ACIT, Ernakulam V. Navas M. Meeran, Cochin

ITA 473/COCH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2611 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 08-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: R KRISHNAN
• Section: 80IB

Judgement Text

1 ITA NO.473/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 473/COCH/2011 (ASSESSMENT YEAR 2005-06) A.C.I.T., CIR.1(1) VS SHRI NAVAS M MEERAN KOCHI 4 TH FLOOR, MATHEW SQUARE, C2 OPP. NORTH RAILWAY STATION ROAD, KOCHI 682 018 PAN : AEIPM2852E (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SUSAN GEORGE VARGHESE RESPONDENT BY : SHRI R KRISHNAN DATE OF HEARING : 13-02-2013 DATE OF PRONOUNCEMENT : 12-04-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF C.I.T.(A)-II, KOCHI DATED 25-02-2011 AND PERTAINS TO ASSESSMENT Y EAR 2005-06. 2 ITA NO.473/COCH/2011 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DEDUC TION U/S 80IB OF THE ACT. 2. SMT. SUSAN GEORGE VARGHESE, THE LD.DR SUBMITTED THAT THE TAXPAYER IS ENGAGED HIMSELF IN THE BUSINESS OF MANUFACTURING AND SALE OF CURRY POWDER. THE TAXPAYER CLAIMED DEDUCTION U/S 80IB FR OM THE PROFIT DERIVED FROM MANUFACTURING UNIT AT ADIMALI. ACCORDING TO T HE LD.DR, THE TAXPAYER IS BUYING DIFFERENT SPICE POWDERS FROM DIFFERENT SISTE R CONCERNS MIXING THEM IN ITS UNIT AND SELLING THEM AS MASALA POWERS. REF ERRING TO PROVISIONS OF SECTION 80IB(2)(III) OF THE ACT, THE LD.DR SUBMITTE D THAT FOR CLAIMING DEDUCTION, THE TAXPAYER SHALL MANUFACTURE OR PRODUC E ANY ARTICLE OR THING. SINCE THE TAXPAYER IS MERELY MIXING THE POWDER IT C ANNOT BE CONSIDERED TO BE A MANUFACTURING ACTIVITY. THEREFORE, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE TAXPAYER U/S 80IB OF THE ACT. 3. ON THE CONTRARY, SHRI R KRISHNAN, THE LD.REPRESE NTATIVE FOR THE TAXPAYER SUBMITTED THAT MANUFACTURING OF MASALA IS A METICULOUS PROCESS INVOLVING SEVERAL STAGES. ACCORDING TO THE LD.REPR ESENTATIVE, THE TAXPAYER IS 3 ITA NO.473/COCH/2011 PROCURING RAW MATERIALS WHICH INCLUDE NUTS, MEGS, C LOVES, TURMERIC, CHILLY, CORIANDER, GINGER, ETC. THE TAXPAYER ALSO PROCURIN G POWDERS LIKE CHILLY POWDER, TURMERIC POWDER, CORIANDER POWDER AND KASHM IRI CHILLY POWDER. THEREAFTER, THE TAXPAYER IS CLEANING THE RAW MATERI AL, BOTH MANUALLY AND MECHANICALLY. THEN, THE RAW MATERIALS ARE ROASTED AT DIFFERENT TEMPERATURES FOR DIFFERENT PRODUCTS. THE POWDERS A RE ALSO ROASTED SEPARATELY. THEREAFTER, IT WOULD BE LEAD TO NATURA L COOLING. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT AFTER COOL ING, THE POWDERS ARE SENT TO A HOPPER AND THEN TO THE BLENDER. THE BLENDED M ATERIALS ARE COLLECTED IN BAGS AND THEY ARE SEPARATED FOR VEG AND NON VEG PRODUCTS. FINALLY THE PRODUCTS ARE PACKED BOTH MANUALLY AND MECHANICALLY. REFERRING TO THE FLOW CHART FILED BY THE TAXPAYER, THE LD.REPRESENTATIVE SUBMITTED THAT FROM THE STAGE OF PROCURING RAW MATERIALS TILL PACKING, METI CULOUS PROCESSINGS ARE INVOLVED IN MANUFACTURING MASALA. THEREFORE, ACCOR DING TO THE LD.REPRESENTATIVE, THE ENTIRE PROCESS AMOUNTS TO M ANUFACTURE. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE TAXPAY ER IS PRODUCING DIFFERENT KINDS OF MASALA FOR BOTH VEGETARIAN AND NON-VEGETAR IAN PRODUCTS. REFERRING TO THE DECISION OF THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN ACIT VS EMPIRE SPICES & FOODS MUMBAI LTD (2010) 188 TAXM AN 36 (MUM), THE 4 ITA NO.473/COCH/2011 LD.REPRESENTATIVE SUBMITTED THAT PRODUCING DIFFEREN T KINDS OF MASALA USING DIFFERENT SPICES AS INPUTS WOULD AMOUNT TO MANUFAC TURE AND IS ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE QUES TION ARISES FOR CONSIDERATION IS WHETHER MANUFACTURING MASALA PRODU CTS AMOUNTS TO MANUFACTURE SO AS TO CLAIM DEDUCTION U/S 80IB OF THE ACT. THIS ISSUE WAS EXAMINED BY THE MUMBAI BENCH OF THIS TRIBUNAL IN EM PIRE SPICES & FOODS MUMBAI LTD (SUPRA) AND THE MUMBAI BENCH OF THIS TRI BUNAL FOUND THAT PRODUCING DIFFERENT VARIETIES OF MASALA USING DIFFE RENT SPICES AS INPUTS WOULD AMOUNT TO MANUFACTURING AND SUCH A PROCESS IS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. THE CIT(A), AFTER CONSIDERING THE DECISION OF THIS TRIBUNAL IN DCIT VS SRI SAI ROLLER FLOUR MILLS (P) LTD 002 ITR (TRIB) 0490 AND THE JUDGMENT OF THE APEX COURT IN ASPINWALL AND CO. VS CIT (2001) 251 ITR 323 (SC) HELD THAT MANUFACTURING DIFFERENT MASALA P OWDERS AMOUNTS TO MANUFACTURING ACTIVITY. THE CIT(A) HAS ALSO PLACED HIS RELIANCE ON VARIOUS OTHER JUDGMENTS OF THE HIGH COURTS AND SUPREME COUR TS. SINCE THE CO- ORDINATE BENCH OF THIS TRIBUNAL AT MUMBAI HAS ALREA DY CONSIDERED 5 ITA NO.473/COCH/2011 MANUFACTURING OF MASALA AS MANUFACTURING ACTIVITY ELIGIBLE FOR DEDUCTION U/S 80IB, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE LOWER AUTHORITY. ACORDINGLY, THE SAME IS CONFIRMED. 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH APRIL, 2013. (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 12 TH APRIL, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH