Philips Foods India Pvt Ltd., CHENNAI V. ACIT, Tuticorin

ITA 503/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8700 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 08-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 04-03-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: D ANAND
• Keywords: Reopening of assessment; Depreciation; Retrospective amendment; Tangible material; Reason to believe; Reassessment proceedings
• Section: 10AA; 10B; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NOS.498 TO 503/MDS./2016 / ASSESSMENT YEARS : 2005-06, 2006-07, 2008-09,2 009-10, 2010-11 & 2011-12 M/S.PHILIPS FOODS INDIA PVT. LTD, PLOT NO.C-75/76, SIPCOT INDUSTRIAL COMPLEX, MADATHOOR POST, TUTICORIN-8. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, TUTICORIN. [PAN AABCP 7916 Q ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.D.ANAND,ADVOCATE /RESPONDENT BY : MR.A.V.SREEKANTH, JCIT, DR / DATE OF HEARING : 08 - 06 - 201 6 / DATE OF PRONOUNCEMENT : 24 - 08 - 2016 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER ALL THESE SIX APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-1, MADURAI PERTAINING TO THE ASSESSMENT YEARS 2005-06, 2006-07, 2008- ITA NOS.498 TO 503/MDS./15 :- 2 -: 09,2009-10, 2010-11 & 2011-12. SINCE ISSUES INVOLVED IN ALL THESE ASSESSEES APPEALS ARE COMMON IN NATURE, THESE APPE ALS ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OFF BY THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP ITA NO.499/MDS./2016 (A.Y.2006-07 ) 2. THE FIRST GROUND FOR OUR CONSIDERATION IS WITH REGARD TO VALIDITY OF REOPENING OF ASSESSMENT AFTER THE ASSESSEE DISCL OSING ALL THE DETAILS ALONG WITH THE RETURN OF INCOME, SINCE THE AO HAD N OT FOUND ANY FRESH INFORMATION TO REOPEN THE ASSESSMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING, PROCESSIN G AND EXPORT OF SEA FOODS OF ALL KIND. THE ASSESSEE IS HAVING ONE 1 00% EXPORT ORIENTED UNIT(EOU) AT TUTICORIN WHICH PROCESSES PAS TEURIZED CRAB MEAT IN RESPECT OF WHICH DEDUCTION U/S.10B WAS CLAIMED. THE ASSESSEE FILED ITS RETURN OF INCOME ON 26.10.2006 ADMITTING INCOME OF ,23,39,780/-, WHICH WAS ACCEPTED U/S.143(1). IN THE ASSESSMENT M ADE THE ENTIRE CLAIM OF 3,21,08,861/- U/S.10B WAS ALLOWED. SUBSEQ UENTLY, THE AO REOPENED THE ASSESSMENT U/S.148 AFTER RECORDING THE REASONS AS UNDER:- FOR ASSESSMENT YEAR 2008-09, THE CLAIM U/S.10B WAS DISALLOWED AND BROUGHT TO TAX IN THE ORDER PASSED U /S.143(3) ITA NOS.498 TO 503/MDS./15 :- 3 -: DATED 24.12.2011 SINCE THE BASIC CONDITIONS LAID DO WN IN SEC.10B(2)(I) AND 10B(2)(III) ARE FOUND NOT SATISFI ED. FOR ALLOWANCE OF DEDUCTION U/S.10B, ALL THE CONDITIONS LAID DOWN IN SEC.10B ARE TO BE SATISFIED. AS THE ASSESSEE CO MPANY FAILED TO SATISFY THE CONDITION U/S.10B(2)(I) AND C ONDITION U/S.10B(2)(III), THE ASSESSEE COMPANY IS NOT ENTITL ED TO AVAIL THE DEDUCTION U/S.10B FOR ALL THE EARLIER YEARS ALS O. IN THE INTIMATION U/S.143(1) SENT ON 14.06.2007, T HE ENTIRE CLAIM OF DEDUCTION U/S.10B OF ` 3,21,08,861/- WAS ALLOWED. IN VIEW OF THE FACTS OBTAINED DURING THE ASSESSMENT FOR ASSESSMENT YEAR 2008-09, THERE IS EXCESSIVE DEDUCTI ON ALLOWED FOR WHICH THE ASSESSEE IS NOT ENTITLED. HEN CE, I HAVE REASON TO BELIEVE THAT THERE IS ESCAPEMENT OF INCOM E (MORE THAN RS.1 LAKH) WHICH IS CHARGEABLE TO TAX FOR ASSE SSMENT YEAR 2006-07 WITHIN THE MEANING OF EXPLANATION 2(I II) TO SEC.147 OF THE ACT. NUMBER OF YEARS LAPSED EXCEEDS 4 YEARS BUT NOT 6 YEARS. ADDITIONAL COMMISSIONER OF INCOME TAX TUTIOCRIN RANGE MAY KINDLY CONSIDER ACCORDING APPRO VAL FOR ISSUE OF NOTICE U/S.148 IN THIS CASE. THEREAFTER, THE AO AFTER GETTING THE APPROVAL FROM ADDITIONAL COMMISSIONER OF INCOME TAX BEFORE ISSUING NOTICE U/ S.148 OF THE ACT, COMPLETED THE RE-ASSESSMENT PROCEEDINGS BY THE ORDE R U/S.143(3) R.W.S.147 DATED 12.03.2014 FOR THE ASSESSMENT YEAR 2006-07 WITH DENYING DISALLOWANCE U/S.10B OF THE ACT. AGGRIEVED WITH THE ORDER OF THE LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 3.1 ON APPEAL, THE CIT(A) OBSERVED THAT THERE WAS POSITIVE INCOME ONLY IN RESPECT OF TUTICORIN CRAB UNIT WHILE THERE WAS LOSS IN ALL THE REMAINING THREE UNITS. THE RETURN OF INCOME FILED B Y THE APPELLANT WAS ACCEPTED IN A SUMMARY MANNER U/S.143(1) WITHOUT ANY SCRUTINY U/S.143(3). ITA NOS.498 TO 503/MDS./15 :- 4 -: WHILE SCRUTINISING THE ASSESSMENT FOR ASST.YEAR 200 8-09, THE ASSESSING OFFICER EXAMINED AS TO WHETHER THE ASSESSEE HAD FU LFILLED ALL THE CONDITIONS LAID DOWN IN SEC. 10B AND FOUND THAT THE APPELLANT COULD NOT BE SAID TO BE A MANUFACTURER AND THE MACHINERIES WERE EARLIER USED BY M/S. BABY MARINE EXPORTS LTD. FROM WHOM THE ASSESSEE PURCHASED SECO ND HAND MACHINERY. FURTHER, LD.CIT(A) OBSERVED THAT THE ASSESSING OFFI CER HAS REOPENED THE ASSESSMENT FOR THIS ASSESSMENT YEAR, SINCE THE CLAI M OF ASSESSEE U/S.10B WAS DENIED AS THE ASSESSEE VIOLATED THE CONDITION L AID DOWN IN SEC.10B(2)(II) OF THE ACT. THE LD.CIT(A) OBSERVED THAT THE CONTEN TION OF THE APPELLANT THAT THE REOPENING IS INVALID CANNOT BE ACCEPTED BECAUSE THERE WAS NO SCRUTINY ASSESSMENT EARLIER FOR THIS ASSESSMENT YEAR AND ALS O THE CLAIM OF THE ASSESSEE THAT THERE IS NO FAILURE ON THE PART OF T HE APPELLANT TO DISCLOSE THE MATERIAL FACTS IS NOT APPLICABLE AS THIS IS NOT A C ASE WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) AND FOUR YEARS LAPSED FROM THE END OF THE ASST. YEAR. ACCORDING TO LD.CIT(A), THE ASSESSI NG OFFICER HAS CORRECTLY RECORDED THE REASONS WHICH LED HIM TO FORM A BELIEF THAT THERE WAS ESCAPEMENT OF INCOME AND HE HAS ALSO TAKEN THE APPR OVAL OF ADDL.CIT BEFORE ISSUING NOTICE U/S.148. ACCORDING TO LD.CIT( A), THE ASSESSEE OBJECTED TO REOPENING OF ASSESSMENT AFTER OBTAINING THE REAS ONS RECORDED FROM THE ASSESSING OFFICER AND THE SAME WAS DISPOSED BY THE ASSESSING OFFICER BY HIS ORDER DATED 06.03.2014 IN WHICH HE HAS MENTIONED TH AT ONLY BASED ON THE DOCUMENTS WHICH WERE FILED BY THE ASSESSEE DURING T HE COURSE OF ASSESSMENT PROCEEDINGS FOR ASST.YEAR 2008-09, THE A SSESSING OFFICER COULD FORM AN OPINION THAT THERE WAS ESCAPEMENT OF INCOME . THIS MEANS THAT THE ITA NOS.498 TO 503/MDS./15 :- 5 -: DOCUMENTS FILED DURING THE COURSE OF ASSESSMENT PRO CEEDINGS FOR ASST.YEAR 2008-09, WOULD CONSTITUTE TANGIBLE MATERIAL / INFOR MATION BASED ON WHICH THE ASSESSING OFFICER REOPENED THE ASSESSMENT. LD.C IT(A) WAS OF THE OPINION THAT SINCE AO WHILE FRAMING THE ASSESSMENT FOR ASSESSMENT YEAR 2008-09, CAME TO KNOW THAT DEDUCTION U/S.10B CANNOT BE GRANTED TO THE ASSESSEE ON THE REASON THAT THE ASSESSEE HAS NOT C ARRIED ON MANUFACTURING ACTIVITY AND ALSO THE ASSESSEE HAS USED THE MACHINE RIES WHICH ARE ALREADY USED BY M/S. BABY MARINE EXPORTS LTD. FROM WHOM THE ASSESSEE PURCHASED THE SECOND HAND MACHINERY AND DENIED THE DEDUCTION U/S.10B OF THE ACT FOR ASSESSMENT YEAR 2008-09. THIS IS A REASON FOR REOPE NING OF ASSESSMENT FOR ASSESSMENT YEAR 2006-07. ACCORDINGLY, LD.CIT(A) CONFIRMED THE REOPENING OF ASSESSMENT. 3.2 REGARDING GRANT OF DEDUCTION ON MERIT ALSO, LD .CIT(A) DECIDED THE ISSUE AGAINST THE ASSESSEE BY OBSERVING ASSESSE ES ACTIVITIES OF EXTRACTING THE MEAT FROM LIVE CRABS CANNOT BE SAID THAT THE ASSESSEE MANUFACTURED OR PRODUCED AN ARTICLE OR THING AS PRO VIDED IN SEC.10B(2)(I) OF THE ACT. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. A.R REITERATED THE SUBMISSIONS WHAT HE MADE BEFORE THE LOWER AUTHORITIES. THE MAIN CONTENTION OF THE LD.A .R THAT THE REOPENING IS INVALID CANNOT BE ACCEPTED BECAUSE THE RE WAS NO SCRUTINY ASSESSMENT EARLIER FOR THIS ASSESSMENT YEAR AND AL SO THERE IS NO ITA NOS.498 TO 503/MDS./15 :- 6 -: FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS. FURTHER, LD.A.R PLEADED THAT THE RE-OPENING OF ASSE SSMENT IS WITHOUT JURISDICTION AND THAT FRESH APPLICATION OF MIND BY THE AO ON SIMILAR FACTS WOULD TANTAMOUNT TO REVIEW OF OWN DECISION AN D THAT THE AMENDED SECTION U/S.147 DOES NOT AUTHORIZE THE AO T O RE-OPEN ASSESSMENT UNDER THE GARB OF REASON TO BELIEVE TO REVIEW ITS OWN DECISION. HENCE, LD.A.R ARGUED THAT THE RE-ASSESSM ENT FRAMED IS VOID. 5. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDERS OF LOWER AUTHORITIES. LD.D.R SUBMITTED THAT SINCE AO WHILE FRAMING THE ASSESSMENT FOR ASSESSMENT YEAR 2008-09, CAME TO KNOW THAT DEDU CTION U/S.10B CANNOT BE GRANTED TO THE ASSESSEE ON THE REASON THAT THE ASSESSEE HAS NOT CARRIED ON MANUFACTURING ACTIVITY AND ALSO THE ASSESSEE HA S USED THE MACHINERIES WHICH ARE ALREADY USED BY M/S. BABY MARINE EXPORTS LTD. FROM WHOM THE ASSESSEE PURCHASED THE SECOND HAND MACHINERY AND DE NIED THE DEDUCTION U/S.10B OF THE ACT FOR ASSESSMENT YEAR 2008-09. HEN CE, THERE IS A REASON TO BELIEVE ESCAPEMENT OF INCOME FOR ASSESSMENT YEAR 20 0607 WITHIN THE MEANING OF EXPLANATION 2(C)(III) TO SEC.147 OF THE ACT. HENCE, LD.D.R ARGUED IN SUPPORT OF REOPENING OF ASSESSMENT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN CONTENTION OF THE LD. AR IS THAT REASSESSM ENT WAS COMPLETED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR THOUGH THERE WAS NO FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND ITA NOS.498 TO 503/MDS./15 :- 7 -: TRULY ALL MATERIAL FACTS FOR THE PURPOSE OF ASSESSM ENT. IT IS AN ADMITTED FACT THAT IN THIS ASSESSMENT YEAR, THERE IS NO ASSESSMEN T U/S.143(3) OF THE ACT. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT. BE ING SO, 1 ST PROVISO TO SEC.147 CANNOT BE APPLIED IN THE CASE OF THE ASSESS EE TO RESTRICT THE AO TO REOPEN THE ASSESSMENT AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR. FURTHER, AS ARGUED BY TH E LD. DR WHILE FRAMING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09, IT CAME TO THE KNOWLEDGE OF THE AO THAT THE ASSESSEE HAS NOT FULFILLED REQUI SITE CONDITIONS LAID DOWN IN SEC.10B OF THE ACT AND THE ASSESSEE COULD NOT BE SA ID TO BE A MANUFACTURER AND PRODUCER OF ANY ARTICLE OR THING AS SPECIFIED I N SEC.10B OF THE ACT. IT IS ALSO CAME TO THE KNOWLEDGE OF THE AO THAT THE MACHI NERIES USED BY THE ASSESSEE WERE EARLIER USED BY M/S. BABY MARINE EXPO RTS LTD. FROM WHOM THE ASSESSEE PURCHASED SECOND HAND MACHINERY AND THIS M ATERIAL FACT PROVOKED THE AO TO REOPEN THE ASSESSMENT FOR THE A.Y. 2006-0 7. IN OUR OPINION, THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF ACIT V . RAJESH JHAVERI STOCK BROKERS P. LTD. (291 ITR 500) IS SQUARELY APPLICABL E TO THE ASSESSEES CASE. WHEREIN IT WAS HELD THAT THE AO HAD JURISDICTION TO ISSUE NOTICE U/S.148 FOR BRINGING TO TAX INCOME ESCAPING ASSESSMENT IN AN IN TIMATION UNDER SEC.143(1)(A) ON THE GROUND THAT THE CLAIM OF DEDUC TION BY THE ASSESSEE WAS NOT ACCEPTABLE AS THE CONDITIONS FOR ALLOWANCE NOT FULFILLED. FAILURE TO TAKE STEPS U/S.143(3) OF THE ACT WILL NOT RENDER THE AO POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS WHEN INTIMATION U/S.143(1) HAS BEEN ISSUED. BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE REOPE NING OF ASSESSMENT FOR THE A.Y. 2006-07. THIS GROUND OF APPEAL OF THE ASSESSE E IS DISMISSED. ITA NOS.498 TO 503/MDS./15 :- 8 -: 7. THE NEXT GROUND IS WITH REGARD TO WHETHER THE ASSES SEE CAN BE SAID TO BE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRO DUCTION OF AN ARTICLE OR THING AND WHETHER THE ASSESSEE HAS FULFI LLED CONDITIONS LAID DOWN IN SECTION 10B(2)(II) & (III) OF THE ACT TO CL AIM DEDUCTION U/S.10B OF THE ACT. 8. ON MERIT, LD.A.R SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING ACTIVITY OF EXTRACTING MEAT FROM CRAB CANNOT BE SAID, THOUGH IT IS A PROCESSING ACTIVITY SINCE IT INCLUDE S THE FOLLOWING ACTIVITIES. FLOW CHART OF PASTEURIZED CRAB MEAT STAGE - I FIELD PROCUREMEN OF LIVE CRAB | FIRST COOKING | COLING | ICING IN INSILATED BOXES | TRANSPORTATION TO MINI PLANTS | STAGE - II MINI PLANT ARRIVAL OF COOKED CRAB MEAT FROM FIELD | DE SACKING (MAIN SHELL REMOVING) | CRAB MEAT PICKING | FILLING IN SMALL CASES (SIMILAR TO DISPOSABLE LUNCH BOX) | PACKING & ICING IN INSULATED BOX USING ICE ITA NOS.498 TO 503/MDS./15 :- 9 -: STAGE - III MAIN PLANT SORTING FOR SHEL FILTH & SOFT MEAT | GRADING | FILLING IN METAL CANS | ADDING SAPP | SEAMING (CLOSING OF CAN) | PASTEURIZATION (SECOND COOKING) | STORING IN COLD STORAGE (-1 TO + 2 DEGREE CENTIGRAD E) | SHIPMENT FOR EXPORT FURTHER LD.A.R SUBMITTED THAT THE ASSESSEE IS ENTIT LED FOR DEDUCTION U/S.10B OF THE ACT AS A MANUFACTURER ON THE FOLLOWING REASO NS:- 1. PRIOR TO 1.4.2009 THE TERM MANUFACTURE IS EXPLA INED IN THE INCOME TAX ACT ONLY IN EXPLANATION 10AA OF THE INCO ME TAX ACT. IT IS ONLY BY FINANCE ACT, 2009 W.E.F.1.4.2009 THE TERM M ANUFACTURE WAS SPECIFICALLY DEFINED UNDER THE ACT IN SEC.2(29BA). IN THE SAID DEFINITION THE SCOPE OF THE WORD MANUFACTURE WAS RESTRICTED TO NON-LIVING PHYSICAL OBJECT. THE OBSERVATION OF THE LD.CIT(A) THAT [PAG E 10 PARA 4.2 OF THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 2006-07) T HE DEFINITION OF MANUFACTURE WAS INSERTED IN THE IT ACT BY CONSIDERI NG ALL THE JUDICIAL PRONOUNCEMENT WHICH WERE ON THE SUBJECT IS AMISS, SINCE, IF THE INTENT OF THE LEGISLATURE WAS SO, THAN THE DEFINITION OF T HE WORD MANUFACTURE WOULD HAVE BEEN WITH RETROSPECTIVE EFFECT AND NOT P ROSPECTIVE. THE OBSERVATION OF THE LEARNED CIT(A) ONLY SUPPORTS THE CASE OF THE APPELLANT. 2. IT IS ONLY AFTER THE DEFINITION OF THE WORD MANU FACTURE IN SECTION 2(29BA) OF THE INCOME TAX ACT, THE PROCESSING, PRES ERVATION, PACKAGING OF MEAT AND MEAT PRODUCTS OR POULTRY OR M ARINE PRODUCTS OR ITA NOS.498 TO 503/MDS./15 :- 10 - : DAIRY PRODUCTS WAS REMOVED FROM THE REALM OF MANUFA CTURING ACTIVITY. PROVISO TO SECTION 80IB(11A) WAS INTRODUCED W.E.F 1 .4.2010. 3. ALTHOUGH SECTION 801B(11A) OF THE INCOME TAX ACT WAS EFFECTIVE FROM 1.4.2002. IT IS ONLY AFTER THE INSERTION OF TH E DEFINITION OF THE TERM MANUFACTURE, THE PROVISO TO SECTION 801B (11A) WAS INTRODUCED WHEREBY THE PROCESSING, PRESERVATION, PACKAGING OF MEAT AND MEAT PRODUCTS OR POULTRY OR MARINE PRODUCTS OR DAIRY PRO DUCTS WAS REMOVED FROM THE REALM OF MANUFACTURING ACTIVITY. PROVISO T O SECTION 801B(11A) WAS INTRODUCED W.E.F 1.4.2010. THUS THE LEGISLATURE ALWAYS INTENDED TO DEFINE MANUFACTURING TO INCLUDE PROCESSING, PRESERV ATION, PACKAGING OF MEAT AND MEAT PRODUCTS OR POULTRY OR MARINE PRODUCT S OR DAIRY PRODUCTS, UNTIL 1.4.2009, WHEN THE TERM WAS RESTRIC TED ONLY TO NON- LIVING PHYSICAL OBJECT. 4. EVEN BEFORE VENTURING TO ANALYSE THE VARIOUS CAS E LAW RELIED BY THE A.O AND CIT(A) TO DENY THE DEDUCTION CLAIMED BY THE APPELLANT UNDER SECTION 10B OF THE INCOME TAX ACT, IT WOULD BE PERT INENT TO MENTION THAT NONE OF THE DECISIONS CITED BY CIT(A) ARE RELA TABLE TO 100% EOU UNDERTAKINGS. IT IS NOW MORE OR LESS ACCEPTED BY KE RALA HCOURT, KOLKATTA SPL. BENCH AND EVEN MADRAS ITAT THAT ONCE IT IS A 100% EOU, THE DEFINITION OF MANUFACTURE UNDER SEC.2R OF THE SEZ ACT IS TO BE APPLIED IN THE. ABSENCE OF A DEFINITION IN THE INCO ME TAX ACT. 5. THE JUDGMENT RENDERED BY THE APEX COURT IN THE C ASE OF RELISH FOOD WAS RENDERED UNDER THE FACTS LAID DOWN IN THE SAID CASE IN WHICH THE HONBLE APEX COURT JUSTIFIED HOW THE SAID CASE IS D IFFERENT FROM THE CASE OF MARWELL SEA FOODS . IN THE CASE OF RELISH FOOD T HE HONBLE APEX COURT OBSERVED AS UNDER : THERE IS UPON THE RECORD BEFORE US NO DETAILED DES CRIPTION OF WHAT THE ASSESSEE DOES TO THE SHRIMPS IT BUYS, OTHE R THAN THE BALD STATEMENT THAT IT PEELS AND FREEZES THEM. WE CANNOT ACCEPT THE STATEMENT AT THE BAR THAT THE PRO CESS TO ITA NOS.498 TO 503/MDS./15 :- 11 - : WHICH THE ASSESSEE PUTS THE SHNMPS IS THE PROCESS T HAT MARWELL SEA FOODS USED IN REGARD TO ITS PRAWNS. THE HONBLE APEX COURT FURTHER OBSERVED THAT IN TH E CASE OF MARWELL SEA FOODS THE ASSESSEE HAD PLACED BEFORE THE TAXING AUTHORITIES A DETAILED DESCRIPTION OF THE PROCESS BY WHICH PRAWNS WERE PREPARED FOR EXPORT AND THAT THE APPELLATE AUTHORITIES HAD UNDER STOOD THE VARIOUS STAGES THROUGH WHICH THE PRAWNS PASSED AS PROCESSES INVOLVING PRODUCTION OR MANUFACTURE THE HIGH COURT WAS OF THE VIEW THAT THE TRIBUNAL HAVING AFFIRMED THE FINDING OF THE AAC, IT SHOULD BE EXTREMELY SLOW TO DOUBT THE CORRECTNESS OF THE FINDING UNLESS IT WAS PERVERSE. IN EFFECT THE HONBLE SUPREME COURT HAS TACITLY APPRO VED THE JUDGEMENT IN THE CASE OF MARWELL SEA FOODS REPORTED IN 166 IT R 624 (KER) AND HAS NOT FOUND ANY DEFECT IN THE JUDGEMENT OF THE HONBL E KERALA HIGH COURT. 6. ACCORDING TO THE LD. AR, THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF MARWELL SEA FOODS STANDS APPROVED BY TH E FULL BENCH OF THE KERALA HIGH COURT IN THE CASE OF BHARATH SEA FO ODS REPORTED IN 237 ITR 46. 7. THE APPELLANT IN THE INSTANT CASE IS RECOGNIZ ED AS AN INDUSTRIAL UNDERTAKING AND ALSO AS A 100% EOU FOR THE PURPOSE OF MANUFACTURING PASTEURIZED CANNED CRAB. THE APPELLAN T IS ALSO REGISTERED AS MANUFACTURER UNDER THE CENTRAL EXCISE ACT AND SALES TAX ACT. THE MANUFACTURING OPERATION IN THE ABOVEME NTIONED 100 % EOU UNIT INVOLVES VARIOUS ACTIVITIES SUCH AS BOILIN G, COOLING, REMOVING SHELLS, SEGREGATING THE CRABS INTO VARIOUS PARTS, G RADING THE CRABS ITA NOS.498 TO 503/MDS./15 :- 12 - : ACCORDING TO SIZES, PLACES OF CATCH ETC BEFORE CONV ERTING THE LIVE CRAB INTO EDIBLE CANNED PRODUCT. THE PASTEURIZATION AND CANNED MEAT IS QUIET DISTINCT FROM THE RAW MATERIAL-AND THE RNANUF ACTURING ACTIVITY IS UNDERTAKEN WITH VARIOUS MACHINERY ITEMS AND SKILLED LABOUR. THE CASE OF STERLING FOODS REPORTED BY THE LEARNED ASSESSING OFFICER AND CIT(A) IS ON A FACTUALLY DIFFERENT MATRIX AND IT INVOLVED PROCESSING OF PRAWNS . THE HONBLE COURT IN THE CASE OF STERLING FOOD OBSE RVED WHEN RAW SHRIMPS, PRAWNS AND LOBSTERS ARE SUBJECTED TO THE P ROCESS OF CUTTING OF HEADS AND TAILS, PEELING, DEVEINING, CLEANING AN D FREEZING, THEY DO NOT CEASE TO BE SHRIMPS, PRAWNS AND LOBSTERS AND BE COME ANOTHER DISTINCT COMMODITY. THEY ARE IN COMMON PARLANCE KNO WN AS SHRIMPS, PRAWNS AND LOBSTERS. THERE IS NO ESSENTIAL DIFFEREN CE BETWEEN RAW SHRIMPS, PRAWNS AND LOBSTERS AND PROCESSED OR FROZE N SHRIMPS, PRAWNS AND LOBSTERS. 8. THUS THE CASE OF STERLING FOODS IS CLEARLY DI STINGUISHABLE ON FACTS FURTHER THE DEFINITION OF THE TERM MANUFACTURE AND THE INSERTION OF PROVISO TO SECTION 80IB(11A) (W.E.F 1.4.2010) WAS N OT IN VOGUE WHEN THE ABOVE JUDGMENT WAS RENDERED. 8.1 THE LD. AR ALSO RELIED ON THE FOLLOWIN G JUDGMENTS : (I). IN THE CASE OF CIT VS GITWAKO FARMS: (332 I TR 0471): THE HONBLE DELHI HIGH COURT HELD THAT THE PROCESS INV OLVED IN CONVERTING RAW FISH INTO TINNED FISH DID NOT AMOUNT TO MANUFAC TURING AND THEREFORE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UN DER S. 80-IB BUT HOWEVER THE SAID JUDGEMENT WAS RENDERED WITHOUT REF ERENCE TO THE DEFINITION OF THE TERM MANUFACTURE AND THE INSERTIO N OF PROVISO TO SECTION 801B (HA) WAS NOT IN VOGUE WHEN THE ABOVE J UDGEMENT WAS RENDERED. THE SAID DECISION IS DISTINGUISHABLE. (II). PIO FOOD PACKERS 48 STC 0083 (SC): IN PIO FOOD PACKERS CASE (SUPRA), THE QUESTION FOR CONSIDERATION BEFORE THE SUPREME COURT WAS ITA NOS.498 TO 503/MDS./15 :- 13 - : WHETHER THE PREPARATION OF PINEAPPLE SLICES FOR SAL E IN SEALED CANS AMOUNTED TO MANUFACTURE. THUS THE CASE OF PIO FOOD PACKERS IS CLEARLY DISTINGUISHABLE ON FACTS FURTHER THE DEFINI TION OF THE TERM MANUFACTURE AND THE INSERTION OF PROVISO TO SECTION 801B(11A) (W..E.F 1.4.2010) WAS NOT IN VOGUE WHEN THE ABOVE JUDGEMENT WAS RENDERED. (III). THE CASE OF VENKATESHWAR HATCHERIES: 237 ITR 0174 (SC) RELIED BY THE LEARNED ASSESSING OFFICER IS ON A FACTUALLY DIFFERENT MATRIX AND IS NOT APPLICABLE TO THE CASE OF THE APPELLANT. IN THE SAID CASE THE QUESTION BEFORE THE COURT WAS WHETHER THE APPLICATI ON OF MECHANICAL PROCESS DOES IN THE HATCHERY TO HELP THE NATURAL OR BIOLOGICAL PROCESS OF GIVING BIRTH TO CHICKS WOULD AMOUNT TO MANUFACTU RE OR NOT THE HONBLE APEX COURT HELD THAT THE FORMATION OF CHIC KS IS A NATURAL AND BIOLOGICAL PROCESS OVER WHICH THE ASSESSEE HAS NO H AND OR CONTROL. THE CHICKS OTHERWISE CAN ALSO BE PRODUCED BY CONVEN TIONAL O.R NATURAL METHOD THE ONLY DIFFERENCE SEEMS TO BE THAT, BY APP LICATION OF MECHANICAL METHODS, THE MORTALITY RATE OF CHICKS IS LESS AND THE ASSESSEE MAY GET CHICKS MORE IN NUMBER. THIS, HOWEV ER, WOULD NOT MEAN THAT THE ASSESSEE PRODUCES CHICKS. 8.2 HE SUBMITTED THAT IN THE LIGHT OF THE JUDGEME NT OF THE KERALA HIGH COURT IN THE CASE OF MARWELL INDUSTRY REPORTED IN 166 ITR 624 WHICH STANDS APPROVED BY THE FULL BENCH OF THE KERA LAHIGH COURT IN THE CASE OF BHARATH SEA FOODS REPORTED IN 237 ITR 46 AN D IN THE ABSENCE OF DEFINITION OF THE TERM MANUFACTURE IN THE INCOME TAX ACT UNTIL 1.4.2009 AND IN THE LIGHT OF THE JUDGMENT OF THE HO NBLE APEX COURT IN THE CASE OF ASPINWALL & CO THAT IN THE ABSENCE OF A DEFIHITION OF THE WORD MANUFACTURE1 IT HAS TO BE GIVEN A MEANING AS IS UNDERSTOOD IN COMMON PARLANCE AND THE EXPLANATION OF THE TERM MAN UFACTURE BEING GIVEN ONLY EXPLANATION TO SEC.1OAA OF INCOME TAX AC T. I IS HUMBLY SUBMITTED THAT PRIOR TO 1.4.2009 THE WORD MANUFACTU RE SHOULD BE ITA NOS.498 TO 503/MDS./15 :- 14 - : ASSIGNED THE MEANING IT IS GIVEN IN EXPLANATION TO SECTION 1OAA OF THE INCOME TAX ACT AND THAT PROCESSING, PRESERVATION, P ACKAGING OF MEAT AND MEAT PRODUCTS OR POULTRY OR MARINE PRODUCTS OR DAIRY PRODUCTS SHOULD BE CONSTRUED AS MANUFACTURING ACTIVITY PRIOR TO 1.4.2009. 8.3 FURTHER LD. A.R SUBMITTED THAT BOTH THE LD.CI T(A) AND THE AO HAVE PLACED RELIANCE ON SECTION 10B(2)(II) &(III) O F THE INCOME TAX ACT TO DENY THE APPELLANT THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT. HE DREW OUR ATTENTION TO THE RELEVA NT PROVISION OF THE ACT. SECTION 10(B) (2) OF THE IT ACT IS EXTRACTED H EREUNDER:- (2) THIS SECTION APPLIES TO ANY UNDERTAKING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (I) IT MANUFACTURES OR PRODUCES ANY ARTICLES OR THI NGS OR COMPUTER SOFTWARE; (II) IT IS NOT FORMED BY THE SPLITTING UP, OR THE R ECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY III RE SPECT OF ANY UNDERTAKING WHICH IS FORMED AS A RESULT PF THE RE- ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASS ESSEE OF THE BUSINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33 B, IN THE CIRCUMSTANCES AND WITHIN THE P ERIOD SPECIFIED IN THAT SECTION; (III) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. EXPLANATION.THE PROVISIONS OF EXPLANATION 1 AND. EXPLANATION 2 TO SUBSECTION (2) OF SECTION 80-I SHA LL APPLY FOR THE PURPOSES OF CLAUSE (III) OF THIS SUB-SECTIO N AS THEY APPLY FOR THE PURPOSES OF CLAUSE (II) OF THAT SUB-S ECTION. 8.4 ACCORDING TO THE LD. AR, THE MOOT QUESTION IS WHETHER THE INDUSTRIAL UNDERTAKING OF THE APPELLANT IS FORMED B Y SPLITTING UP, OR THE RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE O R IT IS NOT FORMED BY ITA NOS.498 TO 503/MDS./15 :- 15 - : THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLAN T PREVIOUSLY USED FOR ANY PURPOSE. THE UNDISPUTED FACTS ON THE ISSUE IS THAT: (I). THE APPELLANT IS REGISTERED WITH CENTRAL EXCIS E DEPARTMENT, CENTRAL SALES TAX DEPARTMENT (22.11.2001), TNGST (22.11.2001) AND EXCISE CONTROL CODE NUMBER (6.2.20 03). (II). M/S. BABY MARINE EXPORTS, PURCHASED MACHINERI ES BETWEEN THE YEARS 1996 TO 1998 BUT HOWEVER IT WAS UNABLE T O IMPLEMENT A PROJECT FOR PRODUCING QUALITY CRAB MEAT SINCE IT DID NOT HAVE THE RIGHT TECHNOLOGY TO MARINE EXPORTS ATTESTED BY INDEPENDENT AUDITORS OF THE SAID FIRM (ANNEXURE VIIB). (III). M/S. BABY MARINE EXPORTS, HAVE CONFIRMED VID E LETTER DATED 14.12.2011 THAT THE MACHINERY PURCHASED BY TH E SAID FIRM FOR THE PURPOSE OF IMPLEMENTING A PROJECT FOR PROCESSING OF CRAB MEAT WAS NEVER PUT TO USE AND THAT NO DEPRE CIATION WAS EVER CLAIMED BY THE FIRM ON ANY OF THE MACHINER IES SOLD TO THE APPELLANT. THE FACT THAT THE FIRM HAS NOT CLAIM ED DEPRECIATION ON THE MACHINERIES SOLD TO THE APPELLA NT IS CONFIRMED/ AFFIRMED BY THE ASSESSING OFFICER OF M/S . BABY MARINE EXPORTS BASED ON THE QUERIES MADE BY THE ASS ESSING OFFICER OF THE APPELLANT COMPANY(ANNEXURE VU-A &B O F THE TYPED SET FURNISHED BEFORE CIT(A)). (IV). THE MARINE PRODUCTS EXPORT DEVELOPMENT AUTHOR ITY, A AGENCY UNDER MINISTRY OF COMMERCE, GOVERNMENT OF IN DIA HAS CERTIFIED THAT M/S. BABY MARINE EXPORTS DID NT PROC ESS AND EXPORT PASTEURIZED MEAT DURING THE PERIOD WHEN BAB Y MARINE EXPORTS WAS ALLEGED TO BE IN POSSESSION OF PROCESSI NG PLANT . (V). THE APPELLANT PURCHASED .45 ACRES OF LAND ALON G WITH MACHINERY FROM M/S. BABY MARINE PRODUCT AS PER THE . MOU DATED 6.12.2001. THE APPELLANT COMMENCED COMMERCIAL PRODUCTION, SINCE 8.4.2002. THE APPELLANT IS RECOGN IZED AS 100% EOU BY THE STATUTORY AUTHORITY FOR THE PURPOSE OF PRODUCING PASTEURIZED CANNED CRAB MEAT. (VI). THE SEQUENCE, CHRONOLOGY OF EVENTS MENTIONED IN POINT NOS (I), (II), (III) AND (IV), SUPRA, WOULD FACTUA LLY ESTABLISH THAT M/S. BABY MARINE EXPORTS HAD NOT ESTABLISHED CRAB P ROCESSING UNIT FOR THE PURPOSE OF PRODUCTION OF PASTEURIZED C ANNED CRAB MEAT AND THAT IT HAD ONLY TRANSFERRED THE MACHINERY AND THE LAND WHICH WAS UTILIZED BY THE APPELLANT FOR THE PU RPOSE OF ITA NOS.498 TO 503/MDS./15 :- 16 - : ESTABLISHING A UNIT FOR THE PRODUCTION OF PASTEURIZ ED CANNED CRAB MEAT. THUS THE APPELLANT UNIT IS NOT FORMED BY SPLITTING UP, OR THE RECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE THEREBY SATISFYING THE CONDITION LAID DOWN IN SECTI ON 10B(2)(II) OF THE INCOME TAX ACT. (VII). THE FACT THAT M/S. BABY MARINE EXPORTS HAS N OT CLAIMED DEPRECIATION WOULD ONLY ESTABLISH THE FACT THAT THE MACHINERIES WERE NEVER PUT TO USE BY M/S. BABY MARINE EXPORTS A ND THE SAID FACT STANDS VINDICATED BY CONFIRMATION BY MPED A (A GOVERNMENT AGENCY) THAT M/S. BABY MARINE EXPORTS DI D NOT PROCESS AND EXPORT PASTEURIZED MEAT. THUS IT IS ONL Y ON SUSPICION DEHORS ANY MATERIAL EVIDENCE, THAT BOTH T HE ASSESSING OFFICER AND THE LEARNED COMMISSIONER HAVE COME TO A CONCLUSION THAT THE APPELLANT MACHINERY WOULD HAV E BEEN PUT THE PRIOR USE. (VIII). HE SUBMITTED THAT EXPORTS WHICH WAS MADE AS EARLY AS 1996 TO 1998. FURTHER THE TRANSACTION BETWEEN M/S. BABY MARINE EXPORTS AND THE APPELLANT COMPANY WAS MADE A LMOST MORE A DECADE AGO. BOTH THE APPELLANT AND THE M/S. BABY MARINE EXPORTS WERE UNABLE TO PRODUCE INVOICE, ONLY DUE TO EFFLUX OF TIME. IT WAS THEREFORE NOT INCUMBENT ON T HE ASSESSING OFFICER OR THE CIT(A) TO DRAW ADVERSE INFERENCE ON THE BASIS OF NOT PRODUCTION OF INVOICES FOR THE PURCHASE OF MACH INERY AND CONSEQUENTLY COME TO A CONCLUSION THAT THE APPELLAN T HAD NOT PURCHASED NEW MACHINERY. THE ASSESSING OFFICER AND THE LEARNED CIT(A) OUGHT TO HAVE SEEN A BENEFICIAL PROV ISION SHOULD NOT BE DENIED ON THE BASIS OF SUSPICION AND PREPONDERANCE OF POSSIBILITY AND THE CIRCUMSTANTIAL EVIDENCES MUST HAVE BEEN GIVEN A PRIORITY WHILE DECIDING THE ISSUE ON HAND. THE ASSESSING OFFICER/CIT(A). OUGHT TO HAVE C ONSIDERED THE LETTERS ISSUED BY M/S. BABY MARINE EXPORTS AND MPEDA FAVORABLY WHILE DECIDING THE ISSUE WHEN NO MATERIAL CONTRARY TO THE CLAIM HAS BEEN DECIPHERED BY THE ASSESSING O FFICER . THUS BOTH THE ASSESSING OFFICER AND THE CIT(A), IN. THE ABSENCE OF ANY MATERIAL EVIDENCE TO THE CONTRARY TH AT THE APPELLANT HAD, PURCHASED MACHINERY WHICH HAS PREVIO USLY USED FOR ANY PURPOSE OUGHT TO HAVE GIVEN THE BENEFIT OF DOUBT TO THE APPELLANT WHILE DECIDING ON A BENEVOLENT PROVIS ION OF LAW. (IX). ACCORDING TO THE LD. AR, THE ASSESSING OFFI CER SEEMS TO HAVE BEEN UNDULY INFLUENCED BY THE INTRODUCTION OF DEFINITION OF THE WORD MANUFACTURE UNDER SECTION 2(29BA) OF TH E INCOME TAX ACT W.E.F 1.4.2009 AS ALSO TO THE INSERTION OF PROVISO TO SECTION 801B(11A) OF THE INCOME TAX ACT W.E.F :1.4. 2010,. ITA NOS.498 TO 503/MDS./15 :- 17 - : WHILE THE ASSESSING OFFICER HAD NO AMBIGUITY TO THE CLAIM OF THE APPELLANT ON ELIGIBILITY OF DEDUCTION UNDER SEC TION 10B UNTIL THE INTRODUCTION OF THE AFORESAID DEFINITION AND PR OVISO, HOWEVER THE ASSESSING OFFICER SEEMS TO HAVE TAKEN A DIAGONALLY OPPOSITE VIEW AFTER THE INTRODUCTION OF THE TERM MANUFACTURE IN THE STATUE AND ALSO WITH INSERTION O F PROVISO TO SECTION 801B(11A). THE ASSESSING OFFICER FAILED TO LOOK INTO THE INTENT OF THE LEGISLATURE WHILE BRINGING IN THE DEF INITION TO THE WORD MANUFACTURE AS WELL AS THE INSERTION OF PROVIS O TO SECTION 801B(11A). THE LEGISLATURE WITH NO AMBIGUITY HAS ST ATED THAT THE DEFINITION OF THE WORD MANUFACTURE WOULD BE ONL Y W.E.F 1.4.2009 AND THE INSERTION OF PROVISO TO SECTION 80 1B(11A) WILL BE W.E.F 1.4.2010. (X). HE SUBMITTED THAT THE EXERCISE CARRIED OUT BY THE APPELLANT FOR THE A.Y.2008-09 WOULD HAVE BEEN RELEV ANT IF THE ASSESSING OFFICER HAD CARRIED OUT THE SAME FOR INIT IAL ASSESSMENT YEAR VIZ: A.Y.2003-04 AND ONCE THE INITI AL YEAR FOR GRANT OF DEDUCTION STANDS UNDISTURBED THAN THE APPE LLANT IS ENTITLED TO ENJOY THE ENTIRE TAX HOLIDAY PERIOD. 8.5 ACCORDING TO THE LD. AR, BOTH ON ACCOUNT OF RULE OF LITERAL INTERPRETATION AND RULE OF BENEFICIAL CONSTRUCTION THE APPELLANT SUBMITS THAT PROCESSING, PRESERVATION, PACKAGING OF MEAT AN D MEAT PRODUCTS OR POULTRY OR MARINE PRODUCTS OR DAIRY PRODUCTS SHOULD BE CONSTRUED AS MANUFACTURING ACTIVITY PRIOR TO 01.04.2009 AND THE APPELLANT HAVING FULFILLED ALL CONDITIONS LAID DOWN IN SECTION LOB P RAYS THAT ITS CLAIM UNDER SECTION 10B BE ALLOWED AND JUSTICE RENDERED. FURTHER SINCE THE FIRST YEAR OF CLAIM OF THE APPELLANT UNDER SECTION 10B OF THE INCOME TAX ACT BEING A.Y.2003-04 AND THE SAME HAS BEEN ALLOWED BY THE DEPARTMENT AND HAS RACHED FINALITY IT IS HUMBLY PRA YED THAT THE HONBLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPELLANTS APP EAL AND THUS RENDER JUSTICE. FURTHER, LD.A.R RELIED ON THE JUDGEMENT OF RELISH FOODS VS. CIT IN [1999] 237 ITR 59 (SC), CIT VS. STERLING FOODS ( GOA) IN 213 ITR ITA NOS.498 TO 503/MDS./15 :- 18 - : 851(BOM.), CIT VS.GITWAKO FARMA (I) LTD., IN 332 IT R 471(DELHI), PIO FOOD PACKERS IN 48 STC 83 AND VENKATESHWARA HATCHER IES LTD., IN 237 ITR 0174(SC). HE FURTHER RELIED ON IN THE CASE OF S AMI LABS LTD. VS. ACIT REPORTED IN (2011) 334 ITR 0157(KARNATAKA HC). 9. ON THE OTHER HAND, THE LD. DR PLACED RELIANCE I N THE CASE OF CIT VS.GITWAKO FARMA (P) LTD.,(SUPRA) WHEREIN IT WA S HELD THAT THE PROCESSING, STERILIZATION AND CANNING OF FISH AFTER REMOVING UNWANTED PARTS DOES NOT AMOUNT TO MANUFACTURE. THE LD. DR SUBMITTED THAT, THIS DECISION IS APPLICABLE TO THE FACTS OF THE PRE SENT CASE. FURTHER, LD.D.R REFERRED TO EFFECT OF AMENDMENT BY DEFINING MANUFACTURE IN SEC.2(29BA) WAS EXPLAINED BY THE BOARD IN CIRCULAR NO.5/2010 DATED 03.06.2010 WHEREIN IT WAS CLEARLY DEFINED MANUFACT URE THAT ONLY CHANGE IN NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING WOULD AMOUNT TO MANUFACTURE. THE ABOVE DEFINITION OF MANUFACTURE WAS INSERTED IN THE IT ACT BY CONSIDERING ALL THE JUDICIAL PRONOUNCEMEN TS. EVEN THOUGH THE AMENDMENT IS EFFECTIVE FROM 01.4.2009, THE ANALOGY THAT MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING WOULD NOT INCL UDE LIVING OBJECTS IS CLEAR STARTING WITH THE CASE OF VENKATESHWARA HATCH ERIES LTD.(SUPRA) IN WHICH IT WAS HELD THAT THE POULTRY BUSINESS WOULD N OT AMOUNT TO MANUFACTURE OR PRODUCTION OF ARTICLE OR THING A S IT IS A NATURAL BIOLOGICAL PHENOMENA. FURTHER, LD. DR SUBMITTED THA T AS PER SEC/80- IB(11A) UNDERTAKING, THE ASSESSEE DERIVED PROFIT FR OM THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF MEAT AND MEAT PRODUCTS OR ITA NOS.498 TO 503/MDS./15 :- 19 - : MARINE PRODUCTS SHALL BE TREATED AS ELIGIBLE BUSINE SS FOR THE PURPOSE OF ALLOWING DEDUCTION U/S.80-IB, WHERE THE UNDERTAKING BEGINS SUCH BUSINESS AFTER 01.04.2009. HENCE, THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ARTICL E OR THING WITHIN THE MEANING OF SEC.10B OF THE ACT. FURTHER, LD.D.R SUBM ITTED THAT SINCE THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS AS PROVID ED IN SEC.10B OF THE ACT, THE ASSESSEE CANNOT BE TREATED AS MANUFACTURE TO CLAIM DEDUCTION UNDER THIS SEC.10B. 9.1 FURTHER THE LD. DR SUBMITTED THAT WHETHER THE APPELLANT HAS FULFILLED THE CONDITION LAID DOWN IN SEC.10B(2)(II) & (III). IT HAS TO BE EXAMINED WHETHER THE INDUSTRIAL UNDERTAKING WAS NOT FORMED BY THE SPLITTING UP OR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE AND WAS NOT FORMED BY TRANSFER TO A NEW BUSINESS OF MACHINE RY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. ADMITTEDLY, THE AP PELLANT PURCHASED THE INDUSTRIAL UNDERTAKING FROM MIS. BABY MARINE EX PORTS, MANDAPAM AS PER MEMORANDUM OF UNDERSTANDING DATED 06.12.2001 . IN THE ABOVE MEMORANDUM, IT IS STATED THAT M/S. BABY MARINE EXPO RT WAS ALLOTTED 2.5 ACRES OF LAND BY SIPCOT, OUT OF WHICH THEY HAD SET UP THE FACILITY FOR PROCESSING CRAB IN 0.45 ACRES OF LAND WHICH IS ACQUIRED BY THE ASSESSEE ALONG WITH MACHINERY AS PER ANNEXURE TO TH E ABOVE MEMORANDUM AND ALSO THE COMMON FACILITY AS PER SCHE DULE B WHICH INCLUDES HALF OF ALL THE ACCOMMODATION FACILITY HEL D BY M/S. BABY MARINE ITA NOS.498 TO 503/MDS./15 :- 20 - : INCLUDING MESS FACILITY FOR MONTHLY RENT. FURTHER, IT IS SEEN FROM THE ABOVE MEMORANDUM THAT IT IS MENTIONED AS BELOW - WITH THE MAIN OBJECT OF PROCESSING AND EXPORTING C RAB AND ARE IN THE LOOK OUT FOR ACQUIRING A FACILITY ALREADY IN EXISTENCE FOR EXPANSION AND ITS OPERATIONS AND AGAIN IT IS MENTI ONED THAT MIS. BABY MARINE EXPORTS IS POSSESSION OF SUCH A F ACILITY IN TUTICORIN. THIS MEANS THAT M/S. BABY MARINE EXPORTS WERE ALREA DY HAVING CRAB PROCESSING FACILITIES WHICH WERE ACQUIRED BY THE AP PELLANT ALONG WITH THE PLANT AND MACHINERY AS PER THE ANNEXURE. THUS T HE ASSESSEE HAS ONLY PURCHASED A BUSINESS WHICH WAS ALREADY IN EXIS TENCE AND THUS VIOLATED THE CONDITION LAID DOWN IN SEC.10B(2)(II) AS THE UNDERTAKING IS FORMED BY SPLITTING UP OF A BUSINESS ALREADY IN EXI STENCE. FURTHER, M/S. BABY MARINE EXPORTS TOOK ON LEASE THE LAND OF 2.5 A CRES AS PER LEASE AGREEMENT WITH SIPCOT ON 18.12.91 AND IT IS NOT KNO WN WHEN THE BUILDING WAS CONSTRUCTED BY M/S. BABY MARINE EXPORT S. THE APPELLANT COULD NOT PRODUCE THE INVOICE COPIES FOR PURCHASE O F PLANT AND MACHINERY BY M/S. BABY MARINE EXPORTS, WHICH WERE T AKEN OVER BY THE ASSESSEE. IT IS NOT CLEAR WHETHER M/S. BABY MARINE EXPORTS PURCHASED SECOND HAND MACHINERY IN INDIA OR NEW MACHINERY IN THE ABSENCE OF INVOICE COPIES. THE APPELLANT HAS SUBMITTED A LETTE R DATED 14.12.2011 FROM M/S. BABY MARINE EXPORTS ADDRESSED TO THE ASSE SSEE. THE LETTER READS AS UNDER:- THIS IS TO CONFIRM THAT THE FOLLOWING ASSETS WERE A CQUIRED BY PHILIPS FOODS INDIA FROM US, WIDE MOU DATED OW DEC EMBER, 2001. ITA NOS.498 TO 503/MDS./15 :- 21 - : WE ALREADY DECLARED TO YOU THAT NO DEPRECIATION WAS CLAIRBD ON THOSE MACHINERIES AND SINCE THIS MACHINERY WAS P URCHASED MORE THAN 15 YEARS AGO, WE ARE UNABLE TO TRACE OUT THE INVOICES. HOWEVER, WE CONFIRM THAT MANY IN THE FIST ATTACHED WERE PURCHASED LOCALLY AS NEW MACHINERY, AND SOME WERE I MPORTED FROM UNITED STATES OF AMERICA. TO THE BEST OF OUR REMEMBRANCE AND KNOWLEDGE, PLEAS E FIND ATTACHED THE DETAILS. FROM THE ABOVE LETTER, IT IS CLEAR THAT THE INVOICE S COPIES WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER. SEC.10B IS T O BE ALLOWED AS DEDUCTION FROM THE COMPUTATION OF TOTAL INCOME AND IT IS THE RESPONSIBILITY OF THE ASSESSEE TO PROVE THAT ALL TH E CONDITIONS ARE FULFILLED WITH NECESSARY EVIDENCES. ACCORDINGLY, TH E ONUS OF PROVING THE FACT THAT THE UNDERTAKING WAS NOT FORMED BY TRANSFE R OF MACHINERIES ALREADY USED FOR OTHER PURCHASE SQUARELY LIES ON TH E ASSESSEE. THE APPELLANT WAS UNABLE TO DISCHARGE THIS ONUS OF PROO F BEFORE THE LOWER AUTHORITIES. HENCE, IT COULD NOT BE ASSUMED THAT M /S. BABY MARINE EXPORTS PURCHASED ONLY NEW MACHINERY IN INDIA AND F EW OLD MACHINERY FROM USA BASED ON THE CERTIFICATE ISSUED BY THEM. I N ANY CASE AS REMARKED BY THE ASSESSING OFFICER, THE MACHINERIES WERE PURCHASED IN THE YEAR 1996 TO 1998 WHEREAS THE SAME WERE TRANSFE RRED TO THE ASSESSEE ONLY ON 06.12.2001 AND THE APPELLANT START ED COMMERCIAL PRODUCTION ON 08.04.2002. IT IS NOT CLEAR WHY IT TO OK SO MUCH TIME AND HOW M/S. BABY MARINE EXPORTS KEPT THE BUILDING AND MACHINERY IDLE FOR MORE THAN 5 YEARS. EVEN AS PER THE CERTIFICATE ISSU ED BY M/S. BABY MARINE EXPORTS IN THE YEAR 2011, THE MACHINERIES WE RE PURCHASED 15 ITA NOS.498 TO 503/MDS./15 :- 22 - : YEARS AGO WHICH MEANS IN THE YEAR 1996. IT COULD NO T BE ACCEPTED THAT THE MACHINERY PURCHASED IN THE YEAR 1996 WERE KEPT IDLE TILL 2001 AND NOT AT ALL IN USED FOR ANY PURPOSE. THE CONTENTION OF THE APPELLANT IS THAT AS CERTIFIED BY THE ASSESSING OFFICER OF M/S. BABY MARINE EXPORTS, DEPRECIATION WAS NOT CLAIMED ON THIS ITEM OF MACHIN ERIES. HOWEVER, IT IS SEEN THAT THIS POINT IS IRRELEVANT BECAUSE EVEN IF THEY CLAIMED DEPRECIATION, THE APPELLANT WOULD BE ENTITLED TO DE DUCTION U/S. 10B IN RESPECT OF REMAINING YEARS STARTING WITH THE YEAR I N WHICH THE COMMERCIAL PRODUCTION WAS COMMENCED BY M/S.BABY MAR INE EXPORTS. THIS IS BECAUSE THE DEDUCTION U/S.10B IS ALLOWED TO THE INDUSTRIAL UNDERTAKING AND NOT TO THE ASSESSEE. EVEN IF THERE IS A CHANGE IN THE OWNERSHIP OR THE BENEFICIAL INTEREST DURING THE PER IOD OF 10 YEARS FOR WHICH DEDUCTION U/S.10B IS ALLOWED, THE SUCCESSOR W OULD BE ENTITLED TO DEDUCTION U/S.10B AS SUB SEC.(9) OF 10B HAS BEEN OM ITTED WITH EFFECT FROM 01.04.2004 BY FINANCE ACT, 2003. FURTHER, THE DEDUCTION U/S. 10B IS TO BE ALLOWED ONLY FROM THE YEAR IN WHICH THE CO MMERCIAL PRODUCTION WAS COMMENCED BY THE INDUSTRIAL UNDERTAKING AND ADM ITTEDLY ONLY THE APPELLANT STARTED COMMERCIAL PRODUCTION ON 08.04.20 02. BUT THE RELEVANT POINT IS WHETHER THE M/S. BABY MARINE EXPO RTS SET UP THE INDUSTRIAL UNDERTAKING WITHOUT TRANSFERRING ANY MAC HINERY USED FOR ANY OTHER PURCHASE EARLIER. THIS POINT IS NOT ESTABLISH ED BY THE ASSESSEE BY BRINGING ON RECORD THE INVOICE COPIES FROM WHICH ON LY IT CAN BE VERIFIED WHETHER THE MACHINERIES PURCHASED BY M/S. BABY MARI NE EXPORTS WERE NEW OR SECOND HAND MACHINERY, IN THE ABSENCE OF WHI CH DEDUCTION ITA NOS.498 TO 503/MDS./15 :- 23 - : U/S.10B CANNOT BE ALLOWED TO THE ASSESSEE. IT IS CO NTENDED IN PARA- 2(D)(I) OF THE STATEMENT OF FACTS THAT THE MACHINER IES PURCHASED BY M/S. BABY MARINE EXPORTS IN 1998 COULD NOT BE USED BY THEM SINCE THEY DID NOT HAVE THE RIGHT TECHNOLOGY TO PRODUCE QUALIT Y CRAB MEAT AND HENCE THE PROJECT COULD NOT BE IMPLEMENTED. THIS FA CT COULD NOT BE ACCEPTED ON THE GROUND THAT WITHOUT THE RIGHT TECHN OLOGY, HOW M/S. BABY MARINE EXPORTS CONSTRUCTED THE BUILDING IN 0.5 4 OF ACRES AND ALSO INSTALLED THE MACHINERY IN THE YEAR 1998 ITSELF. IT IS THE CONTENTION OF THE ASSESSEE THAT THE APPELLANT COMMENCED COMMERCIA L PRODUCTION ON 08.04.2002 AFTER PURCHASING THE INDUSTRIAL UNDERTAK ING FROM M/S. BABY MARINE EXPORTS. HENCE, LD.D.R PLEADED THAT APPELLAN T WAS UNABLE TO SUBSTANTIATE THE CLAIM THAT M/S. BABY MARINE EXPORT S SET UP THE INDUSTRIAL UNDERTAKING ONLY WITH THE NEW MACHINERY PURCHASED IN INDIA IN THE ABSENCE OF INVOICES FOR PURCHASES BY M/S. BA BY MARINE EXPORTS. THEREFORE, THE ASSESSEE HAS NOT DISCHARGED THE ONU S OF PROVING THAT THE UNDERTAKING WAS SET UP WITHOUT TRANSFERRING ANY MACHINERY USED FOR ANY OTHER PURPOSE EARLIER. ACCORDINGLY, REVENUE HAS DENIED THE DEDUCTION CLAIMED U/S.10B ON THIS GROUND. 9.2 ACCORDING TO LD.D.R, AS PER BOARDS CIRCULAR NO .07/DV/2013 DATED 16.07.2013, IT WAS CLARIFIED IN PARA-5, 5.1,5 ,2 AND 5.3 THAT ONLY AFTER SETTING OFF OF LOSSES FROM OTHER UNITS INCLUD ING INELIGIBLE UNITS IS TO BE CONSIDERED FOR DEDUCTION U/S. 1OB. THE RELEVANT PARAS I.E. 5, 5.1, 5.2,5.3 & 6 OF THE ABOVE CIRCULAR ARE REPRODUCED BE LOW :-. ITA NOS.498 TO 503/MDS./15 :- 24 - : 5. FROM THE ABOVE IT IS EVIDENT THAT IRRESPECTIVE OF THEIR CONTINUED PLACEMENT IN CHAPTER III, SECTION WA AND LOB AS SUBSTITUTED BY FINANCE ACT, 2000 PROVIDE FOR DEDUCT ION OF THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF ARTICL ES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TA THE PREVIOUS YEAR IN WHICH THE UNDERTAK ING BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLE OR THING OR COMPUTER SOFTWARE. THE DEDUCTION IS TO BE ALLOWED FROM THE T OTAL REFERRED TO IN SECTION 5, COMPUTED IN THE MANNER LA ID DOWN IN THE INCOME-TAX ACT. 5.1 ALL INCOME FOR THE PURPOSES OF COMPUTATION OF T OTAL INCOME IS TO BE CLASSIFIED UNDER THE FOLLOWING HEAD S OF INCOME AND COMPUTED IN ACCORDANCE WITH THE PROVISIO NS OF CHAPTER IV OF THE ACT- SALARIES INCOME FROM HOUSE PROPERTY POFITS AND GAINS OF BUSINESS AND PROFESSION CAPITAL GAINS INCOME FROM OTHER SOURCES 5.2 THE INCOME COMPUTED UNDER VARIOUS HEADS OF INCO ME IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER IV OF THE IT ACT SHALL BE AGGREGATED IN ACCORDANCE WITH THE PROVISIO NS OF CHAPTER VI OF THE IT ACT, 1961. THIS MEANS THAT FIR ST THE INCOME/LOSS FROM VARIOUS SOURCES I.E. ELIGIBLE AJID INELIGIBLE UNITS, UNDER THE SAME HEAD ARE AGGREGATED IN ACCORD ANCE WITH THE PROVISIONS OF SECTION 70 OF THE ACT. THERE AFTER, THE INCOME FROM ONE AHEAD IS AGGREGATED WITH THE INCOME OR LOSS OF THE OTHER HEAD IN ACCORDANCE WITH THE PROVI SIONS OF SECTION 71 OF THE ACT. IF AFTER GIVING EFFECT TO TH E PROVISIONS OF SECTION 70 AND 71 OF THE ACT THERE IS ANY INCOME (WHERE THERE IS NO BROUGHT FORWARD LOSS TO BE SET OFF IN A CCORDANCE WITH THE PROVISIONS OF SECTION 72 OF THE ACT) AND T HE SAME IS ELIGIBLE FOR DEDUCTION IN ACCORDANCE WITH THE PROVI SIONS OF CHAPTER VL-A OR SECTION 10A, LOB ETC. OF THE ACT, T HE SAME SHALL BE ALLOWED IN COMPUTING THE TOTAL INCOME OF T HE ASSESSEE. 5.3 IF AFTER AGGREGATION OF INCOME IN ACCORDANCE WI TH THE PROVISIONS OF SECTION 70 AND 71 OF THE ACT, THE RES ULTANT AMOUNT IS A LOSS (PERTAINING TO AY 2001-02 AND ANY SUBSEQUENT YEAR) FROM ELIGIBLE UNIT IT SHALL BE ELI GIBLE FOR CARRY FO,WARD AND SET OFF IN ACCORDANCE WITH THE PR OVISIONS OF SECTION 72 OF THE ACT. SIMILARLY, IF THERE IS A LOS S FROM AN INELIGIBLE UNIT, IT SHALL BE CARRIED KWWARD AND MAY BE SET OFF AGAINST THE PROFITS OF ELIGIBLE UNIT OR INELIGIBLE UNIT AS THE CASE ITA NOS.498 TO 503/MDS./15 :- 25 - : MAY BE, IN ACCORDANCE WITH THE PROVISIONS OF SECTIO N 72 OF THE ACT. 6. THE PROVISIONS OF CHAPTER IV AND CHAPTER VI SHAL L ALSO APPLY IN COMPUTING THE INCOME FOR THE PURPOSE OF DE DUCTION UNDER SECTION 10AA AND 10BA OF THE ACT SUBJECT TO T HE CONDITIONS SPECIFIED IN THE SAID SECTIONS. IN VIEW OF THE ABOVE CIRCULAR, EVEN ASSUMING BUT NO T ADMITTING THAT THE APPELLANT IS ENTITLED TO DEDUCTION U/S.10B, THE SAM E CAN BE ALLOWED ONLY AFTER THE ADJUSTMENT OF LOSSES OF OTHER UNITS WHICH ARE NOT ENTITLED TO DEDUCTION U/S.10B. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. NOW, THE QUESTION BEFORE US IS WITH REGARD TO NATURE OF ACTIVITIES CARRIED ON BY THE ASSESSEE WHETHER IT IS MANUFACTURER OR PRODUCTION OF AN ARTICLE OR THING. THE ASSESSEE IN THIS CASE PROCURED LIVE CRAB FROM FISHERMEN WHICH ARE PROCESSED AFTER CLEANING AND PASTEURIZATION AND CANNED FOR READY TO USE THE MEAT . ACCORDING TO LD.A.R, THE AMENDED PROVISION OF SECTION 2(29BA) WH ICH WAS INSERTED BY FINANCE NO.92), 2009 WITH EFFECT FROM 01.04.2009 CANNOT BE APPLIED TO THE ASSESSEES CASE AS THE ASSESSMENT YEAR INVO LVED HEREIN IS 2006- 07. WITHOUT GOING INTO THE APPLICABILITY OF THIS P ROVISION, IN OUR OPINION WE HAVE TO SEE WHETHER THE ACTIVITIES CARRIED ON BY THE ASSESSEE IS MANUFACTURING OR PROCESSING ACTIVITIES. THE DEDUCT ION UNDER SECTION 10B IS AVAILABLE TO THE UNDERTAKING WHICH MANUFACTU RES OR PRODUCES ANY ARTICLE OR THING AND EXPORTS THE SAME. THE REAL MEANING OF MANUFACTURE IS THE CHANGE FROM ONE OBJECT TO ANOTHE R OBJECT FOR THE ITA NOS.498 TO 503/MDS./15 :- 26 - : PURPOSE OF MAKING IT MARKETABLE WITH THE AID OF POW ER, MEN, MATERIAL AND MACHINERY. EVERY CHANGE IN THE RAW MATERIAL CAN NOT BE TERMED AS MANUFACTURE UNLESS A NEW PRODUCT, WHICH HAS A SEPAR ATE IDENTITY, EMERGES. IF THE ORIGINAL IDENTITY OF THE COMMODITIE S CONTINUES TO REMAIN THE SAME AFTER GOING THROUGH SOME PROCESS AND IS CA LLED BY THE SAME NAME, IT CANNOT BE SAID THERE IS A MANUFACTURE OF A N ARTICLE OR THING. THEREFORE, THE MAIN TEST IS TO DECIDE WHETHER THE I DENTITY OF THE COMMODITY, BEFORE AND AFTER UNDERGONE VARIOUS PROCE SSES, CHANGES OR REMAINS THE SAME. MOREOVER, THE TERM 'PROCESSING' I S DISTINGUISHABLE FROM THE TERM 'MANUFACTURING' IN THE SENSE THAT A M ERE PROCESSING DOES NOT ORDINARILY MAKE THE THING TO UNDERGO A CHANGE L OSING ITS ORIGINAL IDENTITY, WHEREAS IN THE MANUFACTURING, THE ORIGINA L ARTICLES LOSE ITS IDENTITY. THE TERM 'MANUFACTURE' OR PRODUCE IN SECT ION 10B OF THE ACT CAN BE CONSIDERED ONLY WHEN A COMMERCIALLY NEW AND DISTINCT PRODUCT COMES INTO EXISTENCE AFTER UNDERGOING MANUFACTURING ACTIVITIES. IF THE INTENSION OF THE LEGISLATURE IS TO INCLUDE PROCESSI NG ALSO TO CLAIM EXEMPTION UNDER SECTION 10B OF THE ACT, THE CONDITI ON PRECEDENT FOR GRANTING EXEMPTION UNDER THIS SECTION, THE WORD MA NUFACTURING OR PROCESSING WOULD HAVE BEEN USED INSTEAD OF MANUFA CTURE OR PRODUCE. IN THE CASE UNDER CONSIDERATION, WE FIND THAT THE A SSESSING OFFICER IN HIS ENTIRE ORDER DISCUSSED THIS POINT OF ISSUE AND OBSERVED THAT THE ASSESSEE-COMPANY HAS NOT UNDERTAKEN ANY MANUFACTURI NG ACTIVITY. THE ASSESSEE HAS NOT MANUFACTURED ANY NEW ARTICLE OR TH ING DISTINCT FROM THE ORIGINAL RAW MATERIAL. THE FINAL PRODUCT I.E., ARTICLE OR THING CANNOT ITA NOS.498 TO 503/MDS./15 :- 27 - : BE CALLED BY ANY OTHER NAME THAN THE ORIGINAL NAME. THE ASSESSEE HAS PURCHASED LIVE CRAB AND FINALLY SOLD THE CRAB IN TH E FORM OF MEAT. THE ASSESSEE DOES ONLY PROCESSING ACTIVITY FOR THE PURP OSE OF PRESERVATION AND MARKETING THE SAME. THE ASSESSEE PURCHASED CRAB FROM FISHERMEN AND SELLS TO THE PUBLIC/CUSTOMERS. WHATEVER ACTIVIT Y IS UNDERTAKEN BY THE ASSESSEE IS FOR ONLY TO PRESERVE THE PRODUCT. WHEREAS THE CONTENTION OF THE LD.A.R IS THAT AT THE TIME OF PU RCHASE FROM THE FISHERMEN/AGENTS, IT WAS LIVE CRAB AND IT WAS UNDER GONE VARIOUS MANUFACTURING ACTIVITIES BEFORE SELLING IT FOR HUM AN CONSUMPTION. AFTER PURCHASE OF THE LIVE CRAB IT IS PROCESSED BY VARIOU S TREATMENTS WHICH ARE CLEANING, GRADING, SEPARATING, LABORATORY TESTI NG, PRESERVING TREATMENT AND PACKING AND LABELING. AFTER THESE TRE ATMENTS, THE CRAB BECOMES A CONSUMABLE CRAB FOR HUMAN CONSUMPTION. TH ERE IS NO CHANGE IN THE BIOLOGICAL COMPONENT OF THE CRAB. IT IS TO BE NOTED THAT THE LIVE CRAB WOULD HAVE BEEN USED IN THE SAME MANN ER AS THE CRAB MEAT IS USED FOR HUMAN CONSUMPTION. THERE IS NO CH ANGE IN THE SUBSTANCE USING IN LIVE CRAB OR USING IT AS BY EXTR ACTING IT AS MEAT FROM THE SAME LIVE CRAB. THE CRAB MEAT IS CRAB MEAT ONLY . IN OTHER WORDS, LIVE CRAB WOULD BE USED FOR HUMAN CONSUMPTION AS CR AB MEAT USED FOR HUMAN CONSUMPTION. IN OTHER WORDS, INPUT AND OUTPU T IS SAME, WHICH IS CRAB ONLY. 10.1 IT IS WELL SETTLED LAW THAT PROCESS OF STANDA RDIZATION, PRESERVATION, GRADING CANNOT BE TREATED AS MANUFACT URE ACTIVITY OR PRODUCTION. THE LD.A.R PLACED RELIANCE ON THE DECI SION OF SPECIAL BENCH ITA NOS.498 TO 503/MDS./15 :- 28 - : IN THE CASE OF B.G. CHITALE V.DCIT, SOLAPUR(115 ITD 97)(SB) PUNE, WHEREIN THE SPECIAL BENCH HELD THAT PASTEURIZATION OF MILK IS ONLY PROCESSING OF MILK AND MILK REMAINS MILK, EVEN AFTE R SUCH PROCESSING, THOUGH MORE CLEAN AND MORE FIT FOR CONSUMPTION AND THERE DOES NOT AMOUNT IT MANUFACTURE OR PRODUCTION FOR GRAN TING DEDUCTION U/S.80HHA OR 80I OF THE ACT. THE ACTIVITIES OF THE ASSESSEE IN THE CASE OF B.G. CHITALE IS SIMILAR TO THE ACTIVITIES OF ASS ESSEE IN THE PRESENT CASE. FURTHER, LD.A.R RELIED ON VARIOUS JUDGEMENTS WHICH CANNOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE, WHICH ARE DELIVERED IN THE CONTEXT OF THE FACTS OF THOSE CASES. 10.2 THE LD.A.R MADE ONE MORE PLEA THAT DEDUCTION WHICH WAS GRANTED ALREADY IN EARLIER ASSESSMENT YEAR U/S.10B OF THE ACT THAT CANNOT BE DISTURBED IN THE SUBSEQUENT ASSESSMENT YE AR AND PLACED RELIANCE ON THE JUDGEMENT OF KARNATAKA HIGH COURT I N THE CASE OF ACE MULTI AXES SYSTEMS LTD. V. DCIT REPORTED IN [2014] 367 ITR 266 (KAR). THIS DECISION WAS CONSIDERED BY THIS TRIBUN AL IN THE CASE OF M/S. SODECIA INDIA P. LTD., IN ITA NOS. 1959, 1960 & 1961/MDS/2014 VIDE ORDER DATED 16.03.2016 AND THE TRIBUNAL OBSERVED TH AT THE SAID JUDGMENT OF ACE MULTI AXES SYSTEMS LTD. V. DCIT(SUP RA) WAS DELIVERED IN THE CONTEXT OF SEC.263 OF THE ACT AND IN THE PRESENT CASE, WE ARE CONCERNED WITH ASSESSMENT MADE U/S.143(3) OF THE ACT. THESE SECTIONS ARE STANDING ON DIFFERENT FOOTING. ITA NOS.498 TO 503/MDS./15 :- 29 - : 10.3 FURTHER, WE FIND THAT THE CO-ORDINATE BENC H IN THE CASE OF M/S. SODECIA INDIA P. LTD., CITED SUPRA FOLLOWED THE EAR LIER DECISION OF THE CO-ORDINATE BENCH OF PUNE IN THE CASE OF SAMRUDDHI INDUSTRIES LTD. V. JCIT IN ITA NO.1002/PN/2009 DATED 31.3.2011, PUNE B ENCH OF THE TRIBUNAL OBSERVED AS UNDER : 9. WE HAVE CAREFULLY EXAMINED THE RIVAL CONTENTIONS AND FIND OURSELVES UNABLE TO ACQUIESCE TO THE PLEA OF THE AS SESSEE COMPANY. NO DOUBT, THE CONDITIONS PRESCRIBED IN SUB-SECTION (2) OF SECTION 80- IB ARE REQUIRED TO BE EXAMINED IN THE INITIAL ASSES SMENT YEAR, HOWEVER, THERE IS NOTHING IN THE PHRASEOLOGY OF SUB -SECTION (2) TO SUGGEST THAT THE CONDITION IN CLAUSE (III) THEREOF HAS TO BE EXAMINED ONLY IN THE INITIAL ASSESSMENT YEAR. WE ARE IN AGRE EMENT WITH THE POSITION OF THE APPELLANT THAT IN SO FAR AS CONDITI ONS PRESCRIBED IN CLAUSES (I) AND (II) ARE CONCERNED, THE SAME RELATE TO A POINT OF TIME WHICH CAN ONLY BE EXAMINED IN THE COURSE OF THE INI TIAL ASSESSMENT YEAR. CLAUSE (I) REQUIRES AN EXAMINATION AS TO WHE THER THE INDUSTRIAL UNDERTAKING IS FORMED BY SPLITTING UP OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. CLAUSE (II) RELATE S TO EXAMINING WHETHER THE INDUSTRIAL UNDERTAKING IS FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT ALREADY USED IN BUSINESS. EVIDENTLY, THE CONDITIONS IN CLAUSES (I) AND (II) C AN ONLY BE EXAMINED AT THE TIME OF FORMATION OF A UNIT, WHICH IS THE IN ITIAL YEAR. CLAUSE (III), WHICH IS UNDER CONSIDERATION, DOES NOT IMPLY ANY SUCH INTERPRETATION. IN OUR CONSIDERED OPINION, THE IMPO RT OF THE CONDITION PRESCRIBED IN CLAUSE (III) IS THAT THE IN DUSTRIAL UNDERTAKING OUGHT TO BE A SMALL SCALE UNDERTAKING IN THE YEAR O F CLAIM OF DEDUCTION, BE IT BE THE INITIAL YEAR OR ANY OF THE SUBSEQUENT YEARS, SO LONG AS IT MANUFACTURES PRODUCTS LISTED IN THE E LEVENTH SCHEDULE. QUITE CLEARLY, IN THIS CASE ADMITTEDLY THE ASSESSEE IS MANUFACTURING ARTICLES OR THINGS STATED IN THE ELEVENTH SCHEDULE AND IT DOES NOT QUALITY TO BE A SMALL SCALE INDUSTRIAL UNDERTAKING IN THE INSTANT YEAR AND, THUS, THE SAID CONDITION IS NOT FULFILLED. 10. MUCH HAS BEEN ARGUED BY THE APPELLANT TO THE EF FECT THAT THE CONDITIONS ARE TO BE VERIFIED ONLY IN THE INITIAL Y EAR AND SUCH EXAMINATION IS NOT INTENDED BY THE LEGISLATURE TO B E CARRIED OUT IN THE SUBSEQUENT YEARS BY THE ASSESSING OFFICER. FOR THIS PROPOSITION, HEAVY RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF T HE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD (SUPRA). WE HAVE PERUSED THE SAID DE CISION. IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD . (SUPRA), THE FACTS WERE AS FOLLOWS. THE ASSESSEE WAS CARRYING ON BUSINESS OF MANUFACTURING CEMENT AND THE CAPACITY OF THE FIRST CEMENT PLANT WAS 600 TONS PER DAY. IN THE YEAR RELEVANT TO THE A SSESSMENT YEAR 1968-69, THE CAPACITY WAS EXPANDED AND IT WAS RAISE D TO 1600 TONS PER DAY. THE ASSESSEE COMPANY THEREFORE MADE A CLAI M FOR RELIEF ITA NOS.498 TO 503/MDS./15 :- 30 - : UNDER SECTION 80J OF THE ACT WITH REFERENCE TO THE CAPITAL EMPLOYED IN THE EXPANSION OF THE PLANT AND MACHINERY. THE AS SESSING OFFICER ALLOWED THE SAID CLAIM FOR THE ASSESSMENT YEAR 1968 -69. HOWEVER, IN THE ASSESSMENT YEAR 1969-70 THE ASSESSING OFFICE R DISALLOWED THE ASSESSEES CLAIM, AS IN HIS OPINION, THE EXPANS ION OF CEMENT MANUFACTURING UNIT DID NOT AMOUNT TO SETTING UP A N EW INDUSTRIAL UNDERTAKING, INASMUCH AS THE ACTIVITIES OF THE EXPA NDED PART OF THE UNIT AS WELL AS THOSE OF THE ORIGINAL UNITS WERE MU CH INTER- CONNECTED. THUS, HE DISALLOWED THE CLAIM ON THE GRO UND THAT NO NEW UNIT CAN BE SAID TO HAVE BEEN SET UP SEPARATE F ROM THE EXISTING UNIT ON ACCOUNT OF MERE EXPANSION. THE APPELLATE CO MMISSIONER, IN APPEAL, HELD THAT IN THE ABSENCE OF THERE BEING ANY SPECIFIC PROVISION IN THE ACT THAT THE NEW UNIT SHOULD BE AL TOGETHER DISTINCT AND EVEN PHYSICALLY AT A DISTANCE FROM THE OLD UNIT , AND THAT, IF THE RELIEF WAS ADMISSIBLE FOR ASSESSMENT YEAR 1968-69, IN RESPECT OF THE EXPANDED UNIT OF THE ASSESSEE COMPANY, THAT RELIEF WOULD CONTINUE TO BE AVAILABLE TO THE ASSESSEE FOR THE SUBSEQUENT PERIOD OF FOUR YEARS. THE TRIBUNAL ALSO UPHELD THE ORDER OF THE AP PELLATE COMMISSIONER GRANTING RELIEF TO THE ASSESSEE SINCE IN THE OPINION OF THE TRIBUNAL UNLESS THE ASSESSMENT FOR THE ASSESSME NT YEAR 1968- 69 WAS DISTURBED BY WITHDRAWAL OF THE RELIEF, THERE COULD BE NO SUBSTANCE OR JUSTIFICATION IN THE REVENUES ATTEMPT TO WITHDRAW THE CLAIM UNDER SECTION 80J OF THE ACT FOR THE SUBSEQUE NT YEAR, I.E. ASSESSMENT YEAR 1969-70. THE HONBLE HIGH COURT HEL D THAT IF THE RELIEF OF TAX HOLIDAY WAS GRANTED TO THE ASSESSEE F OR THE ASSESSMENT YEAR 1968-69, THE ASSESSEE WAS ENTITLED TO CONTINUA NCE OF THAT RELIEF FOR THE SUBSEQUENT FOUR YEARS AND THE ASSESS ING OFFICER WOULD NOT BE JUSTIFIED IN REFUSING TO CONTINUE THE ALLOWA NCE FOR THE ASSESSMENT YEAR 1969-70, WITHOUT DISTURBING THE REL IEF FOR THE INITIAL YEAR. IN THE WORDS OF THE HONBLE HIGH COURT, --NO DOUBT, THE RELIEF OF TAX HOLIDAY UNDER SECTION 80J CAN BE WITHHELD OR DISCONTINUED PROVIDED THE RELIEF GRANTED IN THE INITIAL YEAR OF ASSESSMENT IS DISTURBED OR CHANGED ON VALID GROUNDS. BUT WITHOUT DISTURBING THE RELIEF GRANTED IN THE INITIAL YEAR, THE ITO CANNOT EXAMINE THE QUESTION AGAIN AND DECIDE TO WITHHOLD OR WITHDRAW T HE RELIEF WHICH HAS BEEN ALREADY ONCE GRANTED. 11. AS THE AFORESAID DISCUSSION SHOWS, THE MATRIX O F THE DISPUTE IN SAURASHTRA CEMENT & CHEMICALS LTD. (SUPRA) STOOD ON AN ALTOGETHER DIFFERENT FOOTING. THE ASSESSMENT YEAR IN DISPUTE W AS 1969-70, WHICH WAS THE SECOND YEAR OF CLAIM OF DEDUCTION UND ER SECTION 80J OF THE ACT. IN THE INITIAL ASSESSMENT YEAR OF 1968- 69 THE CLAIM WAS ALLOWED BY TREATING THE EXPANSION IN CAPACITY AS FO RMATION OF A NEW INDUSTRIAL UNDERTAKING. WHETHER EXPANSION IN CAPACI TY AMOUNTED TO FORMATION OF A NEW INDUSTRIAL UNDERTAKING WAS A CON DITION REQUIRED TO BE EXAMINED ONLY IN THE INITIAL YEAR, AND WHICH WAS DONE IN THE COURSE OF ASSESSMENT FOR THE ASSESSMENT YEAR 1968-6 9, BEING THE INITIAL YEAR. IN THE ASSESSMENT YEAR 1969-70, THE A SSESSING OFFICER SOUGHT TO DENY THE DEDUCTION ON THE GROUND THAT EXP ANSION OF MANUFACTURING CAPACITY DID NOT AMOUNT TO SETTING UP OF A NEW ITA NOS.498 TO 503/MDS./15 :- 31 - : INDUSTRIAL UNDERTAKING. IN OTHER WORDS, A CONDITION WHICH WAS RELEVANT ONLY AT THE TIME OF FORMATION OF UNIT, WAS EXAMINED AND ACCEPTED IN THE ASSESSMENT YEAR 1968-69 AND THE SAM E WAS SOUGHT TO BE REVIEWED BY THE ASSESSING OFFICER IN THE COUR SE OF THE ASSESSMENT FOR THE SUBSEQUENT ASSESSMENT YEAR 1969- 70 AND ARRIVE AT A DIFFERENT CONCLUSION. THIS ACTION WAS NEGATED BY THE HONBLE HIGH COURT WITH AFORESAID OBSERVATIONS THAT WITHOUT DISTURBING THE RELIEF GRANTED IN THE INITIAL YEAR, THE REVENUE CAN NOT EXAMINE THE QUESTION AGAIN TO DENY THE RELIEF IN SUBSEQUENT YE AR. IN OUR CONSIDERED OPINION, IN THE INSTANT CASE MATRIX STAN DS DIFFERENTLY, INASMUCH IN THE INSTANT CASE THE ASSESSING OFFICER IS NOT ATTEMPTING TO REVIEW A POSITION ACCEPTED WITH REFERENCE TO THE INITIAL YEAR. IN FACT, IN THE PRESENT CASE ON ACCOUNT OF CHANGED CON DITION NAMELY THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE LOOSING THE STATUS OF A SMALL SCALE INDUSTRIAL UNDERTAKING UNDER THE IDR AC T, THE ASSESSING OFFICER SEEKS TO HOLD THAT THE SAID CONDITION IS NO T SATISFIED DURING THE YEAR UNDER CONSIDERATION. THE SAID ACTION CANNO T BE INTERPRETED TO MEAN THAT THERE IS AN ATTEMPT BY THE REVENUE TO REVIEW AN ACCEPTED POSITION OF THE INITIAL ASSESSMENT YEAR WH ICH WAS THE CASE BEFORE THE HONBLE GUJARAT HIGH COURT IN THE CASE O F SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. (SUPRA). IN THE C ASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. (SUPRA ) ONCE HAVING ACCEPTED IN THE INITIAL ASSESSMENT YEAR THAT THE EX PANSION IN CAPACITY AMOUNTED TO SETTING UP OF A NEW UNIT, THE SAME WAS SOUGHT TO BE REVIEWED IN THE SUBSEQUENT YEAR BY HOL DING DIFFERENTLY. IN FACT, THE HONBLE GUJARAT HIGH COUR T ITSELF ENVISAGED THAT THE RELIEF OF TAX HOLIDAY UNDER SECTION 80J CA N BE WITHHELD, PROVIDED THE RELIEF GRANTED IN THE INITIAL YEAR IS DISTURBED OR CHANGED ON VALID GROUND. IN THE PRESENT CASE, IT IS QUITE C LEAR THAT ON ACCOUNT OF EVENTS SUBSEQUENT TO THE INITIAL ASSESSM ENT YEAR THE ASSESSEE FAILS TO FULFIL THE IMPUGNED CONDITION AND , THEREFORE, IT IS INELIGIBLE FOR THE CLAIM OF DEDUCTION IN THIS YEAR. IN OUR CONSIDERED OPINION, THE RATIO OF THE JUDGMENT OF THE HONBLE G UJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICALS LTD. ( SUPRA) DOES NOT HELP THE ASSESSEE IN THE PRESENT CASE. 12. THE NEXT DECISION RELIED UPON BY THE APPELLANT IS IN THE CASE OF PAUL BROTHERS (SUPRA) WHEREIN THE FACTS WERE AS FOL LOWS. IN THE CASE OF PAUL BROTHERS (SUPRA), THE ISSUE RELATED TO JURI SDICTION ASSUMED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT FO R ASSESSMENT YEARS 1981-82 AND 1982-83 WHICH WAS QUASHED BY THE TRIBUNAL, WHICH WAS APPEALED BY THE REVENUE BEFORE THE HONBL E HIGH COURT. THE FACTS WERE THAT THE ASSESSEE FIRM HAD BRANCHES IN BACKWARD AREAS CARRYING ON THE BUSINESS OF CONSTRUCTION OF B UILDINGS, TRANSPORTATION AND MANUFACTURE AND SUPPLY OF BRICKS . FOR THE USE IN CONSTRUCTION ACTIVITY, ASSESSEE ALSO MANUFACTURED W INDOWS, CONCRETE SLABS ETC. FOR ASSESSMENT YEARS 1980-81 AN D 1981-82 IT CLAIMED DEDUCTION UNDER SECTION 80HH OF THE ACT, WH ICH WAS ALLOWED FOR THE ASSESSMENT YEAR 1980-81 BY THE ASSE SSING OFFICER WITHOUT DISCUSSION AND SUCH ASSESSMENT HAD BECOME F INAL. IN THE ASSESSMENT YEAR 1981-82 ALSO THE DEDUCTION WAS ALLO WED BY THE ITA NOS.498 TO 503/MDS./15 :- 32 - : ASSESSING OFFICER AND WHILE ALLOWING DEDUCTION, REL IANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE ORISSA HIGH COURT IN THE CASE OF CIT V N.C. BUDHARAJA & CO 121 ITR 212 (ORI) WHICH WAS T HE ONLY DECISION THEN OPERATING IN THE FIELD. FOR THE ASSES SMENT YEAR 1981- 82, THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) ON CERTAIN OTHER ISSUES. AG AIN FOR ASSESSMENT YEAR 1982-83 THE ASSESSING OFFICER ALLOW ED DEDUCTION UNDER SECTION 80HH OF THE ACT. THE COMMISSIONER EXE RCISING JURISDICTION UNDER SECTION 263 OF THE ACT QUASHED T HE ORDERS OF THE ASSESSING OFFICER FOR ASSESSMENT YEARS 1981-82 AND 1982-83. AS PER THE TRIBUNAL, (I) SINCE THE ASSESSMENT ORDER FO R ASSESSMENT YEAR 1981-82 WAS MERGED IN THE APPELLATE ORDER, SECTION 263 JURISDICTION COULD NOT BE EXERCISED BY THE COMMISSIONER; (II) SI NCE THE ASSESSMENT WAS BASED ON A BINDING DECISION OF THE H IGH COURT, IT COULD NOT BE INTERFERED UNDER SECTION 263 OF THE AC T; (III) UNLESS DEDUCTION ALLOWED IN THE ASSESSMENT YEAR 1980-81 ON THE SAME GROUND WAS WITHDRAWN, THEY COULD NOT BE DENIED FOR THE SUBSEQUENT YEARS. THE HONBLE HIGH COURT AFFIRMED T HE APPROACH OF THE TRIBUNAL ON ALL THE THREE COUNTS. BEFORE US, TH E LEARNED COUNSEL FOR THE APPELLANT POINTED OUT THAT THE PARITY OF RE ASONING APPROVED BY THE HIGH COURT TO THE EFFECT THAT UNLESS DEDUCTI ON ALLOWED IN A PRECEDING YEAR ON THE SAME GROUND IS WITHDRAWN, SIM ILAR RELIEF FOR THE SUBSEQUENT YEARS COULD NOT BE WITHHELD. SECONDL Y, THE LEARNED COUNSEL ALSO REFERRED TO THE OBSERVATIONS OF THE HO NBLE HIGH COURT THAT IN SECTIONS 80HH OR SECTION 80J THERE IS NO PR OVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CONDITIONS. IT WAS POINTED OUT THAT SIMILAR IS T HE SITUATION WITH REGARD TO THE PROVISIONS OF SECTION 80-IB AND THERE FORE IN THE INSTANT CASE THE RELIEF UNDER SECTION 80-IB COULD N OT BE DENIED IN THIS YEAR. 13. IN OUR CONSIDERED OPINION, THE RATIO OF THE AFO RESAID JUDGMENT ALSO DOES NOT HELP THE ASSESSEE IN THE INSTANT CASE . THE FACTUAL MATRIX IN THE AFORESAID CASE WAS THAT IN EARLIER YE AR THE BENEFIT STOOD ALLOWED TO THE ASSESSEE AND WITHOUT ANY CHANG ED CIRCUMSTANCES, THE SAID CLAIM WAS SOUGHT TO BE DENI ED IN A SUBSEQUENT YEAR, AND SUCH AN ATTEMPT WAS NEGATED BY THE HONBLE HIGH COURT. IN THE INSTANT CASE, AS WE HAVE NOTED E ARLIER THE CIRCUMSTANCES HAVE CHANGED AFTER THE INITIAL ASSESS MENT YEAR AND THEREFORE, THE CLAIM IS SOUGHT TO BE DENIED ON VALI D GROUNDS AND WITHOUT DISTURBING THE CLAIM IN THE INITIAL YEAR BE CAUSE THE CIRCUMSTANCES IN THE INITIAL YEAR HAVE NOT UNDERGON E ANY CHANGE. THEREFORE, THE DECISION IS INAPPLICABLE TO THE INST ANT CASE. 14. IN THE RESULT, WE HEREBY AFFIRM THE ORDERS OF T HE AUTHORITIES BELOW DENYING RELIEF TO THE ASSESSEE UNDER SECTION 80-IB OF THE ACT. THE ASSESSEE FAILS. ITA NOS.498 TO 503/MDS./15 :- 33 - : IN VIEW OF THIS ABOVE, IN OUR OPINION THERE IS NO M ERIT IN THE ARGUMENT OF THE LD.A.R THAT IN EARLIER ASSESSMENT YEAR DEDUC TION U/S.10B WAS GRANTED, EVEN IN THE ASSESSMENT YEAR UNDER CONSIDER ATION, THE SAME VIEW MUST BE ADOPTED. IN OUR CONSIDERED VIEW, THE ASSESSEE CAN BE ALLOWED DEDUCTION, BUT THE SATISFACTION OF THE COND ITIONS ENVISAGED IN THE LAW COULD NOT BE SAID THAT IT WAS FULFILLED MER ELY BECAUSE IT WAS ERRONEOUSLY ALLOWED DEDUCTION IN THE EARLIER YEARS. IT IS A SETTLED POSITION THAT RES JUDICATA IS NOT APPLICABLE IN THE ADMINISTRATION OF TAX LAWS. NO VESTED RIGHT CAN BE HELD TO BE CREATED IN FAVOUR OF THE ASSESSEE MERELY BECAUSE OF ALLOWANCE OR DEDUCTION I N THE EARLIER YEARS WHICH IS NOT LEGALLY ENTITLED TO. IN VIEW OF THE AB OVE, WE UPHELD THE ORDER OF LD.CIT(A) ON DENYING THE DEDUCTION U/S.10B OF THE ACT. SINCE, WE, HAVE DISMISSED THE MAIN ISSUE OF ALLOWABILITY O F DEDUCTION U/S.10B OF THE ACT, AT THE THRESHOLD, THERE IS NO QUESTION OF GOING TO THE OTHER GROUNDS RAISED BY THE ASSESSEE WITH REGARD TO GRANT ING OF DEDUCTION U/S.10B OF THE ACT AND ALL OTHER GROUNDS RELATING T O DEDUCTION U/S.10B OF THE ACT ARE TO BE CONSIDERED AS INFRUCTUOUS AND ACCORDINGLY, THESE GROUNDS ARE DISMISSED. SIMILARLY, ALTERNATE CLAIM U/S.80IB(11A) OF THE ACT HAS NO MERIT. 11. THE LAST GROUND IS WITH REGARD TO DIRECTION OF LD.CIT(A) TO REOPEN THE ASSESSMENT FOR ASSESSMENT YEAR 2003-04, 2004-0 5 & 2007-08. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD.CIT(A) CANNOT TRAVEL BEYOND THE ASSE SSMENT YEAR UNDER CONSIDERATION AND IN THIS CASE, THE LD.CIT(A) CANNO T GIVE FINDINGS TO ITA NOS.498 TO 503/MDS./15 :- 34 - : REOPEN THE CONCLUDED ASSESSMENT FOR ASSESSMENT YEA R 2003-04, 2004- 05 & 2007-08, WHICH IS NOT NECESSARY FOR THE PURPOS E OF DISPOSE OF THE APPEAL BEFORE HIM. ACCORDINGLY, WE VACATE THIS FIND INGS OF THE LD.CIT(A) IN PARA 6.1 OF THE CIT(A)S ORDER. ACCOR DINGLY, THE APPEAL NO.499/16 IS PARTLY ALLOWED. ITA NO.498/MDS./2016 (A.Y.2005-06) 13. SINCE WE UPHELD THE REOPENING THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07 ON THE SAME REASON, WE ARE INCLINED TO HELD THAT REOPENING IS VALID FOR ASSESSMENT YEAR 2005-06 , THIS GROUND OF THE ASSESSEE IS DISMISSED. 14. THE NEXT GROUND IS REGARDING ALLOWABILITY OF D EDUCTION U/S.10B OF THE ACT. SINCE WE HAVE ALREADY HELD IN THE ASSE SSMENT YEAR 2006-07 THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S .10B OF THE ACT ON THE SAME REASON WE HAVE UPHELD THE ORDER OF THE LD.CIT( A) ON THIS ISUSE. THIS GROUND IS REJECTED. 15. REGARDING THE LAST GROUND IS WITH REGARD TO DI RECTION OF LD.CIT(A) TO REOPEN THE CONCLUDED ASSESSMENT FOR A SSESSMENT YEAR 2003-04 & 2004-05 & 2007-08, IT IS NOT NECESSARY OF LD.CIT(A) TO GIVE FINDINGS FOR THE PURPOSE OF DISPOSAL OF APPEAL BEFO RE HIM FOR ASSESSMENT YEAR 2005-06. ACCORDINGLY, THIS FINDING S OF THE LD.CIT(A) IS VACATED. 15.1 IN THE RESULT THE APPEAL IN 498/16 FOR ASSESS MENT YEAR 2005-06 IS PARTLY ALLOWED. ITA NOS.498 TO 503/MDS./15 :- 35 - : ITA NOS.500 TO 503/MDS./2016 (A.Y.2008-09, 2009-10, 2010-11 & 2011-12) 16. THE ISSUE IN ALL THESE APPEALS IS WITH REGARD TO GRANT OF DEDUCTION U/S.10B OF THE ACT, WHICH IS CONSIDERED B Y US IN THE ASSESSMENT YEAR 2006-07, ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS REJECTED. 16.1 THE APPEALS IN ITA NOS. 500 TO 503/MDS/2 016 ARE DISMISSED. 17. IN THE RESULT, THE APPEALS IN ITA NOS. 49 8 & 499/MDS/2016 ARE PARTLY ALLOWED AND ITA NOS. 500 TO 503/MDS./2016 A RE DISMISSED. ORDER PRONOUNCED ON 24 TH AUGUST, 2016, AT CHENNAI. SD/ - S D/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 24 TH AUGUST, 2016 K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 4. - 1 / CIT 2. / RESPONDENT 5. /23- 4 / DR 3. - 1-!' / CIT(A) 6. 3&-5 / GF