ITO, Agra V. M/s Prabhat Sheet Grah, Agra

ITA 459/AGR/2009

• Counselvise Citation: 45920314 RSA 2009
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K VERMA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCHA, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NOS.459 & 460/AGR/2009 ASSESSMENT YEARS: 2006-07 & 2003-04 INCOME TAX OFFICER 4(3), VS. M/S PRABHAT SHEET GRAH, AGRA. BAGAL GHUSA, HATHRAS ROAD, AGRA. (PAN: AAEFP 7910 J). C.O. NOS.16 & 15/AGR/2010 (IN ITA NOS.459 & 460/AGR/2009 ASSESSMENT YEARS: 2006-07 & 2003-04 M/S PRABHAT SHEET GRAH, VS. INCOME TAX OFFICER 4(3), 25/36, PRABHAT HOTEL, AGRA. CHAKKIPAT, CHIPITOLA, AGRA. (PAN: AAEFP 7910 J). (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI S.K. VERMA, JR. D.R. ASSESSEE BY : SHRI NAVIN GARG, ADVOCATE ITA NOS.381/AGR/2009, 425 & 459/AGR/2010 ASSESSMENT YEARS: 2005-06, 2006-07 & 2004-05 INCOME TAX OFFICER 4(1)/4(4), VS. M/S SHANTI VR AT COLD STORAGE AGRA. (P) LTD., C-65, FOUNDRY NAGAR, AGRA. (PAN: AAGCS 7853 J). (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.K. VERMA, JR. D.R. ASSESSEE BY : SHRI ANURAG SINHA, ADVOCATE 2 ITA NO.466/AGR/2009 ASSESSMENT YEAR: 2004-05 INCOME TAX OFFICER 4(2), VS. M/S MAA GAYATRI CO LD STORAGE, AGRA. VILLAGE KUBERPUR, AGRA FIROZABAD ROAD, AGRA. (PAN: AAHFM 0912 A). (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.K. VERMA, JR. D.R. ASSESSEE BY : SHRI TUSHAR BANSAL, ADVOCATE DATE OF HEARING : 17.08.2011 DATE OF PRONOUNCEMENT : 19.08.2011 ORDER PER BENCH: THE AFORESAID APPEALS OF THE REVENUE IN THREE CASES AND CROSS OBJECTIONS OF THE ASSESSEE IN ONE CASE WERE ARGUED IN CONSOLIDATE D MANNER, AS A COMMON GROUND REGARDING DEDUCTION UNDER SECTION 80IB(11) IS INVOL VED. THEREFORE, WE THINK IT CONVENIENT TO PASS A CONSOLIDATED ORDER. IN DOING SO, WE TAKE UP THE CASE OF M/S PRABHAT SHEET GRAH, BAGAL GHUSA, HATHRAS ROAD, AGRA , IN THE FIRST INSTANCE. THIS CASE INVOLVES THE APPEALS OF THE REVENUE FOR ASSESS MENT YEARS 2003-04 & 2006- 07; AND THE CROSS OBJECTIONS OF THE ASSESSEE FOR TH ESE YEARS. THE ONLY SUBSTANTIVE GROUND TAKEN BY THE REVENUE IN ITS APPEALS IS THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN ALLOWING DEDUCTION UNDER SECTION 80IB (11) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), IGNORING THE FACTS TH AT MERE PROVIDING OF REFRIGERATED STORAGE FACILITY, BEING SINGLE UNIT FOR POTATOES ON LY, CANNOT BE CONSTRUED AS THE 3 UNDERTAKING OF COLD CHAIN FACILITY. THE CROSS OB JECTIONS OF THE ASSESSEE ARE IN SUPPORT OF THE ORDER OF THE LD. CIT(A) AND IT IS ME NTIONED THAT SHE RIGHTLY ALLOWED THE DEDUCTION AFTER CONSIDERING FACTS OF THE CASE A ND THE LAW, AND THAT THE ISSUE STANDS COVERED BY THE DECISION OF I.T.A.T., AGRA BE NCH, AGRA. AS THE FACTS FOR BOTH THE YEARS ARE IDENTICAL, WE MAY BASE THIS ORDE R ON THE FACTS MENTIONED IN THE ORDERS OF THE LOWER AUTHORITIES FOR ASSESSMENT YEAR 2003-04. 2. THE LD. DEPARTMENTAL REPRESENTATIVE DREW OUR ATT ENTION TOWARDS THE FINDINGS OF THE ASSESSING OFFICER DATED 03.03.2006. THE FACTS ARE THAT THE ASSESSEE-FIRM IS RUNNING A COLD STORAGE. IT HAS REC EIVED A TOTAL SUM OF ` 1,77,19,763/- IN TERMS OF AGREEMENTS MADE ON 01.01. 2002 AND 01.01.2003. THE NET PROFIT HAS BEEN DECLARED AT ` 25,67,770/-. AFTER CLAIMING UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 2002-03, THE TOTAL INCOME HAS BEEN COMPUTED AT ` 21,33,808/-. THIS AMOUNT HAS BEEN CLAIMED AS DEDUC TIBLE UNDER SECTION 80IB(11) OF THE ACT. THE SUBMISSIONS OF THE ASSESSEE HAD BE EN THAT IT IS ENGAGED IN OPERATING A COLD CHAIN FACILITY FOR AGRICULTURAL PR ODUCE. SINCE ALL OTHER CONDITIONS MENTIONED IN THE AFORESAID PROVISION STOOD SATISFIE D, IT IS ENTITLED TO DEDUCTION OF THE WHOLE OF THE PROFITS UPTO ASSESSMENT YEAR 2006- 07 AND 25% OF THE PROFIT FOR ASSESSMENT YEARS 2007-08 TO 2011-12. IN THIS CONNE CTION, THE ASSESSING OFFICER EXAMINED THE PROVISIONS CONTAINED IN SUB-SECTIONS ( 3), (4), (5) AND (11) OF SECTION 4 80IB OF THE ACT. ON CONSIDERING THE FACTS AND THES E PROVISIONS, IT HAS BEEN HELD THAT THE PROVISION CONTAINED IN SUB-SECTION (11) IS APPLICABLE TO THE UNDERTAKING DERIVING PROFIT FROM BUSINESS OF SETTING UP AND OPE RATING A COLD CHAIN FACILITY FOR AGRICULTURAL PRODUCE, AND NOT TO THE UNDERTAKING DE RIVING PROFIT FROM THE BUSINESS OF OPERATING A COLD STORAGE. THE LEGISLATIVE INTEN T IS TO CREATE A CHAIN OF FACILITIES SO AS TO MINIMIZE THE POST-HARVEST WASTAGE OF AGRIC ULTURAL PRODUCE. A REFERENCE IS MADE TO THE MEMORANDUM EXPLAINING THE PROVISION IN THE FINANCE BILL, 1999, BY WHICH SUB-SECTION (11) WAS PROPOSED TO BE INTRODUCE D IN THE ACT, IN WHICH IT IS MENTIONED THAT THE COMPLEX FOOD CHAIN FROM THE PROD UCER TO THE CONSUMER INVOLVES VARIOUS INTERMEDIARIES FOR HANDLING AND PROCESSING. THE LOSS AND WASTAGE OF PERISHABLE AGRICULTURE PRODUCE, VEGETABLES AND SIMI LAR COMMODITIES CONTINUES TO BE HIGH. IN ORDER TO MINIMIZE SUCH LOSS AND TO ENSURE SMOOTH AND UNIFORM DISTRIBUTION OF AGRICULTURAL AND PROCESSED PRODUCTS , IT IS PROPOSED TO PROVIDE 100% TAX HOLIDAY FOR A PERIOD OF FIVE YEARS AND 25% (30% IN THE CASE OF COMPANIES) DEDUCTION FROM PROFITS DERIVED FROM OPERATING A COL D CHAIN FACILITY, WHICH STARTS OPERATING AFTER 01.04.1999, IS PROPOSED TO BE ALLOW ED FOR FURTHER PERIOD OF FIVE YEARS. IT IS FURTHER MENTIONED THAT THE WORDS USED THE COMPLEX FOOD CHAIN FROM THE PRODUCER TO THE CONSUMER SHOWS THE INTENTION O F THE LEGISLATURE FOR USING WORD COLD CHAIN FACILITY. THEREFORE, THE DEDUCTION WI LL BE ALLOWED TO THOSE UNDERTAKINGS WHICH CAME IN THE CHAIN FACILITY START ING FROM THE PRODUCER I.E. THE 5 AGRICULTURIST TO THE CONSUMER. MERE PROVIDING REFR IGERATION FACILITY DURING THE PERIOD OF STORAGE CANNOT BE SAID TO BE COLD CHAIN FACILITY. THEREFORE, THE DEDUCTION HAS BEEN DENIED AND THE TOTAL INCOME HAS BEEN COMPUTED AT ` 24,39,295/- 2.2 THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER REF ERRED TO THE EXPLANATORY NOTES ON THE PROVISION RELATING TO THE DIRECT TAXES IN RESPECT OF FINANCE ACT, 1999, ISSUED BY THE BOARD UNDER CIRCULAR NO.779 ON 14.09. 1999. IN PARAGRAPH NO 39.4-3, IT IS MENTIONED THAT THE TERM COLD CHAIN FACILITY HAS BEEN DEFINED TO MEAN A CHAIN OF FACILITIES FOR STORAGE AND TRANSPORTATION OF AGR ICULTURAL PRODUCE UNDER SCIENTIFICALLY CONTROLLED CONDITIONS INCLUDING REFR IGERATION AND OTHER FACILITIES NECESSARY FOR PRESERVATION OF SUCH PRODUCE. HE EMP HASIZED THAT THE WORDS USED ARE CHAIN FACILITIES FOR STORAGE AND TRANSPORTATIO N OF AGRICULTURAL PRODUCE AND IT HAS BEEN MENTIONED THAT SUCH A FACILITY INCLUDES RE FRIGERATION AND OTHER FACILITIES NECESSARY FOR PRESERVATION OF SUCH PRODUCE. IN THE LIGHT OF THIS CIRCULAR, WHICH IS IN THE NATURE OF CONTEMPORANEOUS EXPOSITION OF THE NEW LAW, IT IS ARGUED THAT THE COLD CHAIN FACILITY IS A WIDER CONCEPT THAN A COLD STORA GE PLANT, THE FORMER REQUIRING STORAGE AND TRANSPORTATION INCLUDING REFRIGERATION AND OTHER NECESSARY FACILITIES. THE ASSESSEE IS MERELY RUNNING A COLD STORAGE PLANT . HOWEVER, IT DOES NOT SATISFY THE CONDITIONS MENTIONED IN SUB-SECTION(3) FOR CLAI MING ANY DEDUCTION. IF ITS CASE 6 FAILS UNDER SUB-SECTION (3), IT CANNOT GO TO SUB-SE CTION(11) BECAUSE A COLD STORAGE PLANT AS A STAND-ALONE FACILITY DOES NOT CONSTITUTE A CHAIN OF FACILITIES. 3. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE GROUND REQUIRES HARMONIOUS INTERPRETATION OF SUB-SECTIONS(3), (11) & (14). SUB-SECTION (3) DEALS WITH DEDUCTION TO BE ALLOWED INTER ALIA FROM OPERAT ION OF A COLD STORAGE PLANT. SUB- SECTION (11) DEALS WITH THE DEDUCTION IN THE CASE O F AN UNDERTAKING WHICH HAS SET UP AND OPERATES A COLD CHAIN FACILITY FOR AGRICULTURAL PRODUCE. THIS SUB-SECTION CONTAINS A NON-OBSTANTE CLAUSE AS IT STARTS WITH TH E WORDS NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (II) OF SUB-SECTIONS ( 3), (4) & (5). THEREFORE THIS PROVISION OVERRIDES THE PROVISIONS CONTAINED IN SUB -SECTIONS (3), (4) & (5). THEREFORE, IF OTHER CONDITIONS OF THIS SUB-SECTION ARE SATISFIED, THE ASSESSEE WILL BE ENTITLED TO THE DEDUCTION NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION(3), EVEN IN A SITUATION WHERE THERE COULD BE SOME OVERL APPING IN THE CONTENTS OF THESE TWO PROVISIONS. FURTHER, CLAUSE(AA) OF SUB-SECTION (14) DEFINES COLD CHAIN FACILITY IN AN EXHAUSTING MANNER TO MEAN A CHAIN OF FACILITI ES FOR STORAGE OR TRANSPORTATION OF AGRICULTURAL PRODUCE UNDER SCIENTIFICALLY CONTRO LLED CONDITIONS INCLUDING REFRIGERATION AND OTHER FACILITIES, NECESSARY FOR T HE PRESERVATION OF SUCH PRODUCE. GREAT EMPHASIS HAS BEEN LAID DOWN ON THE CONJUNCTIO N OR USED BETWEEN THE WORDS STORAGE AND TRANSPORTATION TO EXPLAIN THA T CHAIN OF FACILITIES MAY BE FOR 7 STORAGE OR FOR TRANSPORTATION OR FOR BOTH, BUT IS A PPLICABLE EVEN IF IT IS FOR THE PURPOSE OF STORAGE. COMING TO THE WORDS IN A MANN ER USED IN SUB-SECTION (11), IT IS SUBMITTED THAT THESE WORDS RELATE TO THE PERIOD OF DEDUCTION AND NOT TO THE SETTING UP AND OPERATING OF COLD CHAIN FACILITY, AS SOUGHT TO BE INTERPRETED BY THE ASSESSING OFFICER. 3.1 IN ORDER TO SUPPORT HIS CASE, THE LD. COUNSEL R EFERRED TO THE DETAILS OF ACTIVITIES CARRIED ON BY THE ASSESSEE AND SUBMITTED TO THE ASSESSING OFFICER ALONG WITH ITS SUBMISSIONS DATED 14.11.2008. TO SUMMARIZ E THE NATURE OF FACILITIES, IT HAS MULTI-CHAMBER COLD STORAGE CAPABLE OF PRESERVING TH E AGRICULTURAL PRODUCE IN DIFFERENT REFRIGERATION CONDITIONS. IT HAS AMPLE P ARKING SPACE FOR MOVEMENT OF TRACTOR/TROLLEY CARRYING POTATOES. IT PROVIDES FAC ILITY OF PUTTING POTATOES FOR THE PROCESS OF PRESERVATION WITH THE LEAST GESTATION AN D TRANSITIONAL PERIOD THEREBY HELPING IN MINIMIZING THE LOSS IN QUALITY OF POTATO ES. IT HAS UNLOADING PLATFORMS AND VERANDAS WITH STAIRCASES WHICH CAN BE USED FOR EFFICIENT UNLOADING OF THE AGRICULTURAL PRODUCE. IT ALSO HAS SUFFICIENTLY COV ERED AND PROPERLY VENTILATED SPACE FOR COOLING AND DRYING POTATOES BEFORE STORING THEM IN THE CHAMBER OF COLD STORAGE. FACILITY ALSO EXISTS FOR SAMPLE TESTING/CHECKING TH E CONDITION OF POTATOES FROM TIME TO TIME AND STACKING THE POTATOES IN A MANNER SO AS TO ENSURE EFFICIENT CIRCULATION OF AIR FOR PRESERVATION. IT HAS FACILITY OF TWO AMMON IA REFRIGERATION COMPRESSORS AND 8 EVAPORATIVE CONDENSER STANDS WHICH ARE ADEQUATE FOR EFFICIENT PRESERVATION OF THE POTATOES. THE TEMPERATURE IN THE COLD STORAGE CAN BE CONTROLLED AS DESIRED AND THE TEMPERATURE CAN BE BROUGHT DOWN BETWEEN 1 DEGREE TO 3 DEGREE CENTIGRADE FOR EFFICIENT PRESERVATION OF POTATOES. THE PLANT HAS ALSO FACILITY OF BUNKER COOLING COILS FITTED WITH LOW SPEED, HIGH VOLUME NATURAL DR AFT COOLING ARRANGEMENT WITH A VIEW TO PRESERVE HUMIDITY AT A REQUIRED LEVEL. IT IS SUBMITTED THAT ALL THESE FACILITIES TAKEN TOGETHER CONSTITUTE A CHAIN OF FACILITIES FOR STORAGE OF POTATOES. 3.2 FURTHER, THE LD. COUNSEL FOR THE ASSESSEE REFER RED TO THE CERTIFICATE ISSUED BY SHRI Y.P. GUPTA, GOVERNMENT APPROVED VALUER, PLACED IN THE PAPER BOOK ON PAGE NO.14, IN WHICH IT IS MENTIONED THAT THE COLD STORA GE HAS TWO STORAGE CHAMBERS FOR BUNKER COIL COOLING SYSTEM WITH ADEQUATE AIR QUANTI TY, TWO AIR COMPRESSORS, ONE WILL ACT AS STAND-BY, EVAPORATIVE CONDENSER STANDS ADEQUATE TO STORE AND MAINTAIN THE STOCK AT DESIRED TEMPERATURE AND RELATIVE HUMID ITY. THE COLD STORAGE IS HAVING ADEQUATE POWER CONNECTION FROM U.P. POWER CORPORATI ON AND A STAND-BY DIESEL GENERATING SET OF ADEQUATE CAPACITY TO RUN THE PLAN T. THE COLD STORAGE AIR- CONDITIONING AND REFRIGERATION PLANT IS COMPLETE IN ALL RESPECTS AND WILL SCIENTIFICALLY STORE THE AGRICULTURAL PRODUCE. THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE, ON THE BASIS OF THIS CERTIFICATE, IS THAT THE COLD STORAGE IS RUN SCIENTIFICALLY FOR STORAGE OF AGRICULTURAL PRODUCE SO THAT WASTAGE CAN BE MINIMIZED. 9 3.3 THE LD. COUNSEL ALSO REFERRED TO THE CERTIFICAT E ISSUED BY DISTRICT HORTICULTURE OFFICER, AGRA, PLACED IN THE PAPER BOOK ON PAGE NO. 13 MENTIONING, INTER ALIA, THAT COLD STORAGE IS HAVING NECESSARY CHAIN OF FACILITIE S FOR STORAGE AND PRESERVATION OF AGRICULTURAL PRODUCE INCLUDING POTATOES UNDER SCIEN TIFICALLY CONTROLLED REFRIGERATED CONDITIONS. ON THE BASIS OF THIS, THE SUBMISSION I S THAT THE COLD STORAGE HAS CHAIN OF FACILITIES FOR STORAGE AND PRESERVATION OF AGRIC ULTURAL PRODUCE AND IT IS NOT MERELY COLD STORAGE PLANT. 3.4 IT IS ALSO SUBMITTED THAT THE ASSESSEE HAS BEEN GRANTED SUBSIDY ON THE BASIS OF THE FINDING THAT THE COLD STORAGE REDUCES THE POST- HARVEST LOSSES WITH MULTI-CHAMBER AND MULTI-STORAGE FACILITIES, BY ADOPTING MODERN DE SIGN TECHNOLOGY AND ENERGY SAVING EQUIPMENTS TO AVOID OBSOLESCENCE OF MACHINER Y AND MAKING IMPROVEMENT IN TECHNOLOGY LIKE SHIFTING FROM DIFFUSER SYSTEM TO GRAVITY COOLING SYSTEM. THE JOINT MONITORING COMMITTEE, IN ITS REPORT, PLACED I N THE PAPER BOOK ON PAGE NOS.29 TO 32, INTER ALIA MENTIONS THAT THE FIRM IS ELIGIBL E FOR TOTAL SUBSIDY AS PER CISS NORMS. NABARD HAS ALREADY RELEASED ADVANCE SUBSIDY OF ` 21.875 LACS. THE BALANCE AND FINAL INSTALLMENT OF SUBSIDY MAY BE CON SIDERED FOR RELEASE AS PER CISS GUIDELINES SUBJECT TO FULFILLMENT OF 8 CONDITIONS M ENTIONED THEREIN. ON THE BASIS OF THIS REPORT, IT IS CANVASSED THAT AS PER POLICY OF THE GOVERNMENT BEHIND INTRODUCTION OF THE PROVISION CONTAINED IN SUB-SECTION(11) OF SE CTION 80IB, NABARD HAS 10 RELEASED ADVANCE SUBSIDY AND THE MONITORING COMMITT EE HAS RECOMMENDED RELEASE OF FINAL INSTALLMENT OF THE SUBSIDY, THEREF ORE, THE ASSESSEE IS OPERATING COLD CHAIN FACILITY FOR STORAGE OF AGRICULTURAL PRODUCE. 3.5 COMING TO THE FINDINGS OF THE LD. CIT(A), OUR ATTENTION HAS BEEN DRAWN TOWARDS PARAGRAPH NO.2.5 OF THE IMPUGNED ORDER, WHI CH READS AS UNDER :- 2.5 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSES SMENT ORDER OF THE ASSESSING OFFICER, SUBMISSION OF AR & POSITION OF L AW. IN MY OPINION, THE CONTENTION OF THE APPELLANT HAS CONSIDERABLE ME RIT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPE LLANT HAS ARGUED THAT THE APPELLANT FIRM IS HAVING/PROVIDING ALL NEC ESSARY CHAIN OF FACILITIES FOR STORAGE OF POTATOES UNDER SCIENTIFIC ALLY CONTROLLED CONDITIONS INCLUDING REFRIGERATION NECESSARY FOR TH E PRESERVATION OF POTATOES. IN OTHER WORDS NO OTHER FACILITY (INCLUD ING ANY MACHINERY ETC. FOR ANY UNLOADING, CHATAI, TESTING THE CONDITI ON OF POTATO) IS FURTHER REQUIRED WHICH THE UNDERTAKING DOES NOT POS SESS, AND IS NECESSARY FOR PRESERVATION OF POTATOES. THE AR OF THE APPELLANT ALSO PRODUCED A CERTIFICATE OF DISTRICT HORTICULTURE OFF ICER STATING AS UNDER :- THIS IS TO CERTIFY THAT M/S PRABHAT SHEETGRAPH BAG AL GHUNSA, AGRA IS HAVING FACILITY OF MULTI-CHAMBER COLD STORA GE, WHICH IS SETUP AND OPERATING IN A AGRICULTURAL BELT OF AGRA, NEAR NATIONAL HIGHWAY. IT IS HAVING GOOD PARKING SPACE (INSIDE & OUTSIDE) FOR TRACTOR-TROLLEYS, TRUCKS, CONTAINERS E TC. IT IS FURTHER HAVING PROPER LOADING UNLOADING PLATFORM, VERANDAS, SUFFICIENT COVERED PRECOOLING FACILITIES AND DRYING SPACE FOR POTATOES, INSULATED COLD CHAMBERS & AMMONIA BASED REFRIGERATI ON PLANT. IT IS WELL SETTLED LAW VIDE 1995 AIR 1395 (SC) P. KASILINGAM VS. PSG COLLEGE OF TECHNOLOGY 11 WORDS AND PHRASES EXPRESSION MEANS- A PARTICULAR EXPRESSION IS OFTEN DEFINED BY THE LEG ISLATURE BY USING THE WORD MEANS THE USE OF THE WORD MEANS INDICATES THAT DEFINIT ION IS A HARD AND FAST DEFINITION AND NO OTHER CAN BE ASSIGNED TO THE EXPRESSION THAN IS PUT DOWN IN DEFINITION. THE DEFINITION IS IN SUB-SECTION 80IB(14) CONTEMPLA TES COLD CHAIN FACILITY AS FOLLOWS- - A CHAIN OF FACILITY FOR STORAGE OF AGRICULTUR E PRODUCE - UNDER SCIENTIFICALLY CONTROLLED CONDITIONS IN CLUDING REFRIGERATION - AND OTHER FACILITIES NECESSARY FOR THE PRESER VATION OF SUCH PRODUCE CONSIDERING THE ABOVE FACTS & CIRCUMSTANCES OF THE CASE, POSITION OF LAW & JUDICIAL PRONOUNCEMENTS (71 ITR 815 (SC) ITO VS. M.K. KANHAI, M/S AMBIKA SHEETGRAH (P) LTD. VS. ITO-IV(1) , AGRA (ITA NO.342/AG/04 & 298/AG/06, AY 2001-02 & 2003-04), M/ S GOYAL BANDHU SHEET GRAPH (P) LTD., AGRA VS. ACIT-4(1), AG RA (ITA NO.339/AG/04, AY 2001-02) & M/S BANKEY BEHARI INDUS TRIES (P) LTD, AGRA VS. ACIT-4(1), AGRA (ITA NO.340/AG/04, AY 2001 -02), 1995 AIR 1395 (SC) P. KASILINGAM VS. P.S.G. COLLEGE OF TECHN OLOGY, 1976 AIR 1031 (SC) KSE BOARD VS. INDIAN ALUMINUM CO), I AM OF THE OPINION THAT THE APPELLANT HAS ALL NECESSARY CONDITIONS OF COLD CHAIN FACILITY AS INTENDED U/S 80IB(11) OF THE I.T. ACT, 1961. I AM, THEREFORE, DIRECTING THE ASSESSING OFFICER TO ALLOW THE APPELLANTS CLAIM OF DEDUCTION U/S 80IB(11) OF THE I.T. ACT, 19 61 AS PER RULE. THUS, GROUND NO.1 IS ALLOWED. 3.6 FINALLY, IT IS SUBMITTED THAT THE FACTS OF THE CASE ARE COVERED BY THE DECISION IN THE CASE OF M/S. AMBICA SHEET GRAH (P) LIMITED V S. ITO-IV(1), AGRA (ITA NO.342/AGR/2004 & 298/AGR/2006 FOR ASSESSMENT YEARS 2001-02 & 2003-04) WHICH HAS BEEN FOLLOWED IN THE CASE OF A NUMBER OF OTHER SIMILARLY SITUATED ASSESSEES. WE THINK IT APPROPRIATE TO SUMMARIZE TH E FINDINGS OF THIS ORDER AT THIS STAGE. IT HAS INTER ALIA BEEN HELD THAT: (I) THE D EDUCTION IS ADMISSIBLE EVEN IN A CASE 12 WHERE THE COLD CHAIN FACILITY IS MEANT ONLY FOR STO RAGE BECAUSE OF THE USE OF WORD OR IN THE DEFINITION SECTION; (II) THE ASSESSEE I S CARRYING ON A NUMBER OF ACTIVITIES IN AID OF THE ACTIVITY OF STORAGE OF AGRICULTURAL P RODUCE WHICH CONSTITUTES THE COLD CHAIN FACILITY, WHICH WORKS IN SCIENTIFICALLY CONTR OLLED CONDITIONS FOR THE PRESERVATION OF AGRICULTURAL PRODUCE; (III) EVEN IF THERE ARE TWO PLAUSIBLE INTERPRETATION, ONE WHICH CONFERS BENEFIT TO THE AS SESSEE SHOULD BE ADOPTED; AND (IV) SUB-SECTION(11) HOLD THE FIELD VIS-A-VIS SUB-S ECTION(3) BECAUSE OF NON-OBSTANTE CLAUSE. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS MADE BEFORE US. BRIEFLY, THE FACTS ARE THAT IN THE COLD STORAGE PLA NT, THE ASSESSEE HAS PROVIDED FACILITIES FOR A NUMBER OF ACTIVITIES SUCH AS LOADI NG, UNLOADING, COOLING BEFORE PLACING THE AGRICULTURAL PRODUCE IN THE COLD STORAG E, STORAGE AT DESIRED TEMPERATURE TO MINIMIZE LOSS, HEATING BEFORE DISPATCH AFTER REM OVAL OF THE AGRICULTURAL PRODUCE ETC. VARIOUS OTHER CONDITIONS MENTIONED IN SUB-SEC TION (11) AND CLAUSE (AA) OF SUB- SECTION (14) ARE ADMITTEDLY SATISFIED. THE ONLY PO INT OF DISPUTE IS WHETHER THERE COULD BE A COLD CHAIN FACILITY FOR STORAGE ONLY WIT HOUT INVOLVING TRANSPORTATION OF AGRICULTURAL PRODUCE. THE CASE OF THE ASSESSEE CRU CIALLY HINGES ON THE USE OF CONJUNCTION OR BETWEEN THE WORDS STORAGE AND T RANSPORTATION, USED IN DEFINITION CLAUSE (AA) OF SUB-SECTION (14). IT IS THE CASE OF THE LD COUNSEL THAT 13 BECAUSE OF THE AFORESAID CONJUNCTION THERE COULD BE A CHAIN OF FACILITY FOR STORAGE AND IN SUCH A CASE, DEDUCTION UNDER SUB-SECTION(11) WOULD BE PERMITTED IF OTHER CONDITIONS ARE SATISFIED. IN THIS CONNECTION, IT H AS ALSO BEEN SUBMITTED THAT THE PROVISION CONTAINED IN SUB-SECTION (11) OVERRIDES T HE PROVISION CONTAINED IN SUB- SECTION (3) BECAUSE OF NON-OBSTANTE CLAUSE. ON THE OTHER HAND, THE CASE OF THE REVENUE IS THAT ONE HAS TO START ON CHRONOLOGICALLY WHILE READING SECTION 80IB. SUB-SECTION (3) DEALS SPECIFICALLY WITH COLD STORAG E PLANT AND THE ASSESSEE DOES NOT SATISFY THE CONDITIONS MENTIONED IN THIS SUB-SECTIO N. AS THE CASE OF THE ASSESSEE FAILS UNDER THIS SUB-SECTION, THERE IS NO NEED TO L OOK INTO HE PROVISION CONTAINED IN SUB-SECTION(11). THE OTHER ARGUMENT IS THAT THE BO ARD CIRCULAR USES THE CONJUNCTION AND BETWEEN THE WORDS STORAGE AND TRANSPORTATION. THIS CIRCULAR IS IN THE NATURE OF CONTEMPORANEOUS EXPOSITION OF L AW BY THE AUTHORITY INVOLVED WITH THE FORMULATION OF LAW. IT IS ISSUED LATER IN TIME TO THE EXPLANATORY MEMORANDUM OF THE PROVISIONS ISSUED ALONGWITH BILL AND NOTES ON CLAUSES. THEREFORE, IT TAKES PRECEDENCE OVER THE EXPLANATORY MEMORANDUM. THE CIRCULAR HAS TO BE GIVEN WEIGHTAGE IN INTERPRETATION OF SUB- SECTION (11). THE CASE OF THE LD. COUNSEL IN THIS CONNECTION IS THAT THE CIRCULAR CAN NOT OVERRIDE THE CONTENTS OF THE STATUTE AND, THEREFORE, IT HAS TO BE IGNORED IN SO FAR AS THE ISSUE AT HAND IS CONCERNED. HAVING CONSIDERED THE RIVAL SUBMISSIONS , WE ARE OF THE VIEW THAT THE BOARD CIRCULAR CANNOT BE COMPLETELY IGNORED AS IT I S IN THE NATURE OF 14 CONTEMPORANEOUS EXPOSITION OF LAW. WE MAY STATE VE RY CLEARLY THAT WHAT WE ARE SAYING DOES NOT AMOUNT TO THE FINDING THAT THE CIRC ULAR OVERRIDES THE STATUTORY PROVISION BUT WE ARE SAYING THAT THE CIRCULAR HAS T O BE CONSIDERED FOR INTERPRETING THE NEWLY INSERTED PROVISION. WHEN WE CONSIDER THI S CIRCULAR THE QUESTION WHICH ARISES IS WHETHER THE WORD OR USED IN CLAUSE (AA) OF SUB-SECTION(14) SHOULD BE READ AS OR OR AND LOOKING TO THE OVERALL CONTEN TS OF THE DEFINITION IN SUB-SECTION (14) AND THE PROVISION CONTAINED IN SUB-SECTION(11) . ONE COULD COME TO THE CONCLUSION THAT COLD CHAIN FACILITY BECOMES COMPLET E ONLY WHEN IT CATERS TO TRANSPORTATION AND STORAGE AND IT REMAINS INCOMPLET E WHEN ONLY STORAGE IS INVOLVED, THEREFORE, THE WORD OR SHOULD BE READ A S AND. ON THE OTHER HAND, IT CAN ALSO BE HELD THAT VARIOUS ATTENDANT FACILITIES PROVIDED ALONGWITH STORAGE COMPLETE THE COLD CHAIN FACILITY IN SO FAR AS STORA GE IS CONCERNED. WE FIND THAT ON CONSIDERATION OF ALL THESE ISSUES, A CO-ORDINATE BE NCH HAS ALREADY TAKEN A DECISION IN THE CASE OF M/S AMBICA SHEET GRAH (P) LTD. (SUPR A) THAT STORAGE AND ATTENDANT FACILITIES IN THEMSELVES COMPLETE THE COLD CHAIN FA CILITY OF STORAGE. THE JUDICIAL DISCIPLINE DEMANDS THAT THIS DECISION SHOULD BE FOL LOWED. THEREFORE, WE PREFER TO FOLLOW THE DECISION IN THE INTEREST OF JUDICIAL DIS CIPLINE AND HOLD THAT UNDER THE PROVISION THERE CAN BE A CHAIN OF FACILITIES IN RES PECT OF STORAGE ONLY. ACCORDINGLY, THE APPEALS OF THE REVENUE ARE DISMISSED. 15 4.1 SINCE THE CROSS OBJECTIONS ARE ONLY IN SUPPORT OF THE ORDER OF THE LD. CIT(A), THE SAME HAVE BECOME INFRUCTUOUS IN VIEW OF OUR FIN DING IN THE APPEALS OF THE REVENUE. THEREFORE, THE CROSS OBJECTIONS ARE DISMI SSED AS INFRUCTUOUS. 5. THE CASE OF M/S. SHANTI VRAT COLD STORAGE (P) LT D. INVOLVES THREE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEAR 2004-05 TO 2006 -07. TWO SUBSTANTIVE GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN THESE APP EALS. THE POINT RAISED IN THE APPEAL IS ESSENTIALLY THE SAME AS IN THE CASE OF M/ S PRABHAT SHEET GRAH. IN THESE GROUNDS IT IS MENTIONED THAT THE LD. CIT(A) ERRED I N ALLOWING DEDUCTION UNDER SECTION 80IB(11) WITHOUT APPRECIATING THE FACTS OF THE CASE NAMELY THAT THE ASSESSEE COMPANY IS MERELY PROVIDING REFRIGERATION AND STORA GE FACILITIES FOR POTATOES AND NO OTHER COMMODITY. IT IS FURTHER MENTIONED THAT T HE ASSESSEE DOES NOT FALL WITHIN THE MEANING AND SCOPE OF THE TERM COLD CHAIN FACIL ITY. IT IS THE ADMITTED POSITION OF BOTH THE PARTIES THAT THE FACTS OF THE CASE ARE IDENTICAL WITH THE FACTS OF M/S PRABHAT SHEET GRAH. OVER AND ABOVE THE SUBMISSIONS MADE IN THAT CASE, THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGE NO.23 OF THE DECISION IN THE CASE OF M/S. AMBICA SHEET GRAH (P) LTD., IN WHICH THE APPEALS OF THE REVENUE IN THE CASE OF M/S. GOYAL BANDHU SHEET GRAH (P) LTD. AND M/S. BANK EY BIHARI INDUSTRIES (P) LTD. HAVE ALSO BEEN DISMISSED BY FOLLOWING THE DECISION IN THE MAIN CASE. THUS, THE POSITION WHICH FINALLY EMERGES IS THAT FACTS OF THI S CASE ARE IDENTICAL WITH THE FACTS 16 OF THE CASE OF M/S. AMBICA SHEET GRAH (P) LTD. FOL LOWING OUR DECISION IN THAT CASE, THESE APPEALS ARE ALSO DISMISSED. 6. AS IN EARLIER CASES, THE GRIEVANCE OF THE REVENU E IN THE CASE OF M/S. MAA GAYATRI COLD STORAGE IS ALSO THAT THE LD. CIT(A) ER RED IN ALLOWING DEDUCTION UNDER SECTION 80IB(11) IGNORING THE FACTS THAT MERE PROVI DING OF REFRIGERATED COLD STORAGE FACILITY BEING SINGLE UNIT FOR POTATOES, CANNOT BE CONSTRUED AS THE UNDERTAKING FALLING IN THE CATEGORY OF COLD CHAIN FACILITY. BOTH THE PARTIES ADMITTED THAT THE FACTUAL POSITION IN THIS CASE IS THE SAME AS IN THE CASE OF M/S. PRABHAT SHEET GRAH (SUPRA). THEREFORE, FOLLOWING OUR ORDER IN THAT CA SE, THIS APPEAL IS ALSO DISMISSED. 7. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AN D THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS DISCUSSED ABOVE. SD/- SD/- (H.S. SIDHU ) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 19 TH AUGUST, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY