEANING OF SECTION 10B AS INCONSEQUENTIAL. 5) LEARNED CIT(A) ERRED IN GIVING BLANKET DIRECTION TO A.O. TO TAKE ACTION FOR EARLIER AND LATER YEAR FOR DISALLOWING SECTION 10B DEDUCTION WHICH ASSESSMENT YEARS WERE NOT BEFORE HER. SUCH DIRECTIONS ARE ILLEGAL AND WITHOUT JURISDICTION AND THE SAME IS NOT COVERED OR ENVISAGED BY SECTION 150(1) OF THE ACT. 6) ORDER OF LEARNED CIT(A) IS ERRONEOUS ON FACTS AND IN LAW. SHE HAS FAILED TO CONSIDER AND APPRECIATE THE MANUFACTURING PROCESS INVOLVED AND FAILED TO SEE THAT THE ULTIMATE PRODUCT WAS DIFFERENT COMMERCIAL COMMODITY. 2. ALL THE GROUNDS REVOLVE AROUND A SINGLE ISSUE IS THAT WHETHER THE ASSESSEE HAS DERIVED PROFIT FROM AN UNDERTAKING WHICH IS MANUFACTURING OR PRODUCING ARTICLE OR THING SO AS TO QUALIFY FOR THE DEDUCTION U/S 10B OF THE I.T. ACT. 2.1 FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) DATED 29 - 12 - 2008 WERE THAT THE ASSESSEE COMPANY WAS AN 100% EOU FOR THE YEAR UNDER CONSIDERATION. A RETURN OF INC OME WAS FILED DECLARING RS.15,96,752/ - . THE ASSESSEE HAS EXPORTED NIGER SEED S . VIDE PARA 2 OF THE ASSESSMENT ORDER IT HAS ALSO BEEN OBSERVED BY THE AO THAT THE CENTRAL GOVERNMENT HAD ANNOUNCED AN INCENTIVE AT THE RATE OF 5% ON THE FOB VALUE OF EXPORT OF NIGER SEED S . THE ASSESSEE HAD RECEIVED INCENTIVE FROM THE CENTRAL GOVERNMENT AMOUNTING TO RS.56,24,127/ - DURING THE YEAR. ACCORDING TO THE AO THE ISSUE WAS WHETHER THE ASSESSEE WAS ELIGIBLE FOR THE EXEMPTION CLAIMED U/S 10 B OF I.T. ACT THE AO HAD VISITED T HE INDUSTRIAL UNIT. A STATEMENT OF AN INCHARGE OF THE OPERATION OF THE SAID UNIT WAS RECORDED U/S 131 OF I.T. ACT. IT 3 ITA NO. 193/NAG/2013 . WAS EXPLAINED THAT THE SAID UNIT WAS LEASED OUT TO THE ASSESSEE. HE HAS EXPLAINED THAT THE WORK OF CLEANING OF NIGER SEEDS WAS CARRIED OUT IN THE SAID PREMISES. THE AO HAD ASKED THE PROCESS OF CLEANING OF THE NIGER SEED S AND THE MAJOR STEPS INVOLVED W ERE STATED AS UNDER : (I) ROUGH CLEANING IN WHICH THE NIGER SEEDS ARE FILTERED AT LEAST 4 TIMES SO THAT EASILY REMOVABLE IMPURITIES ARE SEPARATED OUT. FOR THIS 6 FILTERS ARE PLACED AT DIFFERENT LEVELS AND THE NIGER SEED IS MADE TO GO THROUGH EACH OF THEM. (II) THE REMAINING NIGER SEEDS ARE PUT INTO DIS - TONER MACHINES BY WHICH STONES OF EQUIVALENT SIZES ARE REMOVED. FOR THIS PURPOSE AT LEAST 4 DIS - TONER M ACHINES ARE USED. (III) THE REMAINING NIGER SEEDS ARE PASSED THROUGH MACHINES IN WHICH FANS ARE FITTED AND AIR BLOWN BY THESE FANS HELP SEPARATE IMPURITIES SUCH AS BHUSA. FOR THIS PURPOSES 2 FANS ARE FITTED. (IV) THEN THE NIGER SEEDS ARE PASSED THROUGH AN INDENT CYLINDER IN WHICH OTHER OIL SEEDS OF SAME SIZE IS REMOVED. FOR THIS PURPOSE 4 INDENT CYLINDER ARE FITTED. (V) ANALYSIS OF THE SEEDS THUS PROCESSED IS CARRIED OUT AND WHERE THE SEEDS FAILED TO MEET THE QUALITY CHECK THE ENTIRE PROCESS IS AGAIN REPEATED. (VI) DEPENDI NG UPON THE REQUIREMENT IS ALSO GOT DONE THROUGH INDEPENDENT PEST CONTROL AGENCY. (VII) THE SEEDS ARE FINALLY PACKED AND EXPORTED. THE AO HAD TAKEN THE PHOTOGRAPHS AT VARIOUS STAGES OF THE PROCESS AND THOSE WERE COMMUNICATED TO THE ASSESSEE AS WELL. ACCORDING TO THE AO THE ACTIVITY OF CLEANING PROCESS OF NIGER SEED S WAS NOT AMOUNTING TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING. HOWEVER, THE ASSESSEE HAS OBJECTED AND PLEADED AS UNDER : I) PROCESSING OF SEEDS WOULD AMOUNT TO MANUFACTURING ACTIVITY IN VIEW O F SCHEDULE CONTAINED U/S. 33, 80IB & 80I. IN THE SCHEDULE V OF THE I.T. ACT PROCESSING OF SEEDS IS LISTED AS AN ACTIVITY RELATED TO MANUFACTURING OR PROCESSING OF NEW ARTICLE. II) AFTER PROCESSING THE FINAL OUTPUT LOSES ITS BASIC CHARACTERISTIC OF BEING RAW S EED AND THAT RAW SEEDS ARE ENTIRELY DIFFERENT FROM THE NEW PRODUCT THAT EMERGES AFTER PROCESSING. 4 ITA NO. 193/NAG/2013 . III) AFTER PROCESSING THE SEEDS LOSES ITS ORIGINAL CHARACTERISTIC OF GERMINATION, SO BOTH THE USE AND CHARACTER CHANGES AFTER PROCESSING. IV) RAW SEEDS ARE HAVING NO C OMMERCIAL EXISTENCE BUT THE PROCESSED SEEDS IS BY ITSELF A COMMERCIAL COMMODITY CAPABLE OF BEING SOLD AND SUPPLIED FOR EXPORT. V) THE ASSESSEE HAS OUTLINED THE FOLLOWING STAGES THAT ARE INVOLVED IN THE CLEANING/PROCESSING OF THE NIGER SEEDS: - A) ROUGH CLEANING OF RAW SEEDS. B) GRADING : REMOVABLE OF IMPURITIES LIKE STONES, WOOD PIECES ETC. C) HUSK REMOVAL : LIGHT WEIGHT UPPER SKIN OF THE SEEDS IS SEPARATED. D) REMOVAL OF UNI - SIZE STONE : USING THE DIS - TONER MACHINE. E) REMOVAL OF OTHER OIL SEEDS OF SAME SIZE : USING INDENT CYLINDER MACHINE. F) DRYING G) PHYSICAL SIZE GRADING H) ANALYSIS I) CHEMICAL TREATMENT AS PER REQUIREMENT OF CUSTOMER. J) PACKING VI) FURTHER THE ASSESSEE HAS QUOTED THE FOLLOWING CASE LAWS IN SUPPORT OF ITS ARGUMENT: - 1) CIT V/S. EID PARRY INDIA LIMITED 298 ITR 713 (MAD) 2) TARAI DEVELOPMENT CORPORATION VS. CIT 120 ITR 342 (ALL) 3) CIT VS. JALNA SEEDS PROCESSING AND REFRIGERATION CO. LTD. 246 ITR 156 (BOM) 4) STATE OF RAJASTHAN V/S. RAJASTHAN AGRICULTURE INPUT DEALERS ASSOCIATION 5 SCC 479 (SC). 5) M/S. INDIA CINE AGENCIES VS. CIT - LA TEST DECISION OF SUPREME COURT DELIVERED ON 12.11.2008 VII) FURTHER THE ASSESSEE HAS ARGUED THAT THE ISSUE IN QUESTION HAS ALREADY BEEN EXAMINED BY A.O. IN A.YR.2004 - 05 & 2005 - 06 AND THAT CLAIM U/S. 10B IN THOSE YEARS HAS BEEN ALLOWED BY THE DEPARTMENT. VIII) FURTHE R THE ASSESSEE HAS ARGUED THAT ITS 100% EOU WAS NOT IN EXISTENCE DURING FINA. YR. 2005 - 06 AND THAT THE INCENTIVE RECEIVED DURING THE YEAR WAS IN RESPECT OF SCHEME OF THE GOVERNMENT APPLICABLE TO 100% EOU WITH RETROSPECTIVE EFFECT FROM 01.04.2005. THEREFORE THE QUESTION OF MANUFACTURING PROCESS VIS - A - VIS SECTION 10B NOT ARISE AT ALL FOR A.YR.2006 - 07. IX) ON THE ISSUE OF APPROVAL FOR THE 100% EOU BY THE BOARD REFERRED TO IN SECTION 10B, THE ASSESSEE HAS ARGUED THAT THROUGH THE APPROVAL FOR 100% EOU IS GIVEN BY TH E DEVELOPMENT COMMISSIONER BUT THAT THE 5 ITA NO. 193/NAG/2013 . SAME IS GIVEN ONLY AFTER OBTAINING THE APPROVAL FROM THE BOARD AS IS REFERRED TO IN CLAUSE IV OF EXPLANATION 2 TO SECTION 10B OF THE I.T. ACT. 2.2 THE AO WAS NOT CONVINCED AND NARRATED FEW FACTS IN RESPECT OF NIGER SEED S . THE NIGER SEEDS ARE USED AS A BIRD - FEED. THE AO HAS NOTED THAT THE NIGER SEED IS FAVOURATE FEED OF WILD BIRDS SUCH AS FINCHES, PINE SISKINS AND RED POLLS . THE SEED S MOSTLY GROWN IN INDIA AND SOME PARTS OF AFRICA. THE SEED IS EXPORTED TO VA RIOUS COUNTRIES INCLUDING USA TO BE USED AS FEED FOR WILD BIRDS. IT WAS A CONDITION OF EXPORT THAT THE SEED MUST BE H EAT STERILI Z ED, SO AS TO PREVENT GE RMINATION OF THE SEED. THE STERILISATION WAS EMPHASISED BECAUSE OF THE PLANT OF THE NIGER SEED SPREA D LIKE A W EED. THEREFORE, THE STERILISATION WAS STATED TO BE ONE OF THE SPECIFIC REQUIREMENT BEFORE E XPORTING THE SEED. THE ALLEGATION OF THE AO WAS THAT ONLY A CLEANING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE WHICH DID NOT AMOUNT TO MANUFACTURE OR PRODU CTION OF ANY ARTICLE OR THING. THE AO HAD DISCUSSED THE DEFINITION OF MANUFACTURE AND THE DEFINITION OF PRODUCTION. IN HIS OPINION THE TRUE TEST FOR DETERMINING THE PROCESS OF MANUFACTURE IS THAT WHETHER THE COMMODITY WAS SUBJECTED TO THE PROCESS OF C HANGING THE ORIGINAL COMMODITY TO A NEW DISTINCT COMMODITY. THE AO HAD GIVEN CERTAIN POINTS IN SUPPORT OF HIS VIEW THAT THE PRODUCTION REQUIRES FOLLOWING MANUFACTURING PROCESS : - I) FOR MANUFACTURE TO TAKE PLACE THE CHANGE OR CHANGES BROUGHT ABOUT SHOULD RESU LT IN TRANSFORMATION OF THE INPUT I.E. A NEW AND DIFFERENT ARTICLE MUST EMERGE HAVING A DISTINCTIVE NAME, CHARACTER OR USE. II) WHETHER THE COMMODITY SUBJECTED TO THE MANUFACTURE CAN DO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT IS RECOGNIZED IN THE TRAD E AS A NEW AND DISTINCT COMMODITY. III) ONLY WHEN A CHANGE OR A SERIES OF CHANGES TAKES THE COMMODITY TO THE POINT WHERE COMMERCIALLY IT CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT IS INSTEAD RECOGNIZED AS A NEW AND DISTINCT ARTICLE THAT A MANUFACTURE CAN BE SAID TO HAVE TAKEN PLACE. IV) THE WOR D PRODUCTION WHEN USED IN ______ POSITION WITH THE WORD MANUFACTURE IMPLIES BRINGING INTO EXISTENCE NEW GOODS BY A PROCESS WHICH MAY OR MAY NOT AMOUNTS TO MANUFACTURE. 6 ITA NO. 193/NAG/2013 . HE HAS, THEREFORE, CONCLUDED T HAT THE ASSESSEE WAS ONLY ENGAGED IN THE ACTIVITY OF CLEANING OF THE NIGER SEEDS THE VIEW TAKEN BY THE AO WAS AS UNDER : I) THE ASSESSEE IS ONLY ENGAGED IN THE ACTIVITY OF CLEANING OF NIGER SEEDS. THE FINAL PRODUCT I.E. THE CLEANED NIGER SEEDS IS NOT A NEW OR DIFFERENT COMMODITY DISTINCT FROM THE STARTING INPUT I.E. UNCLEANED NIGER SEEDS. BY MERELY CLEANING NIGER SEEDS DO NOT HAVE ANY DISTINCTIVE NAME OR CHARACTER OR USE. EVEN BEFORE CLEANING THEY ARE KNOWN AS NIGER SEEDS AND CONTINUE TO THE KNOWN AS NIGER SEE DS EVEN AFTER THE CLEANING PROCESS AS IS UNDERTAKEN BY THE ASSESSEE. FURTHER EVEN THE USE OF THE NIGER SEEDS DOES NOT CHANGE PROCESSED NIGER SEEDS ARE USED AS BIRD FEED FOR WILD BIRDS AND IT CANNOT BE DENIED THAT EVEN IF THEY WERE NOT CLEANED THEY COULD ST ILL BE USED AS BIRD FEED FOR THE SAME WILD BIRDS. ONLY BECAUSE STERILIZATION RESULTS IN SEEDS RENDERED INCAPABLE FOR GERMINATION, IF CANNOT BE SAID THAT THE CHARACTER OF THE SEEDS HAS CHANGED. THE SEEDS HAVE TO BE STERILIZED AS IT IS A PRE CONDITION SET BY SOME OF THE IMPORTERS; HOWEVER STERILIZATION DOES IN NO WAY EFFECT OR CHANGE THE CHARACTER OF THE NIGER SEEDS. \ II) THE CLEANED NIGER SEEDS ARE NOT A NEW OR DISTRICT COMMODITY, THE CHANGE THAT HAS BEEN BROUGHT ABOUT BY CLEANING THEM HAS NOT RESULTED IN A COMM ODITY WHICH CAN BE DIFFERENTIATED OR DISTINGUISHED FROM THE ORIGINAL COMMODITY. III) EVEN THE WORD PRODUCTION IMPLIES BRINGING INTO EXISTENCE A NEW COMMODITY. IN THE PRESENT CASE NO NEW COMMODITY HAS RESULTED BECAUSE OF CLEANING OR PROCESSING ACTIVITIES 2.3 FEW CASE LAWS LIKE RELISH FOOD 237 ITR 59 (SC), STERLING FOODS 63 STG 239 (SC), JEM INDIA MANUFACTURING CO. 249 ITR 307 (SC) ETC. HAVE ALSO BEEN CITED AND DISCUSSED. IN THE LIGHT OF THE ABOVE JUDGMENTS HE HAS CONCLUDED THE DISALLOWANCE AS UNDER : IN THE LIGHT OF ALL THE ABOVE JUDGMENTS AND GIVEN THE FACTS, THERE CAN BE NO DOUBT WHATSOEVER THAT IN THE ENTIRE PROCESS OF CLEANING OF NIGER SEEDS, THE ESSENTIAL IDENTITY OF NIGER SEEDS REMAINS THE SAME AT ALL STAGES. THE CLEANED NIGER SEEDS ARE NOT A NEW AND DISTINCT COMMODITY; INSTEAD THEY RETAIN THE SAME CHARACTER AND IDENTITY AS THE UNCLEANED NIGER SEEDS. BY SUBJECTING THE NIGER SEEDS TO PROCESSING OR CLEANING FOR THE PURPOSE OF 7 ITA NO. 193/NAG/2013 . EXPORT, NIGER SEEDS DO NOT LOOSE THEIR ORIGINAL CHARACTER. NO NEW COMMODIT Y OR ARTICLE EMERGES AS A RESULT OF SUCH PROCESS. THE PROCESSED NIGER SEEDS RETAINED THEIR IDENTITY AS NIGER SEEDS. THIS IS ALSO EVIDENT FROM THE PHOTOGRAPHS TAKEN OF UN - PROCESSED NIGER SEEDS AND THOSE OF PROCESSED NIGER SEEDS DURING THE COURSE OF MY ON SP OT VISIT AT THE PREMISES ON 16.12.2008. SUCH PHOTOGRAPHS ARE MADE A PART OF THIS ORDER. IN VIEW OF THE ABOVE NO MANUFACTURE CAN BE SAID TO HAVE TAKEN PLACE AND THE ASSESSEE IS CLEARLY INELIGIBLE FOR EXEMPTION U/S. 10B. 2.4 THE EXEMP TION CLAIMED BY THE ASSESSEE U/S 10B AMOUNTING TO RS.56,24,127/ - WAS DISALLOWED. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. SAME ARGUMENTS WERE REITERATED BEFORE THE LEARNED CIT(APPEALS) AND FEW CASE LAWS HAVE BEEN CIT ED. HOWEVER, THE VIEW TAKEN BY THE AO WAS AFFIRMED IN THE FOLLOWING MANNER : 4.4.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER, THE TWO REMAND REPORTS, THE ADDL. CITS REPORT AND REJOINDER TO THE REMAND REPORT. IT IS A TRITE LAW THAT PRINCIPLE OF ESTOPPELS AND RES - JUDICATA IS NOT APPLICABLE IN INCOME TAX ACT. EVERY YEAR IS A FRESH YEAR AND TAXABILITY OF INCOME HAS TO BE DECIDED AFRESH EVERY YEAR. THE ISSUE IN DISPUTE IS WHETHER ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.10B. 4.4.2 - THE PREREQUISITE FOR CLAIMING DEDUCTION U/S. 10B IS THAT UNDERTAKING MANUFACTURE OR PRODUCES ANY ARTICLE OR THING. THEREFORE, THE GERMANE QUESTION IS TO BE CONSIDERED IS WHETHER THE PROCESSING OF NIGER SEEDS AMOUNTS TO MANUFACTURE OR PRODUCTION OF NEW ARTI CLE OR THING. IF THE PROCESSING OF NIGER SEEDS DOES NOT AMOUNT OF MANUFACTURE OR PRODUCTION OF NEW ARTICLE OR THING THEN THE ASSESSEE CANNOT CLAIM DEDUCTION U/S. 10B. I HAVE PERUSED THE ASSESSMENT ORDER, THE TWO REMAND REPORTS AND THE SUBMISSION ALONG WITH THE REJOINDER OF THE APPELLANT. THE APPELLANT HAS PLACED BASIC RELIANCE ON THE FACT THAT IN EARLIER YEARS THE ASSESSING OFFICER AS WELL AS THE CIT(A) AND THE CIT HAVE ALLOWED HIM THE EXEMPTION U/S.10B RESTRICTING IT TO 90%. THEREFORE, THE AO HAS WRONGLY D ISALLOWED THE DEDUCTION IN THE CURRENT YEAR. FROM THE ASSESSMENT ORDER AND THE ORDER OF CIT(A) OF EARLIER YEARS, IT IS NOTICED THAT ISSUE OF APPLICABILITY OF DEDUCTION U/S. 10B HAD NEVER BEEN EXAMINED IN EARLIER YEARS. IN THE CURRENT YEAR, THE AO HAS EXAMI NED THE ISSUE IN DETAIL AND HAS CONSIDERED THE SUBMISSION OF THE APPELLANT AND HAS DISTINGUISHED ALL 8 ITA NO. 193/NAG/2013 . THE CASE LAWS ON WHICH THE APPELLANT HAS PLACED RELIANCE. AFTER CAREFUL ANALYSIS OF FACT AND VARIOUS JUDICIAL PRONOUNCEMENTS, THE ASSESSING OFFICER HAS COM E TO THE CONCLUSION THAT THE PROCESSING OF NIGER SEEDS DOES NOT AMOUNT TO PRODUCTION OF NEW ARTICLE OR THINGS AND THEREFORE, DENIED THE DEDUCTION U/S. 10B OF THE ACT. THE AI HAS ALSO CONCLUDED THAT EVERY YEAR IS A FRESH YEAR IN ASSESSMENT OF INCOME UNDER I NCOME TAX ACT AND PRINCIPLE OF ESTOPPELS OR RES - JUDICATA IS NOT APPLICABLE UNDER INCOME TAX ACT. IN THIS REGARD, HE HAS PLACED RELIANCE ON NUMBER OF CASE LAWS, I.E. (I) INSTALLMENT SUPPLY PVT. LTD., VS. UNION OF INDIA, AIR 1962 SC 53; (II) NEW JEHANGIR VAK IL MILLS CO, LTD., VS. CUT (1963) 49 ITR 137 (SC) AND (III) IPOH (MM) VS. CIT (1968) 67 ITR 106 (SC) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4.4.11 - NIGER SEED IS HIGH IN OIL AND PROTEIN CONTENT. ITS FAT IS EDIBLE, BUT IS WI DELY USED FOR INDUSTRIAL PURPOSES, SUCH AS, SOAP MAKING PAINTS PREPARATIONS AND PREPARATION OF DIFFERENT TYPES OF EMULSIONS. THE SEEDS ARE USED FOR WILD BIRD FEEDING. IF THE NIGER SEEDS ARE CONVERTED INTO SOAP OR PAINTS IT IS MANUFACTURE SINCE THERE IS A C HANGE IN CHARACTER OF THE SEED AND NEW PRODUCT EMERGES. BUT IF NIGER SEED IS USED AS BIRD FEED IT IS NOT MANUFACTURING AS THERE IS NO CHANGE IN CHARACTER. - - - - - - - - - - - - - - - - - - - - - 4.4.16 - APPLYING THE SAID RATIO IN THE APPELLANTS CASE IT IS AMPLY CLEAR THAT AFTER PROCESSING OF SEEDS NO NEW PRODUCT EMERGES. THERE IS NO CHANGE IN THE CHARACTER OR THE UTILITY OF THE SEED. THE SEED BEFORE PROCESSING IS ALSO USED FOR BIRD FEED AND AFTER PROCESSING IS ALSO USED FOR BIRD FEED. THEREFORE, IN THE APPELLANTS CASE, THERE IS NO MANUFACTURE OR PRODUCTION OF ARTICLE OR THINGS. 3.1 SINCE THE CLAIM OF EXEMPTION U/S 10B WAS DISALLOWED BY THE REVENUE AUTHORITIES, HENCE THE ASSESSEE IS NOW FURTHER IN APPEAL. 4. FROM THE SIDE OF THE APPELLANT LEARNED A.R. MR. C.J. THAKAR APPEARED AND INFORMED AT THE VERY THRESHOLD THAT THE YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2006 - 07, HOWEVER, IN ASSESSMENT YEAR 2004 - 05 A DEDUCTION U/S 10B WAS ALLOWED. FOR ASSESSMENT YEAR 2004 - 05 ASSESSMENT WAS MADE U/S 143(3) DATED 01 - 08 - 2006. THE TOTAL INCOME IN THAT YEAR WAS A LOSS OF RS.7,78,385/ - WHICH WAS REDUCED TO RS.2,47,958/ - . LEARNED A.R. HAS DEMONSTRATED THAT IN ASSESSMENT YEAR 2004 - 05 THE ASSESSEE HAD DERIVED THE INCOME FROM EXPORT OF 9 ITA NO. 193/NAG/2013 . NIGER SEEDS. THE AO HAS EXAMINED THE FACTS AND THEREUPON RESTRICTED THE EXEMPTION UPTO 90% OF THE PROFITS AND GAINS. HENCE THE ARGUMENT OF LEARNED A.R. IS THAT THE ISSUE OF CLAIM OF DEDUCTION U/S 10B AND THE ISSUE OF MANUFAC TURING AND PROCESS OF NIGER SEEDS HAS ALREAD Y BEEN SETTLED IN FAVOUR OF THE ASSESSEE IN THE PAST. FOR ASSESSMENT YEAR 2004 - 05 THE CASE WAS REOPENED AND THE REASONS FOR THE REOPENING WERE THAT THERE WAS NO ESSENTIAL CHANGE IN THE PHYSICAL OR CHEMICAL P OSITION OF THE NIGER SEEDS, THEREFORE, THE EXEMPT ION U/S 10B WAS NOT PERMISSIBLE. WHILE REOPENING , REASONS WERE RECORDED ON 22 - 10 - 2009 FOR 2004 - 05 AND IT WAS NOTED THAT THE MANUFACTURING UNIT WAS INSPECTED BY THE AO. LEARNED A.R. HAS INFORMED THAT ALTHOUGH IT WAS PROPOSED TO REOPEN THE ASSESSMENT ON THE GROUND THAT THE INCOME HAD ESCAPED ASSESSMENT BY VIRTUE OF ALLOWING EXEMPTION U/S 10B TO THE ASSESSEE , TH EREAFTER AN ORDER U/S 143(3) READ WITH SECTION 147 FOR ASSESSMENT YEAR 2004 - 05 DATED 17 - 12 - 2009 WAS PASSED AND AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE THE PROCEEDINGS U/S 147 WERE DROPPED. 4.1 LEARNED A.R. HAS FURTHER VEHEMENTLY PLEADED THAT EVEN FOR ASSESSMENT YEAR 2005 - 06 AN ASSESSMENT WAS MADE U/S 143(3) VIDE AN ORDER DATED 31 - 12 - 2007 AND IN THAT YEAR ALSO THE ASSESSEES CLAIM OF EXEMPTIO N U/S 10B BEING 100% EOU WAS AGAIN ALLOWED. FOR ASSESSMENT YEAR 2005 - 06 THE CLAIM OF DEDUCTION U/S 10B WAS AT RS.77,75,926/ - . FOR ASSESSMENT YEAR 2005 - 06 LEARNED COMMISSIONER HAS STARTED THE PROCEEDINGS U/S 263 OF I.T. ACT, HOWEVER, VIDE AN ORDER DATED 29 - 03 - 2010 DROPPED THE PROCEEDINGS WITH A DIRECTION THAT 10% OF THE CLAIM U/S 10B OF RS.7,77,592/ - WAS TO BE WITHDRAWN. A CLEAR FINDING WAS GIVEN VIDE PARA 7 OF THE SAID ORDER THAT THE ELIGIBILITY AS PER SECTION 10B WAS ACCEPTED, HOWEVER, THE CLAIM WAS RESTR ICTED TO 90% OF THE TOTAL AMOUNT. IN RESPECT OF THE ACTIVITY OF PROCESS CARRIED OUT BY THE ASSESSEE, LEARNED COMMISSIONER HAS MENTIONED VIDE PARA 3 IN THE SAID ORDER AS UNDER : 10 ITA NO. 193/NAG/2013 . ON A PERUSAL OF ASSESSMENT ORDER IT IS SEEN THAT THE SAID COMPANY IS ENGAGED I N THE ACTIVITY OF PROCESSING OF NIGER SEED NOT AMOUNTING TO MANUFACTURING OR PRODUCTION. THE CLEANING OF NIGER SEEDS DOES NOT RESULT INTO ANY NEW OR DISTILLED COMMODITY. THE NIGER SEEDS ARE USED AS BIRD FEED FOR WILD BIRDS. THE USE DOES NOT CHANGE BEFORE O R AFTER THE PROCESSING AS BOTH RAW AND PROCESSED SEEDS ARE FIT FOR CONSUMPTION FOR WILD BIRDS. THE CRITICAL DIFFERENCE CLAIMED BY THE COMPANY IS OF STERILIZATION. THE FACT IS THE ONLY CHANGE STERILIZATION RESULTS, IS TO PREVENT WEEDING. IT IS A PRECONDITIO N SET BY SOME IMPORTING COUNTRIES AND NOT ALL. STERILIZATION DOES IN NO WAY EFFECT OR CHANGE THE CHARACTER OF THE NIGER SEEDS. RELIANCE HAS ALSO BEEN PLACED ON SEVERAL DECISIONS OF THE COURT DEFINING THE WORK MANUFACTURE OR PRODUCTION. HENCE THE EXEMPTION OF RS.77,75,926/ - CLAIMED BY THE COMPANY U/S. 10B AND ALLOWED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW OF ABOVE THE A.O. HAS PROPOSED TO REVISE THE ORDER U/S. 263(1) OF THE I.T. ACT, 1961. 4.2 IT HAS ALSO BEEN POINTED OUT TO THE LEARNED COMMISSIONER DURING THE PROCEEDINGS U/S 263 THAT THE LEARNED CIT(APPEALS) - II, NAGPUR VIDE AN ORDER DATED 30 TH SEPT., 2009 IN ASSESSEES CASE BEARING NO. 11/164/06 - 07 FOR ASSESSMENT YEAR 2004 - 05 THE ISSUE OF ELIGIBILITY WAS DECIDED IN ASSESSEES FAVOUR, HOWEVER, THE CLAIM WAS RESTRICTED TO 90% OF THE DEDUCTION. 4.3 AS PER LEARNED A.R. MR. C.J. THAKAR, THIS ISSUE NOW STOOD SETTLED IN FAVOUR OF THE ASSESSEE BY SEVERAL DECISIONS OF THE REVENUE DEPARTMENT IN THE PAST. AS FAR AS THE MERITS OF THE CLAIM WAS CONCERNED, LEARNED A.R. HAS PLACED AN ANOTHER COMPILATION CONTAINING A WRITE UP OF THE MANUFACTURING PROCESS FOR PRODUCING NIGER SEEDS , CLAIMED TO BE A SEED OF DIFFERENT CHARACTERISTIC . THE APPELLANT HAS PLACED ON RECORD FEW PHOTOGRAPHS TO DEMONSTRATE THE ACTIVITY CARRIED OUT BY THE ASSESSEE. FEW CASE LAWS IN SUPPORT CITED WERE AS UNDER : 1. CIT VS. EID PARRY (INDIA) LTD. 218 ITR 713 (MAD.). 2. CIT VS. JALNA SEEDS PROCESSING & REFRIGERATL CO. LTD. 246 ITR 156 (BOM.). 3. TARAI DEVELOPMENT CORPORATION VS. CIT 120 ITR 342 (ALL.). 11 ITA NO. 193/NAG/2013 . 4. CIT VS. SESA GOA LTD. 271 ITR 331 (SC). 5. INDIA CINE AGENCIES VS. CIT 308 ITR 98 (SC). 5. FROM THE SIDE OF THE REVENUE, LEARNED D.R. MR. NARENDRA KANE APPEARED AND S UPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. HIS MAIN EMPHASIS WAS THAT NEITHER THERE WAS PHYSICAL CHANGE NOR THERE WAS CHEMICAL CHANGE IN THE SEE D, THEREFORE, THE PROCESS CARRIED OUT BY THE ASSESSEE WAS NOT A MANUFACTURING PROCESS. NO ARTICLE OR THING WAS PRODUCED. THE SEED REMAINED A SEED AND NO NEW ARTICLE OR THING WAS MANUFACTURED BY THE ASSESSEE. EVEN THERE WAS NO ACTIVITY OF PROCESSING BECAUSE THE NIGER SEEDS WERE SIMPLY CLEANED AND WASHED NOT AMOUNTING TO MANUFACTURING. LEARNED D.R. HAS ALSO PLEADED THAT THE DOCTRINE OF RESJUDICATA DID NOT APPLY ON INCOME - TAX PROCEEDINGS. ALTHOUGH IN SOME OF THE YEARS THIS ISSUE WAS DISCUSSED IN THE PAST BUT T HAT VIEW HAD NO EFFECT ON THE ASSESSMENT PROCEEDINGS CONDUCTED BY THE AO FOR ASSESSMENT YEAR 2006 - 07. LEARNED D.R. MR. NARENDRA KANE HAS ALSO FILED A PAPER BOOK WHICH CONTAINED FEW CASE LAWS AS WELL AS DOWN LOADED A PAGE OF WIKIPEDIA REGARDING NIGER SEED O IL. AS PER THE SAID PAGE IT IS MENTIONED THAT THE SEED CAN BE USED TO EXTRACT OIL TO BE USE D FOR COOKING. BUT THE SEED IS ALSO USED AS A BIRD FEED WORLD WIDE. BEFORE IT IS IMPORTED, NIGER SEED IS STERILIZED BY INTENSE HEAT TO PREVENT GERMINATION OF ANY ADDITIONAL SEEDS THAT MAY BE PART OF THE MIX. TREATED NIGER SEED MAY GERMINATE BUT WOULD TYPICALLY BE STUNTED , LIMITING ITS SPREAD AND OFFERING LESS OF THREAT TO NATIVE PLANTS. LEARNED D.R. HAS ALSO DOWN LOADED FROM GOOGLE SEARCH AND DEMONSTRATED THAT TH E EQUIPMENTS ARE USED ONLY TO EXTRACT OIL, OTHERWISE BIG MACHINERIES ARE NOT REQUIRED FOR CLEANING OF THE SEEDS. RATHER LEARNED D.R. HAS PLEADED THAT IN THE PAST THE CLAIM OF DEDUCTION U/S 10B WAS INADVERTENTLY DECIDED IN FAVOUR OF THE ASSESSEE AND THAT D EFECT CAN BE CURED BY THIS RESPECTED TRIBUNAL. A DECISION OF SMT. CHANDRABAI VS. ITO 53 TAXMANN.COM 304 (MADRAS) HAS ALSO BEEN CITED BY THE LEARNED D.R FOR THE LEGAL PROPOSITION THAT IF AN ISSUE IS ARISING IN NUMBER OF YEARS OR A CLAIM OF THE 12 ITA NO. 193/NAG/2013 . ASSESSEE IS SPREAD OVER IN NUMBER OF YEARS THEN REOPENING BECOMES INEVITABLE. THEREFORE, HE HAS PLEADED THAT IN INCOME - TAX EACH YEAR IS AN INDEPENDENT YEAR TO BE ADJUDGED INDEPENDENTLY. THE LEARNED D.R. HAS CONCLUDED THAT THE ORDERS OF THE REVENUE AUTHORITIES DESERVE TO BE CONFIRMED. 6. WE HAVE HEARD BOTH THE SIDES AT LENGTH. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATIONS FILED FROM BOTH THE SIDES, EVIDENCES ANNEXED AND CASE LAWS CITED. THERE IS NO DISPUTE THAT THE APPELLANT COMPANY IS A 100% EOU EXPORTING NIGER SEEDS. THE ISSUE IS WHETHER THE ASSESSEE IS ENTITLED FOR THE CLAIM OF DEDUCTION U/S 10B. UNDER THE CIRCUMSTANCES WHEN THE ALLEGATION OF THE REVENUE DEPARTMENT IS THAT THE NIGER SEEDS HAVE SIMPLY BEEN PROCESSED ; AS AGAI NST THE REQUIREMENT OF SECTION 10B THAT THE ARTICLE OR THING EXPORTED IS TO BE MANUFACTURED OR PRODUCED TO QUALIFY THE CLAIM OF DEDUCTION. THE ASSESSEE HAS PLACED ON RECORD CERTAIN EVIDENCES TO DEMONSTRATE THAT THERE WAS A MANUFACTURING PROCESS CARRIED OUT BY THE ASSESSEE. IN SHORT, THE STEPS OF MANUFACTURING AS PLEADED BEFORE US ARE THAT THE RAW SEEDS ARE FIRST CLEANED AND THE IMPURITY LIKE STONE, WOOD PIECES ETC. ARE SEPARATED. THIS PROCESS OF CLEANING IS DONE BY A CLEANING MACHINE. FOR THIS PROCESS A DES TONER MACHINE IS ALSO USED. AN INDENT CYLINDER IS ALSO USED TO REMOVE OTHER OIL SEEDS. NEXT IN THE PROCESS IS REMOVAL OF HUSK. THE HUSK IS STATED TO BE A BYE - PRODUCT SOLD IN THE MARKET. THEN THE CLEANED SEEDS ARE HEATED IN THE BOILE R . HOT WATER IS PASSED THROUGH LONG HOLLOW TUBES INTO THE SEEDS. THEN THE COOLERS ARE USED TO COOL THE SEEDS. SEEDS ARE THEN RO A STED IN AN OVEN AT 120 DEGREE TEMPERATURE FOR 20 MINUTES. BY THIS PROCESS THE SEEDS ARE STERILISED SO LOST THE CAPACITY OF GERMINATION. FINALLY A FUMIG ATION IS REQUIRED, THEREFORE, TREATED WITH ALUMINIUM PHOSPHIDE AND METHYL BROMIDE. 6.1 TO KEEP BREVITY IN MIND WE DEEM IT PROPER NOT TO FURTHER ELABORATE THE PROCESS ADOPTED BY THE ASSESSEE BUT TO CONCENTRATE ON THE TERMINOLOGY USED IN SECTION 10B OF I.T. ACT. SECTION 10B HAS PRESCRIBED THAT AN UNDERTAKING 13 ITA NO. 193/NAG/2013 . QUALIFIES FOR THE CLAIM U/S 10B IF IT MANUFACTURE OR PRODUCE ARTICLE OR THING. THE SAME WORDINGS ARE USED IN SECTION 33 FOR THE PURPOSE OF GRANTING DEVELOPMENT REBATE. THE MACHINERY OR PLANT QUALIFYIN G FOR DEVELOPMENT REBATE IS TO BE USED FOR THE PURPOSE OF MANUFACTURE OF PRODUCTION OF ARTICLE OR THING. LIKEWISE SECTION 80HHA(1) GRANTS DEDUCTION TO SMALL SCALE INDUSTRIES IF IT MANUFACTURE OR PRODUCE AN ARTICLE IN ANY RURAL AREA. EVEN SECTION 80HH HAS ALSO USED IDENTICAL LANGUAGE. THEREFORE, TO RESOLVE THIS ISSUE IT IS BETTER TO EXAMINE THE PARALLEL CASES DEALING WITH TERMINOLOGY MANUFACTURE OR PRODUCTION. 6.2 BEFORE WE PROCEED FURTHER IT IS ALSO RELEVANT TO MENTION THAT THE LIST OF ARTICLE AND THING AS PROVIDED IN THE FIFTH SCHEDULE FOR THE PURPOSE OF SECTION 33(1) AT SR. NO. 28 THERE IS A MENTION OF PROCESSED SEEDS. AN ANALOGY CAN BE DRAWN THAT THIS IS A LIST CONTAINING ARTICLES OR THINGS WHICH ARE QUALIFIED AS PRODUCED OR MANUFACTURED . T HE MENTION OF PROCESSED SEEDS FINDING PLACE IN THE LIST OF ARTICLES PRODUCED OR MANUFACTURED HAS SIGNIFICANCE IN RESOLVING THIS CONTROVERSY. THE AO HAS ALSO NOT OBJECTED THAT THE SEEDS WERE PROCESSED BUT THE SEEDS WERE NEITHER MANUFACTURED N OR PROD UCED. BUT THE INCLUSION OF PROCESSED SEEDS IN FIFTH SCHEDULE LIST DEFINITELY INDICATES THAT THE PROCESS IS AKIN TO MANUFACTURE OR PRODUCTION. 6.3 AS FAR AS THE CONTENTION OF THE ASSESSEE IS THAT THERE WAS CHANGE IN THE CHARACTER OF THE SEED HENCE A NEW T HING HAS BEEN PRODUCED, THE CASE LAW OF E ID PARRY INDIA LTD. 218 ITR 713 (MAD.) (SUPRA) IS WORTH READING. IN THIS CASE THE RAW SEEDS AFTER PROCESSING WERE CONVERTED INTO SEEDS FOR CULTIVATION. AFTER PROCESSING, THE RAW SEEDS WOULD NOT REMAIN RAW SEEDS BU T THEY WOULD BE FIT FOR CULTIVATION. THEY WOULD NOT BE FIT FOR HUMAN CONSUMPTION. THE COURT HAS, THEREFORE, HELD THAT THE RAW SEEDS WERE ENTIRELY DIFFERENT FROM THE NEW PRODUCT IMPORTED AFTER THEY WERE PROCESSED THROUGH VARIOUS MEANS. IT WAS FURTHER HELD 14 ITA NO. 193/NAG/2013 . T HAT BY PROCESSING , THE ASSESSEE HAD MANUFACTURED AN ENTIRELY NEW ARTICLE WHICH WAS DIFFERENT FROM THE RAW MATERIAL USED. 7. IN THE CONTEXT OF THIS DECISION OUR ATTENTION HAS BEEN DRAWN ON THE PROCESS ADOPTED BY THE ASSESSEE BY USING STERILIZATION UNIT, CLEANING UNIT ETC. OUR ATTENTION HAS BEEN DRAWN ON THE PROCESS ADOPTED BY THE ASSESSEE FIRSTLY FOR CLEANING AND REMOVAL OF HUSK AND SECONDLY FOR STERILIZATION OF THE SEEDS. IF WE CLOSELY EXAMINE THE PROCESS ADOPTED BY THE ASSESSEE, ONE THING CLEARLY EMERGES THAT THE RAW SEED WAS NOT EXACTLY THE SAME AS FINALLY PRODUCED STERILIZED SEED. THE QUALITY OF THE RAW PRODUCT AND THE PROCE SSED PRODUCT ARE DIFFERENT. THEREFORE, IT CAN ALSO BE SAID THAT THERE WAS A CHANGE IN THE CHEMICAL COM POSITION BECAUSE THE RAW SEEDS ARE CAPABLE OF GERMINATION BUT THE PROCESSED SEEDS BEING STERILIZED ARE NOT CAPABLE FOR GERMINATION. IT IS POSSIBLE THAT T HE PHYSICAL APPEARANCE OF THE RAW SEEDS AND THE PROCESSED SEEDS MIGHT BE MATCHING, ALTHOUGH HUSK IS REMOVED, BUT APART FROM THE VISIBLE CHANGE IT IS WORTH TO EXAMINE THAT WHETHER THERE WAS ANY SPECIFIC CHANGE HAPPENED AFTER THE PROCESSING. EVEN IN THE JALN A SEEDS PROCESSING & REFRIGERATE CASE 246 ITR 156 (BOM.) IT WAS FOUND THAT THE VARIOUS STEPS THROUGH WHICH RAW SEEDS PASSED THROUGH INDICATE THAT THE RAW SEEDS WERE SUBJECT TO HUMAN CONSUMPTION BUT AFTER UNDERGOING VARIOUS PROCESS CEASED TO BE EDIBLE. TH E HONBLE COURT HAS FURTHER COMMENTED THAT EVEN APPLYING THE COMMERCIAL TEST, A CONCLUSION CAN BE DRAWN THAT A DIFFERENT COMMODITY EMERGED AFTER THE RAW SEED UNDERWENT THE DIFFERENT STEPS. 8. WE HAVE EXAMINED THIS ISSUE IN THE LIGHT OF THE FIFTH SCHEDULE O F I.T. ACT AND NOTICED THAT THE HONBLE ALLAHABAD HIGH COURT HAS ALSO DRAWN THE SAME ANALOGY WHILE DEALING WITH THE PROCESSING OF SEED WHETHER TO BE CONSIDERED AS MANUFACTURE OR PRODUCTION IN THE CASE OF TARAI DEVELOPMENT CORPORATION 120 ITR 342 (ALL.) AND HELD AS UNDER : 15 ITA NO. 193/NAG/2013 . THERE IS INHERENT INDICATION IN THE ACT WHICH SHOWS THAT, IN ITS CONTEXT, PROCESSED SEEDS MUST BE TREATED AS FALLING EITHER IN THE CATEGORY OF MANUFACTURE OR PRODUCTION. ONE OF THE ARTICLES OR THINGS WHICH ARE TREATED TO BE MANUFACTURED O R PRODUCED FOR PURPOSES OF S.33 OF THE ACT, AS SET OUT IN SCH. V. IS PROCESSED SEEDS WHICH FINDS PLACE AT ITEM 28 THEREOF. PROCESSED SEEDS IS THUS TREATED AS AN ARTICLE WHICH IS OBTAINED BY THE PROCESS OF MANUFACTURE OR PRODUCTION FOR PURPOSES OF S. 33 ALSO. FURTHERMORE, S. 80B AND SCH.VI, ALSO TREAT PROCESSED SEEDS AS AN ARTICLE OBTAINED BY THE PROCESS OF MANUFACTURE OR PRODUCTION. AND AGAIN S. 80 - I WHICH GRANTED RELIEF TO SPECIFIED INDUSTRIES INCLUDING THOSE WHICH SOLD PROCESSED SEEDS OCCURRED IN CHAP. VI - A OF THE ACT ALONG WITH S. 80J. THEREFORE, INTERPRETATIVE UNIFORMITY SUPPORTS THE VIEW THAT PROCESSED SEEDS SHOULD BE TAKEN AS AN ARTICLE WHICH IS OBTAINED EITHER BY THE PROCESS OF MANUFACTURE OR PRODUCTION FOR PURPOSES OF S.80J. THEREFORE, AN UNDERTAKING ENGAGED IN PROCESSING OF SEEDS IS AN INDUSTRIAL UNDERTAKING AND THE INCOME DERIVED FROM THE PROCESSING OF SEEDS WOULD BE ENTITLED TO RELIEF UNDER S.80J OF THE ACT FOR THE ASSESSMENT YEAR 1970 - 71. 9. AFTER EXAMINING THE TOTALITY OF THE FACT S AND CIRCUMSTANCES OF THE CASE, INTER ALIA, WE DO NOT CONSIDER IT NECESSARY TO EXAMINE IN EXTENSO ALL THE PR ECEDENTS CITED . APART FROM CONSIDERING THE MERITS PERTAINING TO THE ACTIVITY CARRIED ON BY THE ASSESSEE IT IS WORTH TO NOTICE THAT THE CLAIM OF DEDUCTION IN THE CASE OF THE ASSESSEE HAD A CHEQUERED PAST. AS NOTICED ABOVE IN THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 QUEST IONS HAVE BEEN RAISED ABOUT THE LEGALITY OF THE CLAIM BUT LATER ON THE REVENUE DEPARTMENT HAD DROPPED ALL THOSE PROCEEDINGS. THEREFORE, UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONSIDER IT PROPER TO ACCEPT THE CLAIM OF THE ASSESS EE BY REVERSING THE FINDINGS OF THE REVENUE AUTHORITIES. AS A RESULT, GROUNDS RAISED ARE HEREBY ALLOWED. 16 ITA NO. 193/NAG/2013 . 10 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MARCH, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 31 ST MARCH, 2016. COPY FORWARDED TO : 1. M/S SHAH NANJI NAGSI EXPORTS P. LTD., ANAJ BAZAR, ITWARI, NAGPUR. 2. A.C.I.T., CIRCLE - 3 . NAGPUR. 3. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 4. CIT(APPEALS) - , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.