DCIT, Circle -2, Kolkata, Kolkata V. M/s Amricon Agrovet Pvt. Ltd., Kolkata

ITA 827/KOL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70381 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2012
• Court: TRIBUNAL
• Department Lawyers: DILIP KUMAR RAKSHIT
• Assessee Lawyers: D S DAMLE
• Section: 143(3); 80IB

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND ! ' ! ! ' ! ! ' ! ! ' ! , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] # # # # /I.T.A NO. 827/KOL/2012 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. AMRIC ON AGROVET (P) LTD. CIRCLE-2, KOLKATA. (PAN : AADCA1610Q) ()* /APPELLANT ) (+)*/ RESPONDENT ) DATE OF HEARING: 13.08.2013 DATE OF PRONOUNCEMENT: 13.08.2013 FOR THE APPELLANT: SHRI DILIP KUMAR RAKSHIT, JCIT, SR. DR FOR THE RESPONDENT: SHRI D. S. DAMLE, FCA , / ORDER PER MAHAVIR SINGH, JM/ ! ' ! ! ' ! ! ' ! ! ' ! , : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-1, KOLKATA IN APPEAL NO.266/CIT(A)-1/C-2/10-11 DATED 07.02.2012. ASSESSM ENT WAS FRAMED BY DCIT, CIRCLE-2, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 13.12. 2010. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF DEDUCTION U/S. 80IB OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND: THAT THE LD. CIT(A-1, KOLKATA HAS ERRED IN LAW AND FACTS BY NOT RELYING UPON THE APEX COURT DECISIONS IN THE CASES OF (I) SACS EAGLES CHICORY VS. CIT (2002) 255 ITR 178. (II) COLLECTOR OF CENTRAL EXCISE VS. KUTTY FLUSH DOORS A ND FURNITURE COMPANY (P) LTD. AIR 1988 SC 1164 WHICH WERE THE BASIS OF DISALLOWING THE DEDUCTION U /S. 80IB OF RS.1,74,99,674/-, AGAINST THE CLAIM MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE FILED A COPY OF TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR AY 2007-08 IN ITA NO.2227/K OL/2010 DATED 20.03.2013, WHEREIN THE TRIBUNAL VIDE PARA 9 AND 10 OF ITS ORDER HAS HELD A S UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE ONLY I SSUE INVOLVED IN THIS GROUND RELATES TO WHETHER THE ASSESSEE IS ENGAGED IN THE MANUFACTURE OF A PRODUCTION OF AN ARTICLE SO THAT IT MAY BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. T HIS ISSUE HAS DULY BEEN DECIDED BY THIS BENCH IN ASSESSEES SISTER CONCERN IN ITA NO.1505/K OL/2007 IN THE CASE OF ACIT-VS- AMRIT FEEDS LTD., KOLKATA, IN WHICH, THE SIMILAR ISSUE HA S ARISEN AND RESTORED. WHILE DECIDING THE SIMILAR ISSUE, THIS TRIBUNAL OBSERVED AS UNDER VIDE PARA 15 TO 18 OF ITS ORDER. 15. SEC 801B (2) (III) REQUIRES THE ELIGIBLE INDUST RIAL UNDERTAKING TO BE ENGAGED IN MANUFACTURE OF PRODUCTION OF AN ARTICLE . THE SAID SECTION HOWEVER, DOES NOT DEFINE THE EXPRESSION MANUFACTUR E OR PRODUCTION OF AN 2 ITA NO. 827/K/2012 AMRICON AGROVET (P) LTD. A. Y 2008-09 ARTICLE. IN FACT THIS EXPRESSION IS NOT DEFINED IN THE ACT ALSO. THE LD. CIT (A) EXTENSIVELY ANALYSED MEANING OF THE SAID EXPRES SION WITH REFERENCE TO JUDICIAL DECISIONS DISCUSSED IN HIS ORDER. THE TEST LAID DOWN BY THE COURTS IS WHETHER THE EMERGING NEW PRODUCT IS KNOWN TO THE TR ADE, INDUSTRY AND COMMERCE BY ITS OWN NAME HAVING ITS OWN APPLICATION USE AND HAS A MARKET OF ITS OWN. APPLYING THE CRITERIAS LAID DOWN IN THE SE JUDICIAL DECISIONS WE FIND THAT IN PHYSICAL APPEARANCE, COLOUR AND SHAPE THE. POULTRY FEED VASTLY DIFFERS FROM THE INPUT MATERIALS. THE POULTRY FEED IS MANUFACTURED IN A SCIENTIFIC AND SYSTEMATIC MANNER WITH THE USE AND A SSISTANCE OF SOPHISTICATED PLANT AND MACHINERY ACQUIRED AT A SUB STANTIAL COST. POULTRY FEED IS RECOGNISED NOT ONLY BY TRADE AND COMMERCE B UT ALSO BY THE STATUTORY AUTHORITIES UNDER CENTRAL EXCISE, SALES TAX ETC AS INDEPENDENT PRODUCTS APPLYING THE RATIO LAID DOWN IN JUDICIAL DECISIONS DISCUSSED IN THE ORDER OF CTT(A) WE HAVE NO HESITATION IN HOLDING THAT THE AS SESSEE IS ENGAGED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE, CONTEMPLAT ED IN SEC 801B (2) (III) . 16. WE ALSO FIND ON THE IDENTICAL FACTS THE BANGALO RE BENCH OF ITAT IN THE CASE OF KOMRALA FEEDS VS- DCIT 74 ITD 65 HELD THAT ACTIVITY OF PRODUCING POULTRY FEED AMOUNTS TO MANUFACTURE AND T HEREFORE ELIGIBLE FOR DEDUCTION U/S 80 I. SEC 80I AND SEC 80IB ARE PARAME TERIA BECAUSE CONDITIONS FOR PART OF DEDUCTION ARE SAME AND THERE FORE THE SAID DECISION IS EQUALLY APPLICABLE IN THE PRESENT CASE. 17. SECTION 80IB IS AN INCENTIVE PROVISION OF THE I NCOME TAX ACT ENACTED, BY THE LEGISLATURE TO PROMOTE ECONOMIC AND INDUSTRIAL GROWTH IN BACKWARD DISTRICTS AND STATES. IN THE CASE OF BAJAJ TEMPO LT D VS. CIT (196 ITR 188) THE SUPREME COURT HAS OPINED THAT A PROVISION OF TA XING STATUTE GRANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHO ULD BE CONSTRUED LIBERALLY AND SINCE A PROVISION FOR PROMOTING ECONO MIC GROWTH HAS TO BE INTERPRETED LIBERALLY THE RESTRICTION THEREON TOO H AS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO F RUSTRATE IT. CONDITIONS OF SEC 801B (2) (III) SHOULD BE FULFILLED BY EVERY NEW INDUSTRIAL UNDERTAKING CLAIMING DEDUCTION EITHER/UNDER SUB SEC (3) (4) OR (5) OF SEC $0 TB I.E. TO SAY THE UNDERTAKING MUST BE ENGAGED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE. IF THIS CONDITION IS NOT FULFILLED NO DEDU CTION IS PERMISSIBLE UNDER ANY OF THE SUB SECTIONS OF SEC 801B. THE INDUSTRIAL UNDERTAKINGS NOTIFIED AND APPROVED BY THE CENTRAL GOVT. AND SITUATED IN N ORTH EASTERN STATES ARE ELIGIBLE FOR TAX HOLIDAY FOR PERIOD OF 10 YEARS AS AGAINST PERIOD OF 5 YEARS AVAILABLE TO OTHER BACKWARDS STATES. IN NOTIFICATIO N NO. SO 627 (E) DATED 04.08.1999 THE CENTRAL GOVERNMENT HAS RECOGNISED PO ULTRY AND CATTLE FEED INDUSTRY, TO BE AN ELIGIBLE INDUSTRY U/S 80 IB (4). ONCE THE CENTRAL GOVERNMENT NOTIFIED THE POULTRY FEED INDUSTRY U/S 80 IB (4) THEN THERE IS A TACIT ADMISSION THAT IT IS ENGAGED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE. THIS IS SO BECAUSE UNLESS POULTRY FEED IN DUSTRY DOES NOT MANUFACTURE AN ARTICLE; NO DEDUCTION CAN BE PERMISS IBLE U/S 80 IB. ONCE THE CENTRAL GOVT. ACCEPTED IN PRINCIPLE THAT POULTRY FE ED IS AN ELIGIBLE INDUSTRY U/S 80IB(4); THEN THE VERY SAME INDUSTRY CANNOT BE CONSIDERED AS NON MANUFACTURING INDUSTRY UNDER SUB SECTIONS (3) AND ( 5) OF SEC 801B. WITH REFERENCE TO SAME SET OF FACTS THE REVENUE CANNOT H OLD THE POULTRY FEED INDUSTRY AS MANUFACTURING INDUSTRY IF SITUATED IN N ORTH EASTERN STATES AND A PROCESSING INDUSTRY IF SITUATED IN ANY OTHER STAT ES SUCH AN INTERPRETATION WILL ONLY LEAD TO AN ABSURD LEGAL POSITION. 18 FOR THE REASONS AS SET OUT HEREIN BEFORE THEREFO RE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) HOLDING THE ASSESS EE TO BE ENGAGED IN MANUFACTURE OR PRODUCTION OF AN ARTICLE WE ARE THER EFOIE OF THE CONSIDERED OPINION THAT THE ASSESSEE SATISFIES THE CONDITIONS OF SEC 80-IB(2) (III) OF THE 3 ITA NO. 827/K/2012 AMRICON AGROVET (P) LTD. A. Y 2008-09 ACT AND IS THEREFORE ELIGIBLE FOR DEDUCTION U/S 80I B WE THEREFORE UPHOLD THE ORDER OF CII (A) DIRECTING A 0 TO ALLOW DEDUCTION U /S 80 IB TO THE ASSESSEE. 10. FROM PERUSAL OF THE SAID DECISION OF THIS TRIBU NAL, IT IS APPARENT THAT THIS TRIBUNAL HAS CATEGORICALLY HELD IN THE CASE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF POULTRY FEEDS AND THAT THE ASSESSEE IS ENGAGED IN THE MANUF ACTURE OR PRODUCTION OF AN ARTICLE. NO CONTRARY DECISION OF THE COORDINATE BENCH OR THE JU RISDICTIONAL HIGH COURT OR THAT HONBLE SUPREME COURT WAS BROUGHT TO OUR KNOWLEDGE WHICH MAY HAVE TAKEN A CONTRARY VIEW. THE LD. DR, EVEN THOUGH RELIED ON THE DECISIO N OF THE HYDERABAD BENCH A OF THE TRIBUNAL IN THE CASE OF VENKATESWARA FEEDS & FEEDS VS- ACIT 22 TAXMANN.COM 234 (HYD.) BUT WE NOTED THAT THE UNDERTAKING FOR WHICH THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTION 80IB WAS MERELY ENGAGED IN CONVERTING THE POULTRY MASH FEED INTO PELLET FEED AND THEREFORE THAT BENCH HAS HELD THAT THERE W AS NO CHANGE IN THE BASIC COMPONENT OR NEW OR DIFFERENT ARTICLE CAME INTO EXISTENCE. AS SUCH, CONVERSION WAS PROCESSING ACTIVITY NOT MANUFACTURING. THE CASE OF THE ASSESSE E IS ENTIRELY DIFFERENT. THE ASSESSEES ELIGIBLE UNDERTAKING ITSELF WAS INDEPENDENTLY CARRY ING OUT THE COMPLETE ACTIVITY I.E. FROM MIXING, GRINDING TILL THE PELLETISATION. THE RAW MA TERIALS ONCE CONSUMED CANNOT BE RECONVERTED INTO THE SAME POSITION. ITS UTILITY GET S CHANGED. THE PRIME RAW MATERIALS SUCH AS, MAIZE, SOYA OIL, RICE BRAN, ETC. CAN NO MORE BE REGARDED TO BE THE RICE BRAN, SOYA OIL, MAIZE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DE CISION OF THIS BENCH, CONFIRM THE ORDER OF THE CIT(A). 4. AS THE ISSUE IS IDENTICAL AND THE FACTS ARE EXAC TLY SIMILAR, WE TAKE THIS ISSUE AS COVERED MATTER AND DECIDE IN FAVOUR OF ASSESSEE. HOWEVER, T HE LD. SR. DR ALSO CONCEDED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE. ACCORDINGLY, APP EAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ! ' ! ! ' ! ! ' ! ! ' ! , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( - - - -) )) ) DATED : 13TH AUGUST, 2013 ./ '$01 '2 JD.(SR.P.S.) , 3 ''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DCIT, CIRCLE-2, KOLKATA. 2 +)* / RESPONDENT M/S. AMRICON AGROVET (P) LTD., 158, LENIN SARANI, 2 ND FLOOR, KOLKATA-13.. 3 . ',$ ( )/ THE CIT(A) , KOLKATA 4. ',$ CIT, KOLKATA 5 . ='> '$ / DR, KOLKATA BENCHES, KOLKATA +4 '/ TRUE COPY, ,$/ BY ORDER, ! 1 /ASSTT. REGISTRAR .