ITO 19(3)(4), MUMBAI V. SHANKAR K. BHANAGE, MUMBAI

ITA 3217/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8917 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 29-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N INAMDAR
• Section: 80IB; 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NOS. 3216 & 3217/MUM/2010 ASSESSMENT YEARS- 2005-06 & 2006-07 THE ITO-19(3)(4), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012 VS. SHRI SHANKAR K. BHANAGE, 6, BELIEVUE APARTMENTS, 1/5, DR. AMBEDKAR ROAD, BANDRA (W), MUMBAI-400 050 PAN-AAIPB 8595P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MOHIT JAIN RESPONDENT BY: SHRI S.N. INAMDAR DATE OF HEARING :29.08.2012 DATE OF PRONOUNCEMENT: 05.09.2012 O R D E R PER N.K. BILLAIYA, AM: IN BOTH THESE APPEALS THE REVENUE HAS CHALLENGED TH E CORRECTNESS OF THE ORDERS OF THE LD. CIT(A)-30 MUMBAI DT.5.2.2010 PERTAINING TO ASSESSMENT YEARS 2005-06 & 2006-07. IN THESE APPEALS, ASSESSEE HAS TAKEN COMMON GROUND EXCEPT AMOUNT OF DISALLOWANCE OF EXPENSES VA RIES. THEREFORE, WE HEARD THESE APPEALS TOGETHER AND DISPOSE OFF THE SA ME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO. 3216/M/2010- A.Y. 2005-06 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) OUGHT NOT TO HAVE ALLOWED THE CLAIM OF THE ASSESSEE U/S. 80IB (11 A) OF THE ACT AMOUNTING TO RS.64,00,624/-. ITA NO. 3216 & 17/M/10 2 3. THE FACTS GIVING RISE TO THIS DISPUTE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. SHREE SIDDHIVINAY AK ENTERPRISES FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. FOR THE YEAR UNDE R CONSIDERATION, THE ASSESSEE RETURNED INCOME OF RS. 4,43,710/-. THE AS SESSEE CLAIMED DEDUCTION U/S. 801B(11A) OF THE ACT TO THE TUNE OF RS. 64,00, 624/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER SOUGHT CLARIFICATION FROM THE ASSESSEE TO ESTABLISH HIS ELIGIBILITY FOR THE CLAIM OF DEDUCTION U/S. 80IB(11A) OF THE ACT. IN RESPONSE TO WHICH, THE ASSESSEE VIDE HIS LETTER DT. 28.5.2007 SUBMITTED THAT M/S. S IDDHIVINAYAK ENTERPRISES IS DERIVING PROFIT FROM INTEGRATED BUSINESS OF HANDLIN G, STORAGE AND TRANSPORTATION OF FOODGRAINS. IT WAS FURTHER SUBMI TTED THAT THE ASSESSEE HAS BEEN APPOINTED AS A CONTRACTOR FOR HANDLING OF FOOD GRAINS AT TURBHE/KALYAN/BHIVANDI GOODS SHED AND STORAGE OF FO ODGRAINS AT BHIVANDI DEPOT AND TRANSPORTATION OF I.E. FOODGRAINS FROM A LL THE ABOVE GOODS SHED TO BHIVANDI DEPOT AND VICE VERSA. TO SUBSTANTIATE HIS CLAIM, THE ASSESSEE SUBMITTED A LETTER FROM THE FOOD CORPORATION OF INDI A IN WHICH M/S. FCI HAS MENTIONED THAT THE ASSESSEE IS APPOINTED AS H&T CON TRACTOR FOR HANDLING OF FOODGRAINS AT TURBHE/KALYAN/BHIVANDI GOODS SHED AND STORAGE AT BHIVANDI DEPOT AND TRANSPORTATION OF STOCK FROM ALL THE ABOV E GOODS SHED FROM BHIVANDI DEPOT AND VICE VERSA. THE AO GAVE A THOUGH TFUL CONSIDERATION TO THE NATURE OF BUSINESS OF THE ASSESSEE AND ALSO TO THE LETTER ISSUED BY GENERAL MANAGER, FCI AND OPINED THAT THE ASSESSEE HAS TO P ERFORM THE DUTIES THAT OF HANDLING AND TRANSPORTATION OF FOODGRAINS AND STORA GE AT BHIWANDI DEPOT. THEREAFTER, THE AO ISSUED NOTICE U/S. 133(6) OF THE ACT TO THE GENERAL MANAGER, FCI CALLING FURTHER INFORMATION IN RELATION TO THE NATURE OF WORK DONE BY THE ASSESSEE IN RESPONSE TO WHICH G.M. SUBM ITTED COPY OF THE TENDER ISSUED BY THE FCI BEFORE AWARDING CONTRACT. 5. AFTER CONSIDERING THE DOCUMENTS RECEIVED FROM M/ S. FCI, THE AO OBSERVED THAT THE TENDER INVITED BY M/S. FCI IS FOR APPOINTING HANDING AND TRANSPORT CONTRACTOR AND THE ACTIVITIES TO BE CARRI ED OUT BY THE CONTRACTOR ARE IN THE NATURE OF HANDLING AND TRANSPORTATION. THER E IS NO MENTION OF ANY ITA NO. 3216 & 17/M/10 3 STORAGE WORK/ACTIVITY TO BE PERFORMED BY THE CONTRA CTOR. THE AO FURTHER OBSERVED THAT THE ASSESSEE DID NOT HAVE ANY STORAGE OF HIS OWN AND NO STORAGE WAS TAKEN BY THE ASSESSEE ON RENT. THEREFO RE, THE ASSESSEE DOES NOT FULFILL ALL THE CONDITIONS AS MENTIONED U/S. 80IB(1 1A) OF THE ACT. TO EXAMINE THE CLAIM OF THE ASSESSEE, THE AO ISSUED SUMMONS TO THE DY. GENERAL MANAGER (GENERAL) OF FCI WHOSE STATEMENT WAS RECORDE D ON OATH U/S. 131 OF THE I.T. ACT ON 21.8.2007. STATEMENT OF SHRI SUGRIV SABLE WAS RECORDED. ON A SPECIFIC QUESTION RELATING TO THE OWNER OF THE ST ORAGE SPACE/GODOWNS, THE DEPONENT REPLIED THAT THE STORAGE PLACE/GODOWNS ARE OWNED BY M/S. FCI WHEREVER THE STORAGE SPACE/GODOWNS ARE NOT OWNED BY M/S. FCI, THE SAME ARE TAKEN ON RENT. 6. NEXT QUESTION RELATED TO THE PREPARATION RELATIN G TO THE STACKING PLAN FOR STORAGE OF FOOD GRAINS TO WHICH THE DEPONENT RE PLIED THAT THE CONCEPT OF FCI REGARDING STORAGE OF FOOD GRAIN IS MAXIMUM UTILI ZATION OF SPACE. FOR THIS PURPOSE, THE STACKING PLAN IS PREPARED BY MANAGER D EPOT IN CONSULTATION WITH THE LABOURERS OF THE H&T CONTRACTOR. THE AO FURTHE R ASKED HOW THE STORAGE WAS DONE BY THE ASSESSEE WHEN ASSESSEE WAS SPECIFIC ALLY APPOINTED AS H&T CONTRACTOR TO WHICH THE DEPONENT REPLIED THAT THE E NTIRE STOCK OF FOOD GRAINS IS TO BE HANDLED BY THE CONTRACTOR. FROM THE TIME T HE FOOD GRAINS ARRIVES IN THE DEPOT AND THE TIME TILL THEY ARE LIQUIDATED, TH E SAME ARE HANDLED BY THE LABOURERS OF THE CONTRACTOR. THE PROCESS OF PRESER VING THE FOOD GRAINS INVOLVES BRUSHING OF THE BAGS, PUTTING THE ALUMINIU M PHOSPHATE TABLETS, COVERING THE BAGS WITH POLYTHENE, FUMIGATION OF THE FOOD GRAINS, PREPARATION OF SAND SNAKES ETC. ALL THESE ACTIVITIES ARE CARRI ED OUT BY THE LABOURERS OF THE CONTRACTOR AS PER THE ADVICE OF THE QC STAFF. AN O PPORTUNITY TO CROSS EXAMINE SHRI SUGRIV SABLE WAS ALSO GIVEN TO THE ASSESSEE. ON CROSS EXAMINATION, THE CROSS EXAMINER ASKED WHETHER THE SPACE HAVE BEEN GI VEN AS PER TENDER CONTRACT FOR STORAGE OF 10,000 M.T. OF FOOD GRAINS BY FCI TO THE ASSESSEE TO WHICH SHRI SUGRIV SABLE REPLIED THE STORAGE AREA OF 10,000 M.T. IS THE AREA AVAILABLE IN THE GODOWN OF FCI FOR THE PURPOSE OF ST ORAGE OF FOOD GRAINS. THE H&T CONTRACTOR IS ALLOWED TO USE THESE SPACES FOR S TORAGE PURPOSES. ON RE- ITA NO. 3216 & 17/M/10 4 EXAMINATION, THE AO SOUGHT CLARIFICATION RELATING T O THE OWNERSHIP OF THE SPACE FOR STORING 10,000 M.T. OF FOOD GRAINS. THE DEPONENT REPLIED THAT THE SPACE BELONGS TO FCI. THE AO FURTHER QUESTIONED TH E DEPONENT TO VERIFY WHEN THE STORAGE SPACE BELONG TO FCI AND THE CUSTODY OF FOOD GRAINS ARE ALSO WITH THE DEPOT MANAGER OF FCI THEN HOW COMES STORAG E COULD BE DONE BY THE H&T CONTRACTOR, TO WHICH THE DEPONENT REPLIED SINCE THE ENTIRE STOCK OF FOOD GRAINS IS TO BE HANDLED BY THE CONTRACTOR FROM THE TIME THE FOOD GRAINS EMPHASIZES IN THE DEPOT AND THE TIME TILL THEY ARE LIQUIDATED THEREFORE IT WAS STATED THAT THE H&T CONTRACTOR ARE INVOLVED IN THE PROCESS OF STORAGE. 7. THE AO AFTER GIVING THOUGHTFUL CONSIDERATION TO THE STATEMENT OF SHRI SUGRIV SABLE AND CONSIDERING THE FACTS IN TOTALITY CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT FULFILLED ALL THE CONDITIONS S O AS TO MAKE HIM ELIGIBLE FOR DEDUCTION U/S. 80IB(11A) OF THE ACT AND HELD THAT T HE ASSESSEE IS NOT ENGAGED IN THE INTEGRATED BUSINESS OF TRANSPORTATIO N, HANDLING AND STORAGE OF FOOD GRAINS AND THEREFORE THE ASSESSEE IS NOT ELIGI BLE FOR DEDUCTION U/S. 80IB(11A) OF THE ACT AND ACCORDINGLY REJECTED THE C LAIM OF THE ASSESSEE. 8. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A) AND REITERATED HIS STAND THAT HE IS DOING THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS AND THEREFORE IT IS E LIGIBLE FOR DEDUCTION U/S. 80IB (11A) OF THE ACT. 9. THE LD. CIT(A) GAVE A THOUGHTFUL CONSIDERATION T O THE STATEMENT OF SHRI SUGRIV SABLE RECORDED BY THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS AND CAME TO THE CONCLUSION THAT SHRI SU GRIV SABLE WAS VERY MUCH CATEGORICAL IN HIS STATEMENT THAT THE ASSESSEE IS DOING THE STORAGE ACTIVITY ALSO. DURING THE COURSE OF APPELLATE PROC EEDINGS, THE ASSESSEE SUBMITTED CERTIFICATE FROM FCI DT. 7.7.2008 SIGNED BY AGM CONTRACT WITH WHICH CERTIFICATE READ AS UNDER: TO WHOM IT MAY CONCERN : THIS IS TO CERTIFY THAT M/S. SHREE SIDDHIVINAYAK EN TERPRISES IS DOING THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORT ITA NO. 3216 & 17/M/10 5 CONTRACT OF FOOD GRAINS FOR FOOD CORPORATION OF INDI A SINCE 12.12.2003 TO TILL TODAY. 10. AFTER CONSIDERING THE SUBMISSIONS PUT FORTH BY THE ASSESSEE, THE LD. CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAS BEEN AWARDED CONTRACT BY FCI FOR UNDERTAKING INTEGRATED BUSINESS OF HANDL ING, TRANSPORTATION AND STORAGE OF FOOD GRAINS. THE ASSESSEE IS NOT MERELY STACKING FOOD GRAINS IN THE GODOWNS OF FCI BUT ALSO RESPONSIBLE FOR PROTECTI ON OF STOCK FROM PESTS, RODENTS AND SNAKES BY USE OF FUMIGATION, PESTICIDE PHOSNAMUM TABLETS ETC. THE LD. CIT(A) FURTHER RELIED UPON THE CERTIFICATE GIVEN BY FCI CERTIFIED THAT THE ASSESSEE IS ENGAGED IN HANDLING TRANSPORTATION AND STORAGE OF FOODGRAINS AND FINALLY THE LD. CIT(A) OPINED THAT IN HIS CONSI DERED VIEW, THE ASSESSEE IS CARRYING ON THE STORAGE ACTIVITY ON BEHALF OF THE FCI AND AS SUCH IS ENGAGED IN THE INTEGRATED BUSINESS OF HANDLING STORAGE AND TRANSPORTATION OF FOOD GRAINS. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR DE DUCTION U/S. 80IB(11A) OF THE ACT AND ACCORDINGLY DIRECTED THE AO TO ALLOW TH E CLAIM OF THE ASSESSEE MADE U/S. 80IB (11A) OF THE ACT. 11. THE REVENUE IS AGGRIEVED BY THIS FINDING OF TH E LD. CIT(A) AND IS IN APPEAL BEFORE US. 12. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SU PPORTED THE FINDINGS OF THE AO. PER CONTRA, THE LD. COUNSEL FOR THE ASS ESSEE REITERATED THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS MAKING HI M ELIGIBLE FOR CLAIM OF DEDUCTION. 13. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED THE ORDERS OF LOWER AUTHORITIES. THE WHOLE DISPUTE REVOLVES A ROUND THE CLAIM OF THE ASSESSEE U/S. 80IB(11A) OF THE ACT. LET US FIRST EX AMINE THE PROVISIONS OF SEC. 80IB(11A) OF THE ACT. SEC. 80IB (11A) THE AMOUNT OF DEDUCTION IN A CASE OF AN UNDERTAKING DERIVING PROFIT FROM THE BUSINESS OF PR OCESSING, 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 TRANSP ORTATION OF ITA NO. 3216 & 17/M/10 6 FOODGRAINS, SHALL BE HUNDRED PER CENT OF THE PROFIT S AND GAINS DERIVED FROM SUCH UNDERTAKING FOR FIVE ASSESSMENT YEARS BEG INNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER, TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PR OFITS 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 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 MA RINE OR DAIRY PRODUCTS IF IT BEGINS TO OPERATE SUCH BUSINESS BEFO RE THE 1ST DAY OF APRIL, 2009.] 14. A PLAIN READING OF THE AFOREMENTIONED PROVISION S SHOW THAT THE DEDUCTION IS AVAILABLE TO AN UNDERTAKING DERIVING P ROFIT FROM THREE BUSINESS ACTIVITIES. WE ARE NOT CONCERNED WITH THE FIRST TW O BUSINESS ACTIVITIES. WE ARE CONCERNED WITH THE THIRD BUSINESS ACTIVITY. FO R OUR CONVENIENCE, LET US REFRAME THE PROVISION WHICH IS AS UNDER: THE AMOUNT OF DEDUCTION IN A CASE OF AN UNDERTAKIN G DERIVING PROFIT FROM THE INTEGRATED BUSINESS OF HANDLING, STORAGE A ND TRANSPORTATION OF FOOD GRAINS SHALL BE .. THREE CONDITIONS HAVE TO BE FULFILLED AS IT APPEAR S FROM A PLAIN READING OF THE AFORESAID PROVISION. FIRST HANDLING, SECOND STORAGE AND THIRD TRANSPORTATION OF FOOD GRAINS. ALL THE THREE CONDI TIONS SHOULD BE INTEGRATED WITH EACH OTHER. THE DISPUTE IN THE PRESENT CASE R ELATES TO THE SECOND CONDITION I.E. STORAGE. LET US NOW SEE HOW IMPORTAN T IS THIS CONDITION. THE MEMORANDUM APPENDED TO THE FINANCIAL BILL BY WHICH SEC. 80IB(11A) WAS AMENDED SHOW THE LEGISLATIVE INTENT IS AS UNDER: TAX HOLIDAY FOR UNDERTAKINGS ENGAGED IN THE INTEGRA TED HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS . UNDER THE EXISTING PROVISIONS OF SEC. 80-IB OF THE INCOME-TAX ACT, A DEDUCTION IS ALLOWED, IN COMPUTING THE TAXAB LE INCOME, IN RESPECT OF PROFITS DERIVED FROM A NEW INDUSTRIAL UN DERTAKING OR A SHIP OR THE BUSINESS OF A HOTEL. TO ADDRESS THE CO UNTRYS BASIC CONCERNS RELATING TO ENHANCED FOOD SECURITY AND AGR ICULTURAL ITA NO. 3216 & 17/M/10 7 DEVELOPMENT, UPGRADATION AND MODERNIZATION OF INFRA STRUCTURE FOR STORAGE, HANDLING AND TRANSPORTATION OF FOOD GR AINS IS A CENTRAL CONCERN IN WHICH INTRODUCTION OF MODERN TEC HNOLOGY WOULD BRING GREATER EFFICIENCY IN THE GRAIN MANAGEM ENT SYSTEM AND MINIMIZE POST HARVEST FOOD GRAIN LOSSES. THE BILL PROPOSES TO ENCOURAGE BUILDING OF STORAGE CAPACITIES, BY PROVIDING THAT ANY UNDERTAKING ENGAG ED IN INTEGRATED BULK HANDLING, STORAGE AND TRANSPORTATIO N WOULD BE ALLOWED HUNDRED PER CENT DEDUCTION FOR THE FIRST FI VE YEARS AND THIRTY PER CENT DEDUCTION FOR THE NEXT FIVE YEARS. POLICY AND ITS IMPLEMENTATION :- THE ENTIRE SCHEME COVERED BY SEC. 80-IB(11A) RELATES TO SERVICES IN CONNECTION WI TH PRESERVATION OF FOOD GRAINS PROMOTED BY THE GOVERNM ENT OF INDIA UNDER TFC-14/99-VOLUME III, DT. 4 TH JULY, 2000 FOLLOWING THE NATIONAL POLICY IN RESPECT OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS. IT RELATES TO BOTH C ONSTRUCTION CONTRACT AND THE PRESERVATION CONTRACTS ARISING OUT OF A SCHEME SPONSORED BY THE GOVERNMENT OF INDIA ADMINISTERED BY AN AGENCY OF THE STATE GOVERNMENT. IT IS PART OF THE CENTRAL SCHEME UNDER THE IMPLEMENTATION OF FOOD CORPORATION OF INDIA IN PURSUANCE OF THE NATIONAL POLICY FOR HANDLING, S TORAGE AND TRANSPORTATION OF FOOD GRAINS. SECTION 80-IB(11A) TARGETS FOR RELIEF FOR THE BUSINE SS OF PROCESSING PRESERVATION AND PACKAGING OF FRUITS AND VEGETABLES AS NEWLY ADDED FROM A.Y. 2005-06, WHILE THE RELIEF HAS BEEN AVAILABLE W.E.F. 1.4.2002 FOR ALL UNDERTAKINGS, WHI CH HAVE BEGUN TO OPERATE ON OR AFTER 1 ST APRIL, 2001 FOR ANY INCOME FROM THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANS PORTATION OF FOOD GRAINS USING THE VERY LANGUAGE OF THE POLICY. BOTH THE CONSTRUCTION AS WELL AS THE PRESERVATION C ONTRACT ARE SUBJECT TO AN AGREEMENT WITH CENTRAL OR STATE WAREH OUSING CORPORATION IN PURSUANCE OF THE POLICY AND THE OTHE R PAPERS ISSUED FROM TIME TO TIME BY THE GOVERNMENT. ITA NO. 3216 & 17/M/10 8 15. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS NEITHE R THE OWNER NOR THE LESSEE OF THE GODOWN. THE OWNERSHIP VESTS WITH THE FCI. THE LD. COUNSEL SUBMITTED THAT EVEN WHEN THE ASSESSEE WAS CARRYING FOOD GRAINS IN HIS TRUCK, HE WAS IN THE PROCESS OF STORAGE OF FOOD GRAINS. T O SUBSTANTIATE, THE LD. COUNSEL RELIED UPON THE DECISION OF THE HONBLE HIG H COURT OF ORISSA IN CRIMINAL REVN. NO. 43 OF 1951 DECIDED ON 15.01.1953 IN THE CASE OF BALABHADRA RAJA GURU MOHAPATRA VS THE STATE AIR 1954 ORISSA 95 AND SUBMITTED THAT IN THIS CASE, THE HONBLE HIGH COURT OF ORISSA HAS HELD THAT CARRYING OF GOODS IN A TRUCK AMOUNTS TO STORAGE. W E HAVE CAREFULLY GONE THROUGH THE CITED CASE. WE FIND THAT IN THAT CASE THE ACCUSED WAS CARRYING 50 BAGS OR 100 MAUNDS RAGI IN A TRUCK WHICH ACCORDI NG TO THE STATE WAS IN CONTRAVENTION TO THE ORISSA FOOD GRAINS CONTROL ORD ER, 1947 WHEREIN IT WAS PROVIDED THAT NO PERSON SHALL ENGAGE IN ANY UNDERT AKING WHICH INVOLVES THE PURCHASE, SALE OR STORAGE FOR SALE, IN WHOLESALE QU ANTITIES OF ANY FOOD GRAINS EXCEPT UNDER AND IN ACCORDANCE WITH A LICENCE ISSUE D IN THAT BEHALF BY THE DIRECTOR OF FOOD SUPPLIES. EXPLANATION (2) OF THE SAID ORDER PROVIDED THAT FOR THE PURPOSE OF THIS CLAUSE ANY PERSON WHO STORES MU NG AND BIRI OR THEIR PRODUCTS IN QUANTITIES EXCEEDING 20 STANDARD MAUNDS AND OTHER FOOD GRAINS IN QUANTITIES EXCEEDING 50 STANDARD MAUNDS, SHALL UNLE SS THE CONTRARY IS PROVED BE DEEMED TO STORE THE FOOD GRAINS FOR PURPOSES OF SALE. IT WAS HELD THAT THE TRUCK BELONGS TO THE ACCUSED AND THEREFORE 100 MAUN DS OF RAGI FOUND IN THE TRUCK BELONGED TO THE ACCUSED. THE QUESTION BEFORE THE HONBLE COURT WAS WHETHER POSSESSION OF THE GOODS WHILE IN TRANSIT IN A TRUCK CAN BE DESCRIBED AS STORAGE WITHIN THE MEANING OF THE CONTROL ORDE R. ON THIS QUESTION, THE HONBLE HIGH COURT HAS HELD THAT THE PETITIONER WAS ENGAGED IN AN UNDERTAKING WHICH INVOLVED THE STORAGE FOR SALE OF MORE THAN 50 MAUNDS AND ACCORDINGLY HAD CONTRAVENED THE PROVISIONS OF CLAU SE III(1). WE DO NOT FIND ANY SUBSTANCE IN THE SUBMISSION OF THE LD. COUNSEL TO RELY UPON THE MEANING GIVEN TO STORAGE OF THIS DECISION OF THE HONBLE HIGH COURT OF ORISSA BECAUSE IN THAT CASE, THE ACCUSED WAS FOUND TO CARRY GOODS WHICH WERE PROHIBITED BY THE LAW AND ON THAT NOTE, THE COURT HAS HELD THAT E VEN IF A PERSON IS FOUND ITA NO. 3216 & 17/M/10 9 CARRYING GOODS WILL BE TAKEN AS INVOLVED IN THE STO RAGE FOR SALE. HOWEVER, THE POINT WHICH IS TO BE NOTED HERE IS THAT THE COURT H AS EMPHASIZED ON STORAGE IN RELATION TO SALE. ASSUMING YET DENYING THAT B Y CARRYING GOODS, THE ASSESSEE WAS IN THE PROCESS OF STORAGE THEN SUCH PR OCESS SHOULD CULMINATE INTO SALE WHICH IS MISSING ON THE FACTS OF THE INST ANT CASE. THE ASSESSEE FURTHER RELIED UPON THE DECISION OF THE HONBLE GUJ ARAT HIGH COURT IN THE CASE OF CIT VS AHMEDABAD MASKATI CLOTH DEALERS CO-OPERAT IVE WAREHOUSES SOCIETY LTD. 162 ITR 142 WHEREIN THE HONBLE GUJAR AT HIGH COURT HAD AN OCCASION TO CONSIDER WORDS GODOWNS OR WAREHOUSES AND THEIR DICTIONARY MEANING. IN THAT CASE, THE ASSESSEE CLAIMED EXEMPT ION U/S. 80P(2)(E) ON THE PRETEXT THAT RENTAL INCOME RECEIVED BY IT ON LETTIN G OUT OF SHOP AMOUNTED TO RENTAL INCOME RECEIVED FROM GODOWNS OR WAREHOUSES. AFTER CONSIDERING IN DETAIL, THE MEANING OF THE WORDS GODOWNS AND WAREH OUSES AND THE LEGISLATIVE INTENT FOR ALLOWING DEDUCTION U/S. 80P( 2)(E) OF THE ACT, THE HONBLE HIGH COURT HELD THAT ASSESSEE SOCIETY MUST SHOW THA T IT HAS DERIVED INCOME FROM THE LETTING OF GODOWNS OR WAREHOUSES WHICH IT HAS FAILED BECAUSE IT HAS RECEIVED RENTAL INCOME FROM THE LETTING OF SHOPS US ED FOR BUSINESS IN CLOTH WHICH CANNOT BE SAID TO BE INCOME DERIVED FROM LETT ING OF GODOWNS AND WAREHOUSES. IN OUR HUMBLE OPINION THIS DECISION ALS O DOES NOT HELP THE ASSESSEE ON THE FACTS OF THIS CASE. 16. TAKING A LEAF OUT OF THE ABOVE SAID DECISION, W E FIND THAT THE HONBLE GUJARAT HIGH COURT HAS REFERRED TO THE OBSERVATIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CGT VS N.S. GETTI CHETTIAR (1 971) 82 ITR 599 AT PAGES 605-606 OF THE SAID JUDGEMENT, THE HONBLE SUPREME COURT HAS OBSERVED AS UNDER: WORDS IN THE SECTION OF A STATUTE ARE NOT TO BE IN TERPRETED BY HAVING THOSE WORDS IN ONE HAND AND THE DICTIONARY I N THE OTHER. IN SPELLING OUT THE MEANING OF THE WORDS IN A SECTIO N, ONE MUST TAKE INTO CONSIDERATION THE SETTING IN WHICH THOSE TERMS ARE USED AND THE PURPOSES THAT THEY ARE INTENDED TO SE RVE. ITA NO. 3216 & 17/M/10 10 IN RESPONSE TO WHICH THE HONBLE GUJARAT HIGH COURT OBSERVED THAT THE DICTIONARY MEANING OF A WORD OR EXPRESSION USED IN A STATUTE IS RELEVANT BUT NOT SACROSANCT AND THE COURT WILL NOT HESITATE TO D EPART FROM THE DICTIONARY MEANING IF THE CONTEXT AND THE SETTING IN WHICH T HE WORD OR EXPRESSION IS USED SO SUGGESTS OR DEMANDS. 17. LITERAL INTERPRETATION OF WORDS INTEGRATED BU SINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS WILL NOT LEAD TO ANY ABSURDITY OR PRODUCE ANY MANIFESTLY UNJUST RESULT. THE LEGISLAT IVE INTENT IS NOT TO ENCOURAGE TRANSPORTATION OR HANDLING OF FOOD GRAINS BUT THE LEGISLATIVE INTENT IS TO ENCOURAGE CONSTRUCTION OF GODOWNS AND WAREHOU SES WITH A VIEW TO PROVIDING STORAGE OF FOOD GRAINS. IF WE CONSIDER THE ENTIRE COMBAT OF THE SCHEME RELATING TO THE TAX HOLIDAY PROVIDED BY THE LEGISLATURE, WE FIND THAT THE DEDUCTIONS ARE AVAILABLE UNDER VARIOUS PROVISIO NS WHEN THE ASSESSEE HAS CONTRIBUTED SOMETHING TOWARDS THE INFRASTRUCTURE DE VELOPMENT OF THE COUNTRY. IN THE INSTANT CASE, WE DO NOT FIND ANY CONTRIBUTION TOWARDS THE INFRASTRUCTURE BY THE ASSESSEE. THE ASSESSEE IS SIMPLY HANDLING A ND TRANSPORTING THE FOOD GRAINS AND STORING AT THE GODOWNS OF THE FCI WHICH MEANS THAT THE ASSESSEE IS USING THE EXISTING INFRASTRUCTURE OF THE STATE W HEREAS THE MAIN PURPOSE OF BRINGING THIS PROVISION IS CONSTRUCTION OF GODOWNS SPECIFICALLY FOR STOCKING FOOD GRAINS FOR GREATER EFFICIENCY IN THE GRAIN MANAGEME NT SYSTEM AND MINIMIZE POST HARVEST FOODGRAIN LOSSES. THE ASSESSEE HAS NO T DONE ANYTHING TOWARDS THESE FACILITIES. IF WE LOOK AT TENDER BY WHICH THE ASSESSEE HAS BEEN AWARDED THIS CONTRACT, THE TENDER IS ISSUED WITH THE FOLLO WING HEAD NOTE: INVITATION TO TENDER AND INSTRUCTIONS TO THE TENDE RERS FOR APPOINTMENT OF HANDLING AND TRANSPORT CONTRACTOR AT FSD. BHUIWANDI WITH HANDLING OF FOODGRAINS AT TURBHE GOO DS SHED/BHIWANDI/KALYAN GOODS SHED AND TRANSPORTATION FROM TURBHE BHIWANDI GOODS SHED AND KALYAN GOODS SHED TO BHIWANDI DEPOT AND VICE VERSA. EVEN THE TENDER PARTICIPATED BY THE ASSESSEE SHOW T HAT THE ASSESSEE HAS BEEN AWARDED THE CONTRACT FOR HANDLING AND TRAN SPORTATION OF FOOD GRAINS TO THE PLACES MENTIONED THEREIN. THE CONTENTION OF THE ASSESSEE THAT SEC. ITA NO. 3216 & 17/M/10 11 80IB BEING A BENEVOLENT PROVISION LIBERAL CONSTRUCT ION SHOULD BE APPLIED CANNOT BE ACCEPTED BECAUSE BENEFICIAL INTERPRETATIO N APPLIES ONLY WHERE TWO VIEWS ARE REASONABLY POSSIBLE WHEREAS IN THE INSTAN T CASE, WE DO NOT FIND ANY OTHER POSSIBLE VIEW ON THE FACTS OF THE MATTER WHER E THE LAW IS CLEAR AND UNAMBIGUOUS, WE CANNOT ACT CONTRARY TO IT WITH A VI EW TO GIVE BENEFIT TO THE ASSESSEE. AFTER CONSIDERING THE ENTIRE FACTS IN TOT ALITY ALONGWITH THE LEGISLATIVE INTENT, IN OUR CONSIDERATE VIEW, THE ASSESSEE HAS N OT FULFILLED THE CONDITIONS PRECEDENT FOR MAKING HIM ELIGIBLE FOR DEDUCTION U/S . 80IB(11A) OF THE ACT. WE FIND THAT THE LD. CIT(A) HAS BEEN CARRIED AWAY W ITH THE CERTIFICATE ISSUED BY DGM OF FCI. THE DGM IN HIS WISDOM MAY HAVE ISSU ED THE CERTIFICATE WITHOUT CONSIDERING THE LEGISLATIVE INTENT OF THE S CHEME, THEREFORE WE CANNOT GIVE MUCH WEIGHTAGE TO SUCH CERTIFICATE. THE LD. C IT(A) HAS ERRED IN ALLOWING DEDUCTION TO THE ASSESSEE WHICH HE IS NOT ELIGIBLE. ACCORDINGLY, THE FINDING OF THE LD. CIT(A) IS REVERSED. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. ITA NO. 3217/M/2010 A.Y. 2006-07 18. THE ISSUE INVOLVED IS SAME THOUGH QUANTUM MAY D IFFER. ON SIMILAR LINES, SIMILAR REASONS, MENTIONED HEREINABOVE, GROU NDS OF APPEAL TAKEN BY THE REVENUE IN ITA NO. 3217/M/2010 FOR ASSESSMENT YEAR 2006-07 ARE ALSO ALLOWED. 19. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE ALLOWED. ORDER PRONOUNCED ON THIS 5 TH DAY OF SEPTEMBER, 2012 SD/- SD/- (D.K. AGARWAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 5 TH SEPTEMBER, 2012 RJ ITA NO. 3216 & 17/M/10 12 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR J BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI FIT FOR PUBLICATION JM AM