Sh. Yash Raj Singh, Jammu V. The Income Tax Officer-1(3), Jammu

ITA 84/ASR/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1033 (ITAT-AMRITSAR)
• Duration Of Justice: 6 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Question of law; Initiation of penalty proceedings; Difference of opinion; Set aside
• Section: 143(3); 80IB; 251; 80HH; 191; 43; 48; 13; 22; 255(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N.K. CHOUDHRY, JUDICIAL MEMBER AND SH. ANADEE NATH MISSHRA, ACCOUNTANT MEMBE R I.T.A. NOS. 82 TO 84(ASR)/2014 ASSESSMENT YEARS: 2008-09, 2007- 08 & 2006-07 SH. YASH RAJ SINGH, JAMMU [PAN:ACEPS 5319L] VS. I.T.O. -1(3), JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SH. CHARAN DASS (LD. D.R.) DATE OF HEARING: 16.03.2020 DATE OF PRONOUNCEMENT: 17.0 3.2020 CONSEQUENTIAL ORDER PER N.K.CHOUDHARY, JM: WHILE DISPOSING OF THESE APPEALS UNDER CONSIDERATION, THE HONBLE ACCOUNTANT MEMBER AND THE HONBLE JUDICIAL MEMBE R HAVE TAKEN THE DIVERGENT VIEWS VIDE THEIR SEPARATE OR DERS DATED 17.06.2019 AND 05.07.2019 WHICH RESULTED INTO REFERE NCE U/S 255(4) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). CONSEQUENTLY, THE HONBLE THIRD MEMBER VIDE IT S ORDER DATED 04.03.2020 CONCURRED WITH THE VIEW TAKEN BY TH E HONBLE JUDICIAL MEMBER BY CONCLUDING AS UNDER: 7. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD ALONGW ITH THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 2 ORDERS PASSED BY THE REVENUE AUTHORITIES AS WELL AS THE DISSENTING ORDERS PASSED BY THE LD. MEMBERS OF THE ITAT AMRITSAR DIVISION BENCH. IN THE PRESENT CASE THE SO LE CONTROVERSY TO BE RESOLVED RELATES TO THE DEDUCTION UNDER SECTION 80IB OF THE ACT I.E; AS TO WHETHER THE CONV ERSION OF WATER INTO ICE IS A MANUFACTURING ACTIVITY FOR CLAI MING THE DEDUCTION UNDER SECTION 80IB OF THE ACT. 7.1 THE WORD MANUFACTURING HAS BEEN DEFINED IN SU B SECTION 29BA OF THE SECTION 2 OF THE ACT WHICH READ AS UNDER: (29BA) MANUFACTURER, WITH ITS GRAMMATICAL VARIATIONS, MEANS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING,- (A) RESULTING IN TRANSFORMATION OF THE OBJECT OR ARTICL E OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME, CHARACTER AND USE; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OBJEC T OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STRUCTURE; FROM THE AFORESAID DEFINITION IT IS CLEAR THAT WHEN THERE IS CHANGE IN NON LIVING PHYSICAL OBJECT OR ARTICLE OR THING RESULTING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING, HAVING A DIFFERENT NAME, CHARACTER AND USE OR BRINGING INTO EXISTENCE OF AN NEW AND DISTINCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STRUCTURE. IN THE PRESENT CASE THE WATER AND ICE ARE DIFFERENT IN FORM AND SHAPE A S THE WATER IS IN LIQUID FORM WHILE THE ICE IS A SOLID FORM, EVEN THE NOMENCLATURE OF BOTH AND THEIR USES ARE DIFFERENT. 8. ON A SIMILAR ISSUE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GLACIER COLD STORAGE & ICE MILLS & ORS VS. ASSESSING AUTHORITY, SALES TAX, JAMMU (SUPRA) HELD AS UNDER: ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 3 ALTHOUGH ICE DERIVED ITS SOURCE OR GENUS FROM WATER BY BEING REDUCED TO A SOLID STATE, YET WATER ON SOLIDIFICATION INTO ICE COMPLETELY CHANGES ITS STATE AND BECOMES A DISTINCT ENTITY; THE SPECIFIC GRAVITY IS CHANGED, THE MELTING POINT HAS A TEMPERATURE OF OC OR 32F AND THE SUBSTANCE WHICH FORMS ARE HEXAGONAL CRYSTALS. THEREFORE WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE PETITIONERS THAT ICE AND WATER ARE THE SAME THINGS AND WHEN THE NOTIFICATIONS INCLUDES WATER IN THE EXEMPTION LIST, IT INCLUDES ICE ALSO. 8.1 SIMILARLY THE HONBLE ALLAHABAD HIGH COURT DISTIN GUISHED WATER FROM ICE IN THE CASE OF GOEL INDUSTRIES (PVT. )LTD. VS. COMMISSIONER OF SALES TAX (SUPRA) AND HELD AS UNDER : THE SHORT QUESTION INVOLVED IN THIS CASE IS AS TO WHETHER ICE AND WATER ARE THE SAME THING. IT IS TRUE THAT ICE IS MANUFACTURED FROM WATER WITHOUT ADDITION OF ANY CHEMICAL OR SUBSTANCE. THE CHEMICAL COMPOSITION OF ICE AND THAT OF WATER IS TH E SAME, BUT EVEN THEN ICE CANNOT BE REGARDED AS WATER. IT IS A MATTER OF COMMON EXPERIENCE THAT WHILE WATER IS GENERALLY AVAILABLE FREE, ICE IS ALW AYS SOLD IN THE MARKET. IT HAS FURTHER BEEN HELD THAT : CHEMICALLY, ICE AND WATER MAY HAVE THE SAME COMPOSITION, BUT IN COMMERCIAL AND POPULAR SENSE THEY ARE DIFFERENT COMMODITIES. 9. THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOW N BY THE HONBLE JURISDICTIONAL HIGH COURT AND THE HONBLE ALL AHABAD HIGH COURT IN THE AFORESAID REFERRED TO CASES, I CONCUR WITH THE VIEW TAKEN BY THE HONBLE JUDICIAL MEMBER WHO HELD THAT T HE MAKING OF ICE FROM WATER IS A MANUFACTURING ACTIVITY AND T HE ASSESSEE WAS ENTITLED TO GET THE DEDUCTION UNDER SECTION 80I B OF THE ACT. NOW THE MATTER WOULD BE PLACED BEFORE THE REGULAR B ENCH FOR PASSING THE ORDER AS PER THE MAJORITY VIEW. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 4 2. HENCE AS PER MAJORITY VIEW, THE ORDER UNDER CHALLENGE ARE LIABLE TO BE PARTLY SET ASIDE. CONSEQUENTLY, THE APPEA LS OF THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.03.2020 . SD/- SD/- (ANADEE NATH MISSHRA) (N. K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.03.2020 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANTS 2. THE RESPONDENT 3. THE CIT 4. THEN CIT(APPEALS) 5. SR DR, I.T.A.T. AMRITSAR 6. GUARD FILE TRUE COPY BY ORDER ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENC H, AMRITSAR BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT (THIRD MEMBER) ITA NOS.84, 83 & 82/ASR/2014 ASSESSMENT YEARS : 2006-07, 2007-08 & 2008-09 SHRI YASH RAJ SI NGH PROP. NAV BHARAT STEEL, POUNI CHAK, JAMMU VS THE ITO 1(3), JAMMU PAN NO: ACEPS5319L APPELLANT RESPONDENT ASSESSEE BY : SHRI JOGINDER SINGH, CA REVENUE BY : SMT. ABHA RANI SINGH, CIT DR DATE OF HEARING : 03/03/2020 DATE OF PRONOUNCEMENT : / ORDER PER N.K. SAINI, VICE PRESIDENT ON ACCOUNT OF DIFFERENCE OF OPINION IN BETWEEN THE LD. ACCOUNTANT MEMBER AND LD. JUDICIAL MEMBER OF THE IT AT, AMRITSAR BENCH, THIS MATTER HAS BEEN REFERRED TO ME BY THE H ON'BLE PRESIDENT ITAT FOR CONSIDERATION AND DISPOSAL UNDER SECTION 2 55(4) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS A CT). IT MAY BE NOTED THAT EVEN WHILE FRAMING THE QUESTION FOR MAKI NG THE REFERENCE, THERE WAS A DIFFERENCE OF OPINION AND DI FFERENT QUESTIONS HAVE BEEN FRAMED BY BOTH THE LD. MEMBERS. THE LD. A CCOUNTANT MEMBER FORMULATED THE FOLLOWING QUESTIONS: 1 A). WHETHER, THE NATURAL TRANSFORMATION OF A LIQU ID SUBSTANCE INTO SOLID ON LOOSING HEAT, OR VICE VERSA , COULD BE SAID TO BE A RESULT OF MANUFACTURE? B) WHETHER THE CONDENSATION FROM ONE STATE TO ANOTH ER (I.E., FROM GASEOUS TO LIQUID TO SOLID) OF MATTER COULD BE REGARDED AS MANUFACTURE INASMUCH AS A SAME REPRESENTS A NATUR AL ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 6 PHENOMENA, I.E., WHERE UNDERTAKEN ARTIFICIALLY, AS OPPOSED TO NATURALLY ? C) WHETHER WATER (OR ITSVARIANTS IN THE FORM OF WATER VAPOR(STEAM) OR ICE), A CHEMICAL COMPOUND FOUND IN ABUNDANCE IN NATURE, AND IN ALL THE THREE PHYSICAL STATES, CO ULD BE SAID TO BE MANUFACTURED UNLESS PRODUCED FROM ITS CONSTITUEN T ELEMENTS, I.E., HYDROGEN AND OXYGEN? THAT IS, COULD THIS NATU RAL PHENOMENON OF CONVERSION OF ONE FORM OF WATER INTO ANOTHER - WHICH IS REVERSIBLE, OCCURRING IN NATURE ALL THE TI ME, COULD BE SAID TO BE MANUFACTURE OF ITSONE FORM FROM ANOTHER?(A LSO SEE Q. 3(C)) 2 A).WHETHER THE PROCESS OF REFRIGERATION -HELD TO BE NOT MANUFACTURE IN DELHI COLD STORAGE PVT. LTD. V. CIT[1991] 191ITR 656 (SC), IS TO BE REGARDED AS A MANUFACTURE IN THE INSTANT CASE AS THE GOOD (WATER) REFRIGERATED SOLIDIFIES THEREUPON? B) WHETHER THE PROCESS OF CHANGING (INCREASING OR DECREASING) THE TEMPERATURE OF ANY MATTER, AND ITS PHYSICAL STATE IN CONSEQUENCE, COULD BY ITSELF RESULT IN A AND DIS TINCT ARTICLE OR THING? C) WHETHER WATER COULD BE SAID TO BE MANUFACTURED FROM ICE WHEN THE LATTER, ON GAINING HEAT, NATURALLY O R ARTIFICIALLY, GETS CONVERTED INTO THE FORMER? 3 A). WHETHER THE CONVERSION OF WATER INTO ICE, OR OF ICE INTO WATER FOR THAT MATTER, SATISFIES THE DETERMINATIVE TESTS OF MANUFACTURE AS LAID DOWN BY THE HON'BLE HIGHER COURTS OF LAW, I NCLUDING IN DELHI COLD STORAGE PVT. LTD. (SUPRA), AS REFERRED TO BY THE AM IN HIS ORDER, BESIDES THOSE RELIED UPON BY THE REVENUE, IN CLUDING BY THE TRIBUNAL RELYING ON THOSE DECISIONS? B). WHETHER WATER (ICE) CAN BE SAID TO BE CONSUME D IN THE PROCESS OF MANUFACTURE OF ICE(WATER), OR IS IT ONLY A CHANGE OF ONE FORM INTO ANOTHER, RETAINING ITS ESSENTIAL IDENTIT Y AND CHARACTERISTICS? C). WHETHER A REVERSIBLE PROCESS COULD AT ALL BE R EGARDED AS ONE OF MANUFACTURE EVEN AS EXPLAINED AS NOT BY TH E HONBLE APEX COURT IN PUNJAB AROMATICS V. STATE OF KERALA [2008] 11 SCC 482 (IN CA NO. 3160 OF 2008, DATED 30/4/2008), EMPHASIZING THE TEST OF IRREVERSIBILITY FOR CONSTITUTING MANUF ACTURE? D). WHETHER, AGAIN, THAT A UNIT IS A FACTORY UNDER THE FACTORIES ACT, 1948 WOULD BE DETERMINATIVE OF THE MATTER, EVE N AS HELD TO BE NOT SO IN MITTAL ICE & COLD STORAGE V. CIT [1986] 159 ITR 18, 21-22 (MP), NOTED WITH APPROVAL IN CIT V. EVEREST COLD STORAGE [1996] 220 ITR 241, 244 (MP), RELIED UPON BY THE AS SESSEE? 4. WHETHER THE DIFFERENT APPLICATIONS OF ICE ARE (O R ARE NOT) ONLY A MANNER OF USING WATER, INVOLVE AS IT DOES THE TRANS MISSION OF HIGHER ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 7 TEMPERATURE THERETO THROUGH CONTACT - A PROPERTY OF WATER (MATTER), GETTING CONVERTED BACK INTO WATER IN THE PROCESS (VIZ. ICE CUBES IN A BEVERAGE)? 5 A). WHETHER THE QUESTION INVOLVED IN THE PRESENT CASE IS ESSENTIALLY A QUESTION OF FACT, I.E., GIVEN THE LAW AS EXPOUNDED AND SETTLED PER ITS VARIOUS DECISIONS BY THE APEX COUR T, SO THAT IT IS ESSENTIALLY A QUESTION OF APPLYING THE SAME (THE SA ID LAW) TO THE FACTS OF A PARTICULAR CASE, AS EXPLAINED IN UJAGAR PRINTS V. UNION OF INDIA [19 89] 179 ITR 317 (SC)? (ALSO SEE: ASSAM BENGAL CEMENT CO. LTD. [1955] 27 ITR 34, 46 (SC)). B) WHETHER THE CLASSIFICATION OF WATER AND ICE AS DIFFERENT PRODUCTS UNDER THE SALES-TAX OR EXCISE LAW FOR PURP OSE OF TAX ON ITS SALE OR DISPOSAL COULD BE DETERMINATIVE OF WHETHER THE CONVERSION OF ONE INTO ANOTHER IS A MANUFACTURE UNDER THE AC T? C) WHETHER THE DECISION BY THE HON'BLE JURISDICTION AL HIGH COURT IN GLACIER COLD STORAGE V. ASSESSING AUTHORITY, SALES TAX [1974] LAW JOURNAL 142 (J&K), IN RATIO, STATES OF T HE CONVERSION OF WATER INTO ICE OR, EQUIVALENTLY, ICE INTO WATER, TO BE A RESULT OF MANUFACTURE, AS JUDICIALLY DEFINED AND EXPLAINED? D) WHETHER THE SAID CONVERSION, IF REGARDED AS MAN UFACTURE IN TERMS OF THE SAID DECISION, IS A QUESTION OF LAW , OR A QUESTION OF FACT AND/OR A MIXED QUESTION OF FACT AND LAW (VIZ. CIT V. GREAVES COTTON & CO. LTD. [1968] 68 ITR 200, 207(SC))? E) WHETHER THE SAID DECISION, IF REGARDED AS HOLDIN G THE SAID CONVERSION AS MANUFACTURE AND, FURTHER, AS A QUES TION OF LAW, IS CONSISTENT WITH THE DECISIONS BY THE APEX COURT IN RESPECT OF MANUFACTURE SO AS TO CONSTITUTE A BINDING PRECEDE NT? F) WHETHER THE DECISIONS RELIED UPON BY THE ASSESSE E ARE APPLICABLE, I.E., IN RATIO, IN THE PRESENT CASE, OR ARE DISTINGUISHABLE? 6 A).WHETHER THE ACCEPTANCE OF THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80-IB IN ASSESSMENT FOR AY 2010-11, WHICH IS WITHOUT ANY FINDING WITH REGARD TO THE ISSUE AT HAND, OR RE FERENCE TO THE ORDERS FOR THE EARLIER YEARS WHERE THE SAME IS DISC USSED AT LENGTH, AND IS BEING CONTESTED BETWEEN THE PARTIES, COULD B E REGARDED AS CONCLUSIVE OF THE MATTER? B) WHETHER, PARTICULARLY CONSIDERING THAT THE PROCE EDINGS UNDER THE INCOME TAX ACT ARE NOT ADVERSARIAL IN NAT URE OR IN THE NATURE OF A I IS (S. S. GADGIL V. LAL& CO. [1964] 53 ITR 231 (SC); CIT V. INDIAN EXPRESS (MADURAI) PVT. LTD. [1983] 140 ITR 705, 722 (MAD)), THE ACCEPTANCE AFORE-SAID RESOLVES THE CONT ROVERSY ARISING FOR THE YEARS UNDER REFERENCE, BEING SEPARA TE UNITS OF ASSESSMENT? ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 8 C) WHETHER THE OPINION OF THE ASSESSING OFFICER (AO), ASSUMING SO (INASMUCH AS HIS ORDER FOR AY 2010-11 I S SANS ANY DISCUSSION IN THE MATTER), WOULD OVERRIDE THAT BY T HE AO FOR THE EARLIER YEARS? D) WHETHER THE OPINION BY THE ASSESSING AUTHORITY F OR AY 2010- 11, I.E., ASSUMING SO, WOULD BE BINDING ON THE HIGH ER APPELLATE FORUMS, OR ARE THEY OBLIGED TO DECIDE THE ISSUE FOR THE OTHER YEARS ON MERITS, PARTICULARLY CONSIDERING THAT THE PROCEE DINGS UNDER THE ACT ARE NOT ADVERSARIAL IN NATURE? 2. THE LD. JUDICIAL MEMBER FORMULATED THE FOLLOWING QUESTION WHILE REFERRING THE MATTER TO THE HON'BLE PRESIDENT . WHETHER PROCESS OF MAKING ICE FROM WATER COMES WI THIN THE DEFINITION OF MANUFACTURE AS PER SECTION-2(29BA) OF THE INCOME TAX ACT, 1961. 3. IN THE PRESENT CASE, ALTHOUGH BOTH THE LD. MEMB ERS HAVE REFERRED DIFFERENT QUESTIONS FOR CONSIDERATION UNDE R SECTION 255(4) OF THE ACT. HOWEVER THE SOLE CONTROVERSY TO BE RESOLVE D IS THAT AS TO WHETHER THE CONVERSION OF WATER INTO ICE AMOUNTS TO MANUFACTURING FOR QUALIFYING THE DEDUCTION UNDER SECTION 80IB OF THE ACT. 3.1 IN THE PRESENT CASE BOTH THE LD. MEMBERS HAVE D ISCUSSED THE FACTS IN THEIR RESPECTIVE ORDERS, THEREFORE, THERE IS NO NEED TO NARRATE THE SAME AGAIN. 4. IN THE INSTANT CASE WHILE DISMISSING THE APPEALS OF THE ASSESSEE THE LD. ACCOUNTANT MEMBER HAS HELD THAT NE ITHER THE CONVERSION OF WATER INTO ICE NOR OF ICE INTO WATER I.E; CHANGING IN EFFECT THE TEMPERATURE OF THE MATTER (H 2 O), WOULD AMOUNT TO MANUFACTURE, BUT IT IS ONLY A PROCESSING. AND THAT THE BASIC CONTENTION FOR DEDUCTION UNDER SECTION 80IB I.E; MA NUFACTURE OR PRODUCTION OF AN ARTICLE OR THING WAS NOT SATISFIED . ON THE CONTRARY THE LD. JUDICIAL MEMBER IN HIS DISSENTING ORDER WAS OF THE VIEW THAT ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 9 THE MANUFACTURING MEANS A CHANGE IN NON LIVING PHYS ICAL OBJECTS OR ARTICLE OR THING RESULTING INTO TRANSFORMATION INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME, CHARACTER AND USE, ONCE THE ICE IS MADE FROM THE WATER, IT CHANGE S IN NON LIVING PHYSICAL ARTICLE AND RESULTS INTO A NEW AND DISTINC T ARTICLE, HAVING DIFFERENT NAME, CHARACTER AND USE, HENCE INFERENCE CAN BE DRAWN THAT ICE IS THE FINAL PRODUCT OF WATER WHICH REQUIR ES TRANSFORMATION OF WATER (RAW PRODUCT) INTO FINAL PRODUCT (ICE), IN DISPUTABLY HAVING A NEW AND DISTINCT FORM, NAME, CHARACTER AND USE, A ND THAT FOR BRINGING INTO FINAL PRODUCT, SUCH AS TO MAKE OR PRO DUCE ICE, DIFFERENT CHEMICAL COMPOSITION FOR CHANGE OF INTEGR AL STRUCTURE ON A LARGE SCALE, A RANGE OF HUMAN ACTIVITIES, LABOUR AN D USE OF MACHINERY IS BEING REQUIRED BY WHICH RAW MATERIAL ( WATER) TRANSFORMED INTO FINISHED GOODS(ICE), IN ORDER FOR USE OR SALE. 5. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER AND THE ITAT, AMRITSAR DIVISION BENCH. IT WAS FURTHER S UBMITTED THAT AN IDENTICAL ISSUE HAS BEEN DEALT BY THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF GLACIER COLD STORAGE & ICE MIL LS & ORS VS. ASSESSING AUTHORITY, SALES TAX, JAMMU IN WRIT PETIT ION NO. 93 AND 99 OF 1972 COPY OF WHICH IS PLACED AT PAGE NO. 67 TO 6 9 OF THE ASSESSEES PAPER BOOK. IT WAS FURTHER SUBMITTED THA T THE HONBLE ALLAHABAD HIGH COURT ALSO IN THE CASE OF GOEL INDUS TRIES (PVT. )LTD. VS. COMMISSIONER OF SALES TAX VIDE ORDER DATED 12 J ULY 1971 REPORTED AT (1971) 28 STC 729(ALL) HELD THAT CHEMIC ALLY ICE AND WATER MAY HAVE THE SAME COMPOSITION BUT IN COMMERCI AL AND POPULAR SENSE THEY ARE DIFFERENT COMMODITIES. THE R ELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE HONBLE MADHYA PRADES H HIGH ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 10 COURT IN THE CASE OF CIT VS. EVEREST COLD STORAGE R EPORTED AT [1996] 220 ITR 241. IT WAS STATED THAT CONVERSION OF WATER INTO ICE IS A MANUFACTURING ACTIVITY, THEREFORE, THE ASSESSEE WAS ENTITLED FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. IT WAS POI NTED OUT THAT THE A.O. HIMSELF IN THE SUCCEEDING A.Y. 2010-11 ACCEPTE D THE CLAIM OF THE ASSESSEE AND ALLOWED THE DEDUCTION UNDER SECTIO N 80IB OF THE ACT. HE SUPPORTED THE DISSENTING ORDER PASSED BY TH E LD. JUDICIAL MEMBER. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING CASE LAWS: ASPINWALL AND CO. LTD. V/S CIT- (2001) 251 ITR 323 (SC) DELHI COLD STORAGE PVT. LTD. V. CIT (1991) 191 ITR 656 (SC) MITTAL ICE AND COLD STORAGE V. CIT (1986) 159 18, 2 1-22 (MP) ASSAM BENGAL CEMENT CO. LTD. V/S CIT- (1955) 27 ITR 34 (SC) CIT V/S GREAVES COTTON AND CO. LTD. (1968) 68 ITR 2 00 (SC) DISTRIBUTORS (BARODA) PVT. LTD. V/S UNION OF INDIA COMMISSIONER OF INCOME TAX V/S INDIAN EXPRESS (MADU RAI) PVT. LTD.(1983) 140 ITR 705 (MAD) DY. CST V/S PIO FOOD PACKERS (1980) 46 STC 63 CIT V/S RELISH FOODS (1999) 237 ITR 59 (SC) SACS EAGLES CHICORY V/S CIT (2002) 255 ITR 178 (SC) CIT V/S VENATESHWARA HATCHERIES PVT. LTD. (1999) 23 7 ITR 174 (SC) CIT V/S GEM INDIA MANUFACTURING CO.(2001) 249 ITR 3 07 (SC) EMPIRE INDUSTRIES LTD. AND ANOTHERS V/S UNION OF IN DIA (1986) 162 ITR 846 (SC) UJAGAR PRINTS V/S UNION OF INDIA- (1989) 179 ITR 31 7 (SC) TURIGABHADRA INDUSTRIES LTD. V/S CTO (1960) 11 STC 8 27 (SC) 6. IN HER RIVAL SUBMISSIONS THE LD. CIT DR REITERAT ED THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN PARA 2.2 OF THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 11 ASSESSMENT ORDER DT. 28/12/2010 AND SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN CONVERSION OF WATER FROM LIQUID FORM TO A SOLID FORM I.E ICE WHICH REGAINS THIS ORIGINAL FORM ONCE KEPT IN NORMAL TEMPERATURE, THEREFORE, THE CONVERSION OF WATER FRO M LIQUID FORM TO A SOLID FORM ICE IS A REVERSIBLE PROCESS, SO IT WAS ONLY A COMMERCIAL ACTIVITY FOR CLAIMING THE DEDUCTION UNDER SECTION 8 0IB OF THE ACT. SHE ALSO REFERRED TO PARA NO. 3.4 OF THE ORDER OF T HE LD. CIT(A) AND SUBMITTED THAT CONVERSION OF WATER INTO ICE WAS NOT MANUFACTURING, THEREFORE THE DEDUCTION CLAIMED BY THE ASSESSEE UND ER SECTION 80IB OF THE ACT WAS NOT ADMISSIBLE. 7. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD ALONGW ITH THE ORDERS PASSED BY THE REVENUE AUTHORITIES AS WELL AS THE DI SSENTING ORDERS PASSED BY THE LD. MEMBERS OF THE ITAT AMRITSAR DIVI SION BENCH. IN THE PRESENT CASE THE SOLE CONTROVERSY TO BE RESOLVE D RELATES TO THE DEDUCTION UNDER SECTION 80IB OF THE ACT I.E; AS TO WHETHER THE CONVERSION OF WATER INTO ICE IS A MANUFACTURING ACT IVITY FOR CLAIMING THE DEDUCTION UNDER SECTION 80IB OF THE ACT. 7.1 THE WORD MANUFACTURING HAS BEEN DEFINED IN S UB SECTION 29BA OF THE SECTION 2 OF THE ACT WHICH READ AS UNDE R: (29BA) MANUFACTURER, WITH ITS GRAMMATICAL VARIA TIONS, MEANS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE O R THING,- (A) RESULTING IN TRANSFORMATION OF THE OBJECT OR ARTICL E OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME, CHARACTER AND USE; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OBJEC T OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR INTE GRAL STRUCTURE; FROM THE AFORESAID DEFINITION IT IS CLEAR THAT WHEN THERE IS CHANGE IN NON LIVING PHYSICAL OBJECT OR ARTICLE OR THING R ESULTING INTO A NEW ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 12 AND DISTINCT OBJECT OR ARTICLE OR THING, HAVING A D IFFERENT NAME, CHARACTER AND USE OR BRINGING INTO EXISTENCE OF AN NEW AND DISTINCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICA L COMPOSITION OR INTEGRAL STRUCTURE. IN THE PRESENT CASE THE WATER A ND ICE ARE DIFFERENT IN FORM AND SHAPE AS THE WATER IS IN LIQU ID FORM WHILE THE ICE IS A SOLID FORM, EVEN THE NOMENCLATURE OF BOTH AND THEIR USES ARE DIFFERENT. 8. ON A SIMILAR ISSUE THE HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF GLACIER COLD STORAGE & ICE MILLS & ORS VS. ASSESSING AUTHORITY, SALES TAX, JAMMU (SUPRA) HELD AS UNDER: ALTHOUGH ICE DERIVED ITS SOURCE OR GENUS FROM WAT ER BY BEING REDUCED TO A SOLID STATE, YET WATER ON SOLIDIFICATI ON INTO ICE COMPLETELY CHANGES ITS STATE AND BECOMES A DISTINCT ENTITY; THE SPECIFIC GRAVITY IS CHANGED, THE MELTING POINT HAS A TEMPERATURE OF OC OR 32F AND THE SUBSTANCE WHICH FORMS ARE HEXAGO NAL CRYSTALS. THEREFORE WE ARE UNABLE TO AGREE WITH THE CONTENTIO N OF THE PETITIONERS THAT ICE AND WATER ARE THE SAME THINGS AND WHEN THE NOTIFICATIONS INCLUDES WATER IN THE EXEMPTION LIST, IT INCLUDES ICE ALSO. 8.1 SIMILARLY THE HONBLE ALLAHABAD HIGH COURT DIST INGUISHED WATER FROM ICE IN THE CASE OF GOEL INDUSTRIES (PVT .)LTD. VS. COMMISSIONER OF SALES TAX (SUPRA) AND HELD AS UNDER : THE SHORT QUESTION INVOLVED IN THIS CASE IS AS TO WHETHER ICE AND WATER ARE THE SAME THING. IT IS TRUE THAT ICE IS MA NUFACTURED FROM WATER WITHOUT ADDITION OF ANY CHEMICAL OR SUBSTANCE . THE CHEMICAL COMPOSITION OF ICE AND THAT OF WATER IS TH E SAME, BUT EVEN THEN ICE CANNOT BE REGARDED AS WATER. IT IS A MATTER OF COMMON EXPERIENCE THAT WHILE WATER IS GENERALLY AVA ILABLE FREE, ICE IS ALWAYS SOLD IN THE MARKET. IT HAS FURTHER BEEN HELD THAT : CHEMICALLY, ICE AND WATER MAY HAVE THE SAME COMPOS ITION, BUT IN COMMERCIAL AND POPULAR SENSE THEY ARE DIFFERENT COMMODITIES. 9. THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOW N BY THE HONBLE JURISDICTIONAL HIGH COURT AND THE HONBLE A LLAHABAD HIGH ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 13 COURT IN THE AFORESAID REFERRED TO CASES, I CONCUR WITH THE VIEW TAKEN BY THE HONBLE JUDICIAL MEMBER WHO HELD THAT THE MAKING OF ICE FROM WATER IS A MANUFACTURING ACTIVITY AND THE ASSESSEE WAS ENTITLED TO GET THE DEDUCTION UNDER SECTION 80IB OF THE ACT. NOW THE MATTER WOULD BE PLACED BEFORE THE REGULAR BENCH FOR PASSING THE ORDER AS PER THE MAJORITY VIEW. SD/- .., ( N.K. SAINI ) / VICE PRESIDENT AG DATE: 04/03/2020 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT 3. $/ CIT 4. $ ()/ THE CIT(A) 5. *, , *, // DR, ITAT, AMRITSAR 6. / / GUARD FILE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 14 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NOS. 82 TO 84/ASR/2014 ASSESSMENT YEARS: 2 008-09, 2007-08 & 2006-07 YASH RAJ SINGH, M/S. NAV BHARAT STEEL, POUNI CHAK, JAMMU [PAN: ACEPS 5319L] VS. ITO-1(3), JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY : SH. JOGINDER SINGH (C. A.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 03.04.2019 DATE OF PRONOUNCEMENT: .06.2019 ORDER PER SANJAY ARORA, AM: THESE ARE A SET OF THREE APPEALS BY THE ASSESSEE DI RECTED AGAINST SEPARATE ORDER BY THE COMMISSIONER OF INCOM E TAX (APPEALS), JAMMU (CIT(A) FOR SHORT) DATED 06.12.2 013, DISMISSING THE ASSESSEES APPEALS CONTESTING HIS ASSESSMENTS U /S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) FOR AS SESSMENT YEARS (AYS.) 2006-07 TO 2008-09 BY AGAIN SEPARATE ORDERS. 2. THE PRINCIPAL ISSUE IN THESE APPEALS IS IF THE C ONVERSION OF WATER INTO ICE AMOUNTS TO MANUFACTURE WITHIN THE MEANIN G OF THE TERM UNDER THE ACT, QUALIFYING THUS THE PROFIT FROM THE SAID ACTIVITY ON THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 15 SALE OF ICE FOR DEDUCTION U/S. 80-IB OF THE ACT. M ANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING, OTHER THAN THA T SPECIFIED IN THE ELEVENTH SCHEDULE, A NEGATIVE LIST, OR THAT SPECIFIED IN PART C OF THE THIRTEENTH SCHEDULE (FOR UNITS LOCATED IN THE STATE OF JAMMU AND KASHMIR), IS A PRIMARY CONDITION FOR DEDUCTION U/S. 80-IB. WHILE THE PROVISION LISTS SEVERAL OTHER CONDITIONS AS WELL, T HERE IS NO REFERENCE TO THE NON-SATISFACTION OF ANY OF THESE IN THE ORDERS BY THE REVENUE AUTHORITIES, SO THAT, IMPLIEDLY, THE ASSESSEES IND USTRIAL UNDERTAKING, NAMELY, ADITYA ICE FACTORY, BUT FOR THIS CONDITIO N, I.E., WHETHER ICE IS A RESULT OF MANUFACTURE, WHICH IS THE BONE OF CO NTENTION BETWEEN THE REVENUE AND THE ASSESSEE, IS OTHERWISE AN ELIGI BLE UNDERTAKING U/S. 80-IB. THE BACKGROUND FACTS 3. THE ASSESSING OFFICER (AO) HAS IN HOLDING IT TO BE NOT A CASE OF MANUFACTURE, RELIED ON A SERIES OF DECISIONS (REFER PGS. 4-7 OF THE ASSESSMENT ORDER), ALSO REPRODUCING FROM SOME OF TH EM, VIZ. - TUNGABHADRA INDUSTRIES LTD. V. CTO [1960] 11 STC 827 (SC); - CIT V. DELHI CLOTH AND GENERAL MILLS CO. LTD ., AIR 1963 SC 791; - E. VASANTHA & CO. V. STATE OF MADRAS [1963] 14 STC 696 (MAD); - STATE OF GUJARAT V. SAKARWALA BROS . [1967] 19 STC 24 (SC); - CST V. DUNKEN COFFEE MFG. CO . [1975] 35 STC 493 (BOM); - DY. CIT V. PIO FOOD PACKERS [1980] 46 STC 63 (SC); AND ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 16 - STATE OF ORISSA V. TITAGHUR PAPER MILLS CO. LTD. [1985] 60 STC 213 (SC); ALL THESE DECISIONS HAVE BEEN, AGAIN, EMPHASIZED UP ON BY THE FIRST APPELLATE AUTHORITY. HE HAS ALSO MET THE ASSESSEES RELIANCE ON THE FOLLOWING DECISIONS: - GLACIER COLD STORAGE & ICE MILLS V. ASSESSING AUTHO RITY, SALES TAX [1974] LAW JOURNAL 142 (J&K); - GOEL INDUSTRIES PVT. LTD. V. CST [1971] 28 STC 729 (ALL); - CIT V. EVEREST COLD STORAGE [1996] 220 ITR 241 (MP), AS DID THE AO PRIOR THERETO, ENDORSING THE FINDINGS BY THE AO, BEFORE WHOM THE SAME WERE ALSO PRESSED, AND DISCUSSED BY H IM (AT PARAS 2.3 AND 2.4 OF THE ASSESSMENT ORDER FOR AY 2006-07). TH E LD. CIT(A), IN ADDITION, RELIED ON THE FOLLOWING DECISIONS: - B.G. CHITALE V. DY. CIT [2008] 305 ITR (AT) 1 (PUNE)(SB); - AQUA MINERALS PVT. LTD. V. DY. CIT [2005] 279 ITR (AT) 106 (AHD); AND - SHAW SCOTT DISTILLERIES PVT. LTD. V. ASST. CIT [2002] 255 ITR (AT) 14 (CAL) (SB). IN B.G. CHITALE (SUPRA), THE PROCESS INVOLVED WAS THE PASTEURIZATI ON OF MILK, WHICH WAS SAID TO INVOLVE 15 PROCESSES, CARRI ED OUT WITH THE HELP OF APPARATUSES. IN AQUA MINERALS PVT. LTD . (SUPRA), THE CONVERSION WAS OF MUNICIPAL WATER INTO DEMINERALIZE D WATER, WHICH WAS BOTTLED AND MARKETED (AS MINERAL WATER). IN SHAW SCOTT DISTILLERIES PVT. LTD . (SUPRA), IT WAS THE CONVERSION OF POTABLE SPIRIT INTO INDIAN MADE FOREIGN LIQUOR (IMFL), WHICH WAS B OTTLED AND SOLD. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 17 IN EACH OF THESE DECISIONS, THE ARTICLE OR THING, W HICH IS THE OUTPUT OF DIFFERENT PROCESSES, WAS HELD BY THE TRIBUNAL TO BE NOT A RESULT OF MANUFACTURE, BUT OF PROCESSING ONLY. THE LD. CO UNSEL FOR THE ASSESSEE, SH. SINGH, WOULD, UPON BEING QUERIED IN T HE MATTER, EACH OF THESE DECISIONS BEING RENDERED UPON CONSIDERING THE JUDICIAL PRECEDENTS IN THE MATTER, WOULD SUBMIT THAT THESE D ECISIONS PERTAINED TO THE PERIOD FOR WHICH THE TERM MANUFACTURE WAS NOT DEFINED UNDER THE ACT, AS IT NOW IS U/S. 2(29BA), WHICH READS AS UNDER: SECTION 2(29BA) DEFINITIONS. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, (29BA) 'MANUFACTURE', WITH ITS GRAMMATICAL VARIATIO NS, MEANS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING, (A) RESULTING IN TRANSFORMATION OF THE OBJECT OR AR TICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFER ENT NAME, CHARACTER AND USE; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT O BJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STRUCT URE; THE CONTROVERSY 4.1 IT IS APPARENT THAT THERE IS ABUNDANT CASE LAW IN THE MATTER, SO THAT THE QUESTION BOILS DOWN TO THE CORRECT APPLICA TION OF THE SAME IN THE FACTS AND CIRCUMSTANCES OF THE CASE, EVEN AS EX PLAINED BY THE APEX COURT IN UJAGAR PRINTS (INFRA). WHILE THERE HAS BEEN, AS A READING OF THE CITED DECISIONS SHOWS, A FOCUS ON THE PROCESSES INVOLVED IN THE CONVERSION UNDERTAKEN, WHAT HAS WEIGHED WITH THE AD JUDICATING AUTHORITY, AS INDEED WITH THE APPELLATE COURT, IS, THE MECHANISM ASIDE, ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 18 THE CHANGE WROUGHT BY, OR AS THE CUMULATIVE EFFECT OF, THESE PROCESSES. THIS, IT SHALL BE SEEN, IS ALSO THE OBJECT OF THE D EFINITION OF THE WORD MANUFACTURE PROVIDED SINCE, I.E., W.E.F. 01/4/200 9 AND, THEREFORE, APPLICABLE FOR AY 2009-10 ONWARDS (AND WHICH, THERE FORE, IS NOT, STRICTLY SPEAKING, APPLICABLE FOR THE YEARS UNDER R EFERENCE). THE PROCESS INVOLVED IN THE INSTANT CASE IS OF REFRIGER ATION, I.E., REDUCING THE TEMPERATURE, WHICH RESULTS IN THE FREEZING OF W ATER, COMMONLY CALLED ICE, A PRODUCT OF EVERYDAY USE AND APPLICA TION, WHICH IS PRIMARILY IN THE FOOD INDUSTRY. WATER, ON THE OTHER HAND, IS EMPLOYED FOR A FAR WIDER VARIETY OF USES, VIZ. DRINKING BY THE PLANT AND ANIMAL KINGDOM; WASHING AND CLEANING, BESIDES BEING WIDELY USED IN INDUSTRIAL PROCESSES, BEING IN FACT AN INTRINSIC PA RT OF MOST FOODS, CHEMICALS, BEVERAGES AND DRUGS. WATER, INDEED, IS B ASIC TO LIFE, FORMING THE BASE OF MOST FOOD ITEMS, AND INTEGRAL T O ORGANIC MATTER. WHY, IT IS THE MAIN CONSTITUENT OF THE HUMAN BODY, AS ALSO THAT OF ANIMALS AND PLANTS. THIS STATES THE ASSESSEES CASE . HERE IT MAY THOUGH NOT BE OUT OF PLACE TO CLARIFY THAT WATER AS A CONS TITUENT OF THE HUMAN BODY OR THE LIKE, AND INDEED AS AN INTEGRAL PART OF FOOD, ASSUMES THE CHARACTER OF AN ORGANIC MATTER, I.E., AS OPPOSED TO BEING OTHERWISE INORGANIC. THE REVENUES CASE IS THAT THOUGH, WITHOUT DOUBT, T HERE IS A CHANGE FROM ONE FORM TO ANOTHER, THE SAME IS NOT SU FFICIENT TO QUALIFY IT AS MANUFACTURE. THERE IS NO ESSENTIAL DIFFEREN CE BETWEEN WATER AND ICE; THE TWO BEING DIFFERENT FORMS OF THE SAME MATTER, CHEMICALLY, HYDROGEN OXIDE, SYMBOLICALLY, H 2 O. WATER, AS ANY OTHER MATTER, EXISTS IN THREE DIFFERENT PHYSICAL STATES, I.E., SOLID, LI QUID AND GASEOUS, ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 19 DEPENDING ON ITS TEMPERATURE. IT IS CHEMICALLY AND STRUCTURALLY THE SAME, I.E., H 2 O, THOUGH MAY HAVE DIFFERENT APPLICATIONS. WHY, ICE IS ONLY TO BE KEPT AT ROOM TEMPERATURE (AS NORMALLY OB TAINS, I.E., UPWARD OF 0 C, TO TURN IT INTO WATER AGAIN, I.E., THE PROC ESS IS REVERSIBLE, INDICATING, IF IT WAS REQUIRED TO BE, THAT NO NEW A RTICLE OR THING HAD COME INTO EXISTENCE . THE LAW AS EXPLAINED 4.2 WE MAY, TO BEGIN WITH, ADVERT TO THE CASE LAW. IT MAY AT THE OUTSET BE CLARIFIED THAT IT IS NOBODYS CASE THAT T HE CONVERSION OF WATER INTO ICE IS NOT PROCESSING, BUT IF THE SAME IS TO THE EXTENT AS WOULD QUALIFY IT AS MANUFACTURE. EVERY PROCESS INVOLVES A CHANGE, SO THAT THE QUESTION IS ONE OF DEGREE OF CHANGE . A). IN DELHI CLOTH & GENERAL MILLS CO. LTD . (SUPRA), IT STANDS HELD AS: MANUFACTURE IMPLIES A CHANGE, BUT EVERY CHANGE IS NOT MANUFACTURE AND YET EVERY CHANGE OF AN ARTICLE IS THE RESULT O F TREATMENT, LABOUR AND MANIPULATION. BUT SOMETHING M ORE IS NECESSARY AND THERE MUST BE TRANSFORMATION, A NEW AND DIFFERENT ARTICLE MUST EMERGE HAVING DISTINCTIVE NAME, CHARACTER OR USE. B). IN DY. CIT V. PIO FOOD PACKERS [1985] 46 STC 63 (SC), IT WAS HELD AS: 'MANUFACTURING NORMALLY INVOLVES CONSUMPTI ON OF A PARTICULAR COMMODITY IN THE PROCESS OF MANUFACTURIN G OF ANOTHER COMMODITY. THE GOODS PURCHASED SHOULD BE CONSUMED, THE CONSUMPTION SHOULD BE IN THE PROCESS OF MANUFACTURE AND THE RESULT MUST BE THE MANUFACTURE OF OTHER GOODS . THERE ARE SEVERAL CRITERIA FOR DETERMINING WHETHER A COMMODITY IS CONSUMED IN THE MANUFACTURE OF ANOTHER. THE GENERALLY PREVALENT TEST IS WHETHER TH E ARTICLE PRODUCED IS REGARDED IN THE TRADE, BY THOSE WHO DEAL IN IT, AS DISTINCT IN IDENTITY FROM THE COMMODITY INVOLVED IN ITS MANUFACTURE. COM MONLY, MANUFACTURE IS THE END RESULT OF ONE OR MORE PROCES SES THROUGH WHICH THE ORIGINAL COMMODITY IS MADE TO PASS. THE NATURE AND EXTENT OF ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 20 PROCESSING MAY VARY FROM ONE CASE TO ANOTHER, AND I NDEED THERE MAY BE SEVERAL STAGES OF PROCESSING AND PERHAPS A DIFFE RENT KIND OF PROCESSING AT EACH STAGE. WITH EACH PROCESS SUFFERE D, THE ORIGINAL COMMODITY EXPERIENCES A CHANGE. BUT IT IS ONLY WHEN THE CHANGE, OR A SERIES OF CHANGES, TAKE THE COMMODITY TO THE POINT WHERE COMMERCIALLY IT CAN NO LONGER BE REGARDED AS THE OR IGINAL COMMODITY BUT INSTEAD IS RECOGNIZED AS A NEW AND DISTINCT ARTICLE THAT A MANUFACTURE CAN BE SAID TO TAKE PLACE. WHERE THERE IS NO ESSENTIAL DIFFERENCE IN IDENTITY BETWEEN THE ORIGINAL COMMODI TY AND THE PROCESSED ARTICLE IT IS NOT POSSIBLE TO SAY THAT ON E COMMODITY HAS BEEN CONSUMED IN THE MANUFACTURE OF ANOTHER. ALTHOUGH IT HAS UNDERGONE A DEGREE OF PROCESSING, IT MUST BE REGARDED AS STILL RETAINING ITS ORIGINAL IDENTITY .' (IN THIS CASE THE ASSESSEE WAS ENGAGED IN MANUFACT URE AND SELLING OF CANNED FRUIT, WHICH INVOLVED DIFFERENT PROCESSES, I NCLUDING CUTTING, ADDING PRESERVATIVES, STERILIZATION BY PUTTING INTO BOILING WATER THOUGH WAS HELD TO BE AS NOT CONSTITUTING MANUFACT URE) C). IN UJAGAR PRINTS VS. UNION OF INDIA [1989] 179 ITR 317 (SC), IT WAS HELD THAT THE PREVALENT AND GENERALLY ACCEPTED TEST TO ASCERTAIN THAT THERE IS 'MANUFACTURE IS WHETHER THE CHANGE O R THE SERIES OF CHANGES BROUGHT ABOUT BY THE APPLICATION OF PROCESS ES TAKE THE COMMODITY TO THE POINT WHERE, COMMERCIALLY, IT CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT IS, INSTEAD, RECOGNIZED AS A DISTINCT AND NEW ARTICLE THAT HAS EMERGED AS A RESU LT OF THE PROCESSES. THERE MIGHT BE BORDERLINE CASES WHERE EITHER CONCLU SION WITH EQUAL JUSTIFICATION CAN BE REACHED. INSISTENCE ON ANY SHA RP OR INTRINSIC DISTINCTION BETWEEN 'PROCESSING AND 'MANUFACTURE, RESULTS IN AN OVERSIMPLIFICATION OF BOTH AND TENDS TO BLUR THEIR INTERDEPENDENCE. (THE APEX COURT UPHELD THE VIEW TAKEN BY IT IN EMPIRE INDUSTRIES LTD. & ANR . (INFRA), NEGATING THE ASSESSEE-PETITIONERS CONTE NTIONS TO THE CONTRARY, THAT THE PROCESSES OF BLEACHING, DYEING, PRINTING, SIZING, SHRINK-PROOFING, WATER-PROOFING, RUBBERIZING AND OR GANDIE PROCESSING CARRIED ON IN RESPECT OF COTTON OR MAN-MADE GREY FA BRIC, CANNOT BE REGARDED AS ALIEN OR FOREIGN TO THE CONCEPT OF MANU FACTURE AND, THUS, WAS TO BE REGARDED AS AMOUNTING TO MANUFACTURE. IT WAS NOT NECESSARY TO INSIST ON ANY SHARP OR INTRINSIC DISTI NCTION BETWEEN ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 21 'PROCESSING AND 'MANUFACTURE, RESULTS IN AN OVERS IMPLIFICATION OF BOTH AND TENDS TO BLUR THEIR INTERDEPENDENCE.) D). IN EMPIRE INDUSTRIES LTD. & ANR. VS. UNION OF INDIA & ORS . [1986] 162 ITR 846 (SC), IT WAS EXPLAINED THAT THE TEST TO DETERMINE WHETHER A PARTICULAR ACTIVITY AMOUNTS TO 'MANUFACTURE OR N OT IS: DOES NEW AND DIFFERENT GOODS EMERGE HAVING DISTINCTIVE NAME, USE AND CHAR ACTER. THE MOMENT THERE IS TRANSFORMATION INTO A NEW COMMO DITY COMMERCIALLY KNOWN AS A DISTINCT AND SEPARATE COMMO DITY HAVING ITS OWN CHARACTER, USE AND NAME, WHETHER BE IT THE RESU LT OF ONE PROCESS OR SEVERAL PROCESSES, 'MANUFACTURE TAKES PLACE AND LIABILITY TO DUTY IS ATTRACTED. ETYMOLOGICALLY THE WORD 'MANUFACTURE PR OPERLY CONSTRUED WOULD DOUBTLESS COVER THE TRANSFORMATION. IT IS THE TRANSFORMATION OF A MATTER INTO SOMETHING ELSE AND THAT SOMETHING ELSE IS A QUESTION OF DEGREE, WHETHER THAT SOMETHING ELSE IS A DIFFERENT COMMERCI AL COMMODITY HAVING ITS DISTINCT CHARACTER, USE AND NA ME AND COMMERCIALLY KNOWN AS SUCH FROM THAT POINT OF VIEW IS A QUESTION DEPENDING UPON THE FACTS AND CIRCUMSTANCES OF THE C ASE . E). THE HONBLE SUPREME COURT IN ASPINWALL & CO. LTD. VS. CIT [2001] 251 ITR 323 (SC) STATED THAT THE WORD 'MANUF ACTURE' IS NOT DEFINED IN THE ACT, AND IN THE ABSENCE OF DEFINITIO N OF THE WORD 'MANUFACTURE' THEREIN, IT HAS TO BE GIVEN A MEANING AS IS UNDERSTOOD IN COMMON PARLANCE. IT FURTHER OBSERVED THAT IT IS TO BE UNDERSTOOD AS MEANING THE PRODUCTION OF ARTICLES FOR USE FROM RAW OR PREPARED MATERIALS BY GIVING SUCH MATERIALS NEW FORMS , QUALITIES OR COMBINATIONS WHETHER BY HAND LABOUR OR MACHINES, SO THAT IF THE CHANGE MADE IN THE ARTICLE RESULTS IN A NEW AND DIF FERENT ARTICLE THEN IT WOULD AMOUNT TO A MANUFACTURING ACTIVITY. (IN THIS CASE THE CURING OF COFFEE WHEREBY THE COFF EE CHERRIES ARE SUBJECT TO SEVERAL NATURAL AND MAN-MADE PROCESSES T O LEAD TO COFFEE BEANS, I.E., FROM THE COFFEE PLUCKED FROM THE PLANT S, WAS HELD AS MANUFACTURE) F). IN TUNGABHADRA INDUSTRIES LTD . (SUPRA), IT WAS HELD THAT MERELY BECAUSE CERTAIN ARTICLES ARE KNOWN BY DIFFERENT NAM ES, IT DOES NOT MEAN THAT THEY ARE DIFFERENT COMMERCIAL COMMODITIES IF IN FACT THEY ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 22 ARE MERELY DIFFERENT FORMS OF THE SAME COMMODITY. S IMILAR VIEW STANDS EXPRESSED IN DUNKEN COFFEE MFG. CO . (SUPRA). {EMPHASIS, SUPPLIED} THE TERM, THUS, STANDS SUFFICIENTLY EXPLAINED, SO T HAT WE DO NOT THINK IT NECESSARY TO ADVERT TO FURTHER CASE LAW IN THE MATT ER, WHICH IS LEGION, DECISION IN EACH CASE, AS WOULD BE APPARENT, TURNIN G ON THE FACTS OF THE CASE. FURTHER, GIVEN THE EXPOSITION THE WORD HAS RE CEIVED, IT MAY BE RELEVANT TO STATE THE VERDICTS OF THE HONBLE COURT S IN THE SEVERAL CASES THAT HAVE COME BEFORE THEM IN THE CONTEXT OF DIFFER ENT PROCESSES: (I) IN TUNGABHADRA INDUSTRIES LTD . (SUPRA) THE CONVERSION OF RAW GROUNDNUT OIL INTO REFINED OIL WAS HELD TO BE NO DO UBT PROCESSING, BUT NOT AMOUNTING TO MANUFACTURE INASMUCH IT ONLY LED T O ITS PURIFICATION AND REFINING. (II) IN E. VASANTHA & CO . (SUPRA), SUGAR CANDY, THOUGH SUBJECT TO SALES-TAX, AS OPPOSED TO SUGAR WHICH WAS TAX-EXEM PT, WAS HELD TO BE ONLY A PURER FORM OF SUGAR, SO THAT THERE HAS BEEN NO MANUFACTURE OF ANY NEW ARTICLE OR THING. CLEARLY, WHAT HAD BEEN UN DERTAKEN WAS ONLY A PROCESS/ES. (III) IN SAKARWALA BROS . (SUPRA), THE PROCESS INVOLVED THE PASSING OF HYDROGEN SULPHIDE THROUGH SUGAR SOLUTION FOR BLEACH ING, AFTER WHICH PATASHAS ARE PREPARED BY SPLACHING THE SOLUTION ON A PIECE OF WOOD, CONVERTING SUGAR INTO AMORPHOSE D SUGAR, ALLOWED TO COOL IN A SIEVE OF APPROPRIATE THICKNESS, CONVER TING INTO GRANULATE SUGAR LUMPS. THE SAME, WITH THE SAME SUCROSE CONTEN T, WERE HELD TO BE ONLY REFINED SUGAR AND, THUS, NOT A MANUFACTURE . IV) CHOWGULE & CO. (P.) LTD. V. UNION OF INDIA [1981] 47 STC 124 (SC), THE PROCESS OF BLENDING OF DIFFERENT QUALITIE S OF ORES POSSESSING DIFFERENT CHEMICAL AND PHYSICAL COMPOSITION WAS HEL D AS NOT A MANUFACTURE. THE HON'BLEBLE COURT RELIED ON ITS D ECISION IN PIO FOOD PACKERS (SUPRA). ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 23 V) IN SACS EAGLES CHICORY VS. CIT [2002] 255 ITR 178 (SC) IT WAS IN THE CONTEXT OF SS. 80HH, 80-I AND 80J HELD, ON THE APPLICATION OF TEST LAID DOWN IN ASPINWALL & CO. LTD. (SUPRA), THAT THE CONVERSION OF CHICORY ROOT INTO CHICORY POWDER BY ROASTING AND PO WDERING DID NOT AMOUNT TO MANUFACTURE. (VI) IN CIT VS. GEM INDIA MANUFACTURING CO . [2001] 249 ITR 307 (SC) IT WAS HELD THAT CUTTING AND POLISHING OF UNCU T RAW DIAMONDS DID NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF ARTICLE OR THING WITHIN THE MEANING OF THE TERM U/S. 80-I OF THE ACT. (VII) IN DY. CST VS. BHERHAGHAT MINERAL INDUSTRIES [2000] 246 ITR 230 (SC), IT WAS HELD THAT CRUSHING DOLOMITE LUMPS INTO CHIPS AND POWDER IS NOT A PROCESS OF MANUFACTURE THAT BRINGS ABOUT A NEW COMMERCIAL COMMODITY. (VIII) IN CIT VS. VENKATESHWARA HATCHERIES (P.) LTD . [1999] 237 ITR 174 (SC), IT WAS HELD THAT THE PRODUCTION OF CHICKS DID NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF ARTICLES SO AS TO ENAB LE THE ASSESSEE DEDUCTION UNDER SS. 32A/80HH/80HHA/80-I/80J OF THE ACT. BEING ESSENTIALLY A NATURAL OR BIOLOGICAL PROCESS, IT COU LD, BY APPLICATION OF THE MECHANICAL METHOD, ONLY BE BETTER REGULATED. (IX) IN CIT VS. RELISH FOODS [1999] 237 ITR 59 (SC), IT WAS HELD THAT PEELING AND FREEZING OF SHRIMPS DID NOT LEAD TO A D ISTINCT COMMODITY SO AS TO ENTITLE THE ASSESSEE THE SPECIAL DEDUCTION UNDER S. 80HH OF THE ACT, AFTER APPLYING ITS OWN DECISION AND IN THE SAL ES-TAX CASES, I.E., STERLING FOOD VS. STATE OF KARNATAKA [1986] 63 STC 239 (SC). THERE ARE IN FACT DECISIONS BY THE HONBLE HIGH COU RTS AS WELL, THOUGH IN VIEW OF THE SEVERAL BY THE APEX COURT, SE TTLING THE LAW, IT IS NOT CONSIDERED NECESSARY TO BURDEN THIS ORDER FURTH ER THEREWITH. THE FORE-GOING WOULD ALSO ENABLE A BETTER APPRECIATION OF THE THREE DECISIONS BY THE TRIBUNAL RELIED UPON BY THE LD. CI T(A), VIZ. B.G. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 24 CHITALE (SUPRA); AQUA MINERALS (SUPRA); AND SHAW SCOTT DISTILLERIES (SUPRA). IN EACH OF THESE DECISIONS, AFTER REFERRIN G TO JUDICIAL PRECEDENTS, THE CONVERSION UNDER REFERENCE WAS HELD AS NOT AMOUNTING TO MANUFACTURE. 4.3 AT THIS STAGE IT WOULD BE PERTINENT TO EMPHASIZ E THE DIFFERENCE BETWEEN MANUFACTURE AND PROCESSING. EVERY CHANG E IN ANY ARTICLE OR THING IS A RESULT OF A PROCESS, BUT IT IS ONLY W HERE THE CHANGE UPON BEING USUALLY SUBJECT TO A SERIES OF PROCESSES, UND ERGONE BY THE RAW (BASE) MATERIAL, IS SUCH THAT IT CAN NO LONGER BE I DENTIFIED WITH OR AS ONLY A MODIFIED VERSION OF THE FORMER, I.E., ASSUME S THE CHARACTER OF A NEW AND DIFFERENT MATERIAL, DISTINCT, EVEN THOU GH DERIVED, FROM THE FORMER, THAT IT QUALIFIES TO BE A MANUFACTURE OF A NEW ARTICLE OR THING. IN CHOWGULE AND CO. (P.) LTD. (SUPRA), THE SUPREME COURT OBSERVED THAT THE WORD PROCESSING HAS NOT BEEN DEFINED IN THE ACT AND IT MUST, THEREFORE, BE INTERPRETED ACCORDING TO ITS PLAIN NA TURAL MEANING. AS EXPLAINED BY IT: WEBSTER'S DICTIONARY GIVES THE FO LLOWING MEANING OF THE WORD 'PROCESS': 'TO SUBJECT TO SOME SPECIAL PRO CESS OR TREATMENT, TO SUBJECT (ESPECIALLY RAW MATERIAL) TO A PROCESS O F MANUFACTURE, DEVELOPMENT OR PREPARATION FOR THE MARKET, ETC., TO CONVERT INTO MARKETABLE FORM AS LIVESTOCK BY SLAUGHTERING, GRAIN BY MILLING, COTTON BY SPINNING, MILK BY PASTEURISING , FRUITS AND VEGETABLES BY SORTING AND REPACKING'. WHERE THEREFORE ANY COMMODITY IS SUBJEC TED TO A PROCESS OR TREATMENT WITH A VIEW TO ITS DEVELOPMENT OR PRE PARATION FOR THE MARKET, AS, FOR EXAMPLE, BY SORTING AND REPACKING FRUITS AND VEGETABLES, IT WOULD AMOUNT TO PROCESSING OF THE CO MMODITY. THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 25 NATURE AND EXTENT OF PROCESSING MAY VARY FROM CASE TO CASE; IN ONE CASE THE PROCESSING MAY BE SLIGHT AND IN ANOTHER IT MAY BE EXTENSIVE; BUT WITH EACH PROCESS SUFFERED, THE COMMODITY WOULD EXPERIENCE A CHANGE. WHEREVER A COMMODITY UNDERGOES A CHANGE AS A RESULT OF SOME OPERATION PERFORMED ON IT OR IN REGARD TO IT, SUCH OPERATION WOULD AMOUNT TO PROCESSING OF THE COMMODITY . THE NATURE AND EXTENT OF THE CHANGE IS NOT MATERIAL. IT MAY BE THAT CAMPH OR POWDER MAY JUST BE COMPRESSED INTO CAMPHER CUBES BY APPLICATION OF MECHANICAL FORCE OR PRESSURE WITHOUT ADDITION OR ADMIXTURE OF ANY OT HER MATERIAL AND YET THE OPERATION WOULD AMOUNT TO PROCESSING OF CAM PHOR POWDER AS HELD BY THE CALCUTTA HIGH COURT IN SHRI OM PRAKASH GUPTA VS. CCT [1965] 16 STC 935. WHAT IS NECESSARY IN ORDER TO CH ARACTERIZE AN OPERATION AS 'PROCESSING' IS THAT THE COMMODITY MUS T, AS A RESULT OF THE OPERATION, EXPERIENCE SOME CHANGE. APPLICATION 4.4 IN DELHI COLD STORAGE (P.) LTD. V. CIT [1991] 191 ITR 656 (SC), FOLLOWING CHOWGULE AND CO. (P.) LTD . (SUPRA), IT WAS HELD THAT REFRIGERATION IN A COLD STORAGE COULD NOT BE SAID T O BE A PROCESSING, SO AS TO ENTITLE THE APPELLANT-COMPANY TO THE BENEF IT UNDER THE RELEVANT FINANCE ACT AS AN INDUSTRIAL COMPANY. THE BASIS FOR SO HOLDING BY THE APEX COURT WAS THAT THE SAME DOES NOT BRING FORTH THE CHANGE OR ALTERATION OF THE GOODS OR MATERIAL SUBJECT TO PROC ESSING AS UNDERSTOOD OR SIGNIFIED BY THE SAID WORD IN COMMON PARLANCE . A COLD STORAGE, IT EXPLAINED, WAS ONLY AN ACT OF PRESERVAT ION, WITHOUT ANY POSITIVE ACTION. TRUE, IT COULD BE ARGUED THAT CONV ERSION OF WATER INTO ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 26 ICE DOES LEAD TO A CHANGE IN THE PHYSICAL STATE THE REOF WITH CONCOMITANT ATTRIBUTES, SO THAT THE SAID DECISION M AY NOT STRICTLY APPLY TO THE INSTANT CASE, AND THE TRANSFORMATION OR THE CHANGE BROUGHT ABOUT MAY BE REGARDED AS A PROCESS. EQUALLY, IT COULD B E ARGUED, THAT THE CHANGE BEING ONLY ON ACCOUNT OF LOWERING ITS TEMPER ATURE, WHICH IS REVERSIBLE, AS INDEED IT WOULD BE WHERE THE TEMPERA TURE IS, ON THE OTHER HAND, INCREASED, THE SAME, I.E., ALTERATION O F TEMPERATURE, WITHOUT ANYTHING FURTHER, MAY NOT BE REGARDED AS A PROCESS . THE QUESTION BEFORE US, HOWEVER, IS NOT IF THE SAME IS A PROCES S ( WHICH IN OUR VIEW IT IS, ALBEIT REVERSIBLE), OR NOT, BUT IF IT I S SUBSTANTIAL ENOUGH TO QUALIFY THE OUTPUT TO BE A RESULT OF MANUFACTURE. COLD STORAGES, IT MAY BE CLARIFIED, HAVE SINCE BEEN INCLUDED AS A SEP ARATE CATEGORY FOR BEING ELIGIBLE U/S. 80-IB OF THE ACT. 4.5 AT THIS STAGE IT MAY ALSO BE EMPHASIZED, AND AS WOU LD ALSO BE APPARENT FROM THE SEVERAL DECISIONS REFERRED TO HER EINBEFORE, THAT THERE IS NO ESSENTIAL DIFFERENCE BETWEEN THE TERM MANUFA CTURE AS ELUCIDATED BY THE HONBLE COURTS, AND AS DEFINED NO W (I.E., AY 2009- 10 ONWARDS) UNDER THE ACT. INDEED THE DEFINITION IN VOKES THE SAME PRESCRIPTION AS ADVOCATED BY THE SEVERAL DECISIONS. THE EMPHASIS, IT WOULD BE EVIDENT, IN EACH CASE, BEING NOT ON THE IN DIVIDUAL PROCESSES PER SE , WHICH THERE MAY BE IN A GIVEN CASE MANY (VIZ. STA TED TO BE FIFTEEN IN THE CASE OF PASTEURIZATION OF MILK), BUT THE IMPACT AND THE OVERALL CHANGE WROUGHT BY THESE PROCESSES. THAT IS, WHETHER A RAW MATERIAL/S HAS BEEN CONSUMED, TRANSFORMING IT INTO A NEW PRODUCT WITH ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 27 DIFFERENT CHARACTERISTICS, SIGNIFIED BY A CHANGE IN THE CHEMICAL COMPOSITION OR INTEGRAL STRUCTURE THEREOF. 4.6 WE HAVE, THUS, IN VIEW OF THE ABUNDANT ENUNCIAT ION OF THE TERM, AND IN DIFFERENT FACT-SITUATIONS, INVOLVING DIFFERE NT PROCESSES; THE COURT IN EACH CASE EXAMINING THE EFFECT OF THOSE PROCESSE S, HAVE LITTLE DIFFICULTY IN HOLDING THAT THE CONVERSION OF WATER INTO ICE, IRRESPECTIVE OF THE PROCESSES INVOLVED AND THE DIFFERENT APPLICA TIONS OF ICE, SOLD IN THE MARKET AS SUCH, I.E., AS DISTINCT FROM WATER, D OES NOT AMOUNT TO MANUFACTURE. THERE IS IN FACT NO CONSUMPTION OF ANY RAW MATERIAL, AS EXPLAINED IN PIO FOOD PACKERS (SUPRA), WHICH WAS HELD TO BE A CASE OF PROCESSING. WHY, THE RAW MATERIAL (WATER) REMAINS T HE SAME, ICE BEING ONLY A FORM OF WATER NOTHING MORE, AND NOTHING LE SS. WHY, IF CONVERSION OF WATER INTO ICE IS MANUFACTURE, SO WOU LD BE THE CONVERSION OF THE ICE INTO WATER, I.E., BY NECESSAR Y IMPLICATION . AS ARGUED BY THE REVENUE, THE EXPOSURE TO ROOM TEMPERA TURE WOULD CONVERT ICE INTO WATER. SO MUCH FOR THE CHANGE STAT ED TO BE WROUGHT IN/OR ON WATER! COULD THE LATTER PROCESS, THEN, BY ANY STRETCH OF IMAGINATION, BE REGARDED AS MANUFACTURE OF WATER (F ROM ICE)? ONE COULD UNDERSTAND HEATING WHICH IS THE OPPOSITE OF REFRIGERATION, TO BE A PROCESS, BUT IT WOULD BE FAR-FETCHED TO REG ARD IT AS MANUFACTURE. THE CONVERSION OF ICE INTO WATER AND , IN FACT, INTO WATER VAPOUR, HAPPENS IN NATURE ALL THE TIME, BEING ONLY A FUNCTION OF THE TEMPERATURE TO WHICH PHYSICAL STATE, AS OBTAINI NG FOR THE TIME BEING, IT IS SUBJECT TO. THE PROCESS OF REFRIGERATI ON, I.E., REGULATING TEMPERATURE OR MAINTAINING IT AT A PARTICULAR LEVEL , DIFFERENT FROM THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 28 ROOM TEMPERATURE; ITS USES APART, CANNOT BY ITSELF AMOUNT TO MANUFACTURE, AND IT IS THIS PROCESS THAT IS BEING U NDERTAKEN THOUGH ON A DIFFERENT SCALE, IN THE REFRIGERATORS AT HOME OR EVEN IN THE INDUSTRY. IN FACT, REFRIGERATION IS WIDELY USED TO PRESERVE MANY THINGS, WHICH IS MEANT TO MAINTAIN THE INTEGRITY OF THE ART ICLE OR THING SUBJECT TO REFRIGERATION BY BEING KEPT AT A PARTICULAR TEMP ERATURE. THE CONVERSION OF ICE INTO WATER (OR INTO GAS) AS BY HE ATING IT), OR VICE- VERSA, IS, WITHOUT DOUBT, PROCESSING THEREOF, WHICH THOUGH CANNOT BE REGARDED AS MANUFACTURE, WHICH REQUIRES A GREATER AND MORE ENDURING CHANGE. AS EXPLAINED IN PIO FOOD PACKERS (SUPRA), IT IS LARGELY A QUESTION OF THE DEGREE OF CHANGE, WHICH W E DO NOT FIND AS TO ANY MATERIAL EXTENT, SO THAT ALTHOUGH IT HAS UNDERG ONE PROCESSING, IT MUST STILL BE REGARDED AS RETAINING ITS ORIGINAL ID ENTITY. AS REGARDS THE DIFFERENT APPLICATIONS OF ICE, ARE NOT THEY, IF ONE MAY ASK, IN EFFECT, OR ONLY A MANNER OF, USING WATER, AS, FOR INSTANCE, IS HOT/BOILING WATER ? 4.7 THOUGH THE LD. CIT(A) HAS MET THE ASSESSEES RE LIANCE ON THE THREE DECISIONS, IT MAY BE, EVEN AS NOTED DURING HEARING, PERTINENT TO DISCUSS THESE CASES AS WELL FOR THE SAKE OF COMPLET ENESS OF THIS ORDER. THE ASSESSEES PRINCIPAL RELIANCE IS ON GLACIER COLD STORAGE (SUPRA), WHICH WAS ALSO READ OUT DURING HEARING. THE ISSUE I NVOLVED IN THAT CASE WAS WHETHER THE LEVY OF SALES-TAX UNDER THE J& K SALES TAX ACT ON ICE; WATER BEING EXEMPT THERE-UNDER, WAS CONSTIT UTIONALLY VALID OR ULTRA VIRES THE CONSTITUTION. THAT IS, WHETHER THE CLASSIFICAT ION WAS INTELLIGIBLE, BASED ON OBJECTIVE DIFFERENTIAL CRITE RIA AND, THUS, NOT ARBITRARY AND THEREFORE VALID. THE SAME WAS HELD BY THE HONBLE COURT ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 29 TO BE SO, EXPLAINING THAT WATER AND ICE CANNOT BE R EGARDED, ON ACCOUNT OF CHANGE IN FORM, WITH ICE HAVING APPLICATIONS DIF FERENT FROM WATER, AS THE SAME. HOW COULD, ONE WONDERS, THE SAID DECISION BE OF ASSISTANCE TO THE ASSESSEE ? THE QUESTION OF WHETHER THE SAID CHANGE, I.E., FROM WATER TO ICE, OR EQUIVALENTLY, FROM ICE TO WATER (AND WHICH COULD BE TO/FROM WATER VAPOUR (GASEOUS STATE OF H 2 O) AS WELL), AS BEING A MANUFACTURE, OR ONLY PROCESSING, WAS NOT BE FORE THE HONBLE COURT OR DWELT UPON BY IT. WHY, THERE IS NO REFEREN CE TO ANY JUDICIAL PRECEDENTS QUA OR EVEN OTHERWISE IN ITS DECISION AS TO WHAT AMOU NTS TO MANUFACTURE, I.E., PER SE , OR IN CONTRADISTINCTION TO PROCESSING, CASE LAW ON WHICH IS LEGION. THE QUESTION BEFORE TH E HONBLE COURT WAS WHETHER, ICE, I.E., FROZEN WATER, IN SOLID STAT E, CAN BE REGARDED AS WATER (LIQUID FORM) PER SE , AND WHICH DID NOT FIND AGREEMENT OF THE HONBLE COURT, VALIDATING, IN CONSEQUENCE, THE LEVY OF TAX UNDER THE RELEVANT ACT ON ICE. TO SAY THAT IT IS NOT SO WOULD AMOUNT TO IGNORING THE ACTUAL, PHYSICAL DIFFERENCE BETWEEN THE TWO STA TES. WE HAVE ALREADY NOTED THAT AN ARTICLE OR THING EXPERIENCES SOME CHANGE WITH EACH PROCESS, THAT RATHER BEING THE PREMISE OR ATTR IBUTE OF A PROCESS. AS SUCH, NOTHING TURNS ON THE SAID DECISION HOLDING WATER AND ICE TO BE NOT THE SAME THING AND, THEREFORE, THE CLASSI FICATION BETWEEN THE TWO AS CONSTITUTIONALLY VALID. IT IS TRITE LAW THAT A DECISION IS AN AUTHORITY ONLY FOR WHAT IT ACTUALLY DECIDES; THE AP EX COURT IN GOODYEAR INDIA LTD. VS. STATE OF HARYANA & ANR. [1991] 188 ITR 402 (SC) FAMOUSLY HOLDING AS: A PRECEDENT IS AN AUTHORITY ONLY FOR WHAT IT ACTUA LLY DECIDES AND NOT WHAT MAY REMOTELY OR EVEN LOGICALLY FOLLOW FROM IT. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 30 (ALSO REFER IN THIS REGARD THE DECISIONS IN CIT V. SUN ENGINEERING WORKS (P.) LTD . [1992] 198 ITR 297 (SC); LACHMAN DASS BHATIA HINGWALA (P.) LTD. VS. ASSTT. CIT [2011] 330 ITR 243 (DEL)(FB); BLUE STAR LTD. V. CIT (1996) 217 ITR 514 (BOM); RAJPUR RUDA MEHA VS. STATE OF GUJARAT [1980] 2 SCR 353)). THAT APART, IT IS WELL SETTLED THAT IT IS NOT A SOU ND PRINCIPLE OF CONSTRUCTION TO INTERPRET EXPRESSIONS USED IN ONE A CT WITH REFERENCE TO THEIR USE IN ANOTHER ACT (REFER, INTER ALIA, RAM NARAIN V. STATE OF UTTAR PRADESH , AIR 1957 SC 18). THAT CLASSIFICATION OF PRODUCTS UNDER THE EXCISE LAW, OR SALES-TAX, DIFFERENTLY, IS NO GROUND TO REGARD IT AS MANUFACTURE, I.E., OF ONE FROM THE OTHER, UNDER T HE ACT AN ARGUMENT IN THAT RESPECT ASSUMED BEFORE IT IN AQUA MINERALS PVT. LTD . (SUPRA), STANDS ANSWERED EXTENSIVELY BY THE TRIBUNA L, EVEN AS IT FOUND THAT THE TREATED WATER BY THE ASSESSEE IN THAT CA SE WAS DEMINERALIZED WATER, NOT SUBJECT TO EXCISE-DUTY, WHICH THOUGH WAS NOT A DECISIVE FACTOR (REFER PARAS 5 & 9.5 OF THE SAID ORDER). SIM ILARLY, IN SHAW SCOTT DISTILLERIES PVT. LTD . (SUPRA), IMFL IS MARKETED AND KNOWN AS A DIFFERENT PRODUCT (THAN POTABLE SPIRIT), SUBJECT TO EXCISE. MANUFACTURE WOULD, AS EXPLAINED IN THE DECISIONS AFORE-NOTED, I NVOLVE THE CONSUMPTION OF ONE OR MORE MATERIALS IN THE MANUFAC TURE OF A NEW, DIFFERENT MATERIAL. THE DECISION IN GLACIER COLD STORAGE (SUPRA) WOULD THUS OF NO ASSISTANCE TO THE ASSESSEE IN THE INSTANT CASE. THE DECISION IN GOEL INDUSTRIES PVT. LTD . (SUPRA) IS TO THE SAME EFFECT, BEING ALSO UNDER THE STATE SALES-TAX LAW AND RENDER ED ON THE SAME BASIS. THE THIRD DECISION RELIED UPON BY THE ASSESSEE IS I N EVEREST COLD STORAGE (SUPRA). RELIANCE THEREON IS AGAIN MISPLACED. THERE IS NO ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 31 REFERENCE TO THE PROCESS OF CONVERSION OF WATER INT O ICE, MUCH LESS OF IT BEING A RESULT OF MANUFACTURE OR NOT, BEING ON LY A PROCESS. THE ONLY ISSUE ARISING IN THAT CASE WAS IF THE REVISION BY THE REVISIONARY AUTHORITY, AS MADE, WAS SUSTAINABLE IN LAW. THE ASS ESSING AUTHORITY HAD ALLOWED INVESTMENT ALLOWANCE U/S. 32A ON THE CO LD STORAGE, WHICH DID NOT FIND ACCEPTANCE BY THE CIT, BEING OF THE VI EW THAT THE OPERATION OF A COLD STORAGE, DESPITE BEING UNDERTAK EN THROUGH A PLANT, DID NOT RESULT IN BRINGING INTO EXISTENCE ANY NEW A ND DISTINCT ARTICLE OR THING. THE HON'BLE COURT, ON CHALLENGE, UPHELD THE INVOCATION OF S. 263, FINDING IT TO HAVE IN FACT EXPRESSED THE SAME VIEW IN MITTAL ICE & COLD STORAGE V. CIT [1986] 159 ITR 18 (MP). THE REFERENCE TO THE DEFINITION OF FACTORY UNDER THE FACTORIES ACT BY THE TRIBUNAL, MADE IN JUSTIFYING ITS DECISION, WAS, BEING IN A DIFFERENT CONTEXT, NOT FOUND RELEVANT BY THE HON'BLE COURT. BOTH THE ASPECTS ON WHICH THE DECISION IS BASED, STAND, IN FACT, SQUARELY COVERED BY THE D ECISIONS BY THE APEX COURT. THE ISSUE WHETHER ICE, EVEN IF THE ICE PLANT IS A FACTORY UNDER THE RELEVANT ACT, IS A RESULT OF MANUFACTURE OR I S ONLY PROCESSING, WAS NOT IN CONTROVERSY AND, ACCORDINGLY, NOT ADDRES SED BY THE HON'BLE COURT, FOR THE SAID DECISION TO BE ANY ASSISTANCE T O THE ASSESSEE. DECISION 5. IN OUR CLEAR VIEW, THEREFORE, (REFER PARAS 4.1 T HRO 4.7) NEITHER THE CONVERSION OF WATER INTO ICE, OR OF ICE INTO WA TER, AN OPPOSITE PROCESS, BEING REFRIGERATION AND, AS THE CASE MAY B E, HEATING, I.E., CHANGING IN EFFECT THE TEMPERATURE OF THE MATTER (H 2 O), WOULD NOT AMOUNT TO MANUFACTURE, BUT IS ONLY ITS PROCESSING. IN FACT, EVEN THIS ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 32 PROCESSING IS OF PASSING, AS OPPOSED TO ENDURING, V ALUE OR SIGNIFICANCE, AS ALL THAT HAS BEEN DONE IS TO CHANGE THE TEMPERATURE OF WATER, WHICH IS SUBJECT TO PROCESSING, BY SUBJECTIN G IT TO A HIGHER OR, AS THE CASE MAY BE, LOWER TEMPERATURE. IN FACT, EVE N THE PURPOSE OF THIS CHANGE IN TEMPERATURE IS TO TRANSMIT THIS CHAN GE IN TEMPERATURE, I.E., THE LOWER TEMPERATURE (WITH REFERENCE TO THE ROOM OR ATMOSPHERIC TEMPERATURE), OF OTHER MATERIALS THROUGH CONTACT WI TH ICE, THUS, LOWERING THEIR TEMPERATURE. THIS IS AKIN TO RAISING THE TEMPERATURE OF ANY ARTICLE OR THING BY PUTTING IT INTO BOILING WAT ER OR THROUGH CONTACT WITH STEAM. THIS IS PRECISELY WHY IT STOOD MENTIONE D EARLIER, SO AS TO EMPHASIZE THE ANOMALY IN THE PROPOSITION, IF HEATIN G AN EQUIVALENT PROCESS IN TERMS OF ITS IMPACT, COULD BY ITSELF, I. E., WITHOUT ANYTHING MORE, BE REGARDED AS MANUFACTURE. IF THAT IS SO, SO WOULD BE, BY IMPLICATION, THE CONVERSION OF WATER INTO ICE IN TH E HOME REFRIGERATORS, WHICH IS ONLY DIFFERENT IN SCALE AND UNDERTAKEN ON COMMERCIAL BASIS, OR INDEED THE LOWERING OF ROOM TEMPERATURE BY AIR C ONDITIONING IN HOMES AND OFFICES. WHY, ICE CUBES ARE COMMONLY ADDE D TO BEVERAGES FOR THE SAME REASON, I.E., LOWER THEIR TEMPERATURE. AS INDEED IS THE REASON FOR KEEPING FOOD ITEMS AND WHICH HAS INDUS TRIAL EQUIVALENTS AS WELL, IN HOME REFRIGERATORS. WHY, ICE COULD, AFTER A TIME, OR EVEN EARLIER, AS BY HEATING IT, BE USED FOR ANY USE TO W HICH WATER IS ! A CHANGE IN TEMPERATURE, THUS, EITHER ON ITS OWN, AS BY EXPOSING IT TO ROOM TEMPERATURE, OR OTHERWISE, REVERSES THE PROCES S. THERE IS, FURTHER, NO QUESTION OF PRODUCTION OF WATER, I.E. , BY COMBINING HYDROGEN AND OXYGEN AND, CONSEQUENTLY, OF ICE. THE BASIC CONDITION ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 33 FOR DEDUCTION U/S. 80-IB, I.E., MANUFACTURE OR PROD UCTION OF AN ARTICLE OR THING IS, THUS, NOT SATISFIED. THE ASSESSEE HAS NOT MET ANY OF THE SEVERAL DECISI ONS RELIED UPON BY THE AO, AS INDEED BY THE LD. CIT(A), WHO AL SO ADDED TO THE SAID LIST. WE HAVE CONSIDERED ALL THE DECISIONS, RE LYING EXTENSIVELY ON THE ABUNDANT CASE LAW ON THE SUBJECT, BESIDES ALSO MEETING THE ASSESEES RELIANCE OF SOME CASE LAW. WE, ACCORDINGLY, UPHOLD THE DECISION BY THE REVENUE AND THE ASSESSEE FAILS. 6. THE ONLY OTHER GROUND IS TOWARD UNEXPLAINED INVE STMENT (EXPENDITURE) OF RS.1.18 LACS (FOR AY 2006-07). THE SAME WAS NOT PRESSED DURING HEARING AND, CONSEQUENTLY, NOT RESPO NDED TO BY THE OTHER SIDE. THE SAME IS THEREFORE DISMISSED AS NOT PRESSED. IN FACT, AS THE IMPUGNED ORDER REVEALS, THE SAME WAS NOT PRESSE D EVEN BEFORE THE FIRST APPELLATE AUTHORITY, WHO THEREFORE PROCEEDED TO DECIDE THE SAME ON THE BASIS OF THE MATERIAL ON RECORD, FINDING NO CONTENTION, MUCH LESS EVIDENCE, ADVANCED BY THE ASSESSEE IN EXPLANAT ION OF THE CASH OF RS.1.38 LACS DEPOSITED IN HIS BANK ACCOUNT (TO MEET THE EXPENDITURE/REPAYMENT OF LOAN), STATED TO BE OUT OF SAVING, AND TOWARD WHICH THE AO HAD ACCORDINGLY ALLOWED A BENEFIT OF R S.20,000 AS THE ASSESSEES PERSONAL SAVING. WE, ACCORDINGLY, DECLIN E INTERFERENCE. 7. THE APPEALS ALSO RAISE A GROUND CHALLENGING THE INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C). PENALTY PROCEED INGS, IT IS TRITE LAW, ARE SEPARATE PROCEEDINGS, SATISFACTION IN RESPECT O F WHICH IS TO BE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 34 THOUGH RECORDED IN ANY PROCEEDINGS UNDER THE ACT ( D.M. MANASVI V. CIT [1972] 86 ITR 557 (SC); CIT V. S.V. ANGIDI CHETTIAR [1962] 44 ITR 739 (SC)(ALSO REFER: CIT V. ATUL MOHAN BINDAL [2009] 317 ITR 1 (SC) AND MAK DATA PVT. LTD. V. CIT [2013] 358 ITR 593 (SC), AFFIRMING THE DECISION BY THE HON'BLE DELHI HIGH CO URT REPORTED AT 352 ITR 1). THE ACTION OF THE AO IN RECORDING HIS S ATISFACTION IN THE COURSE OF ASSESSMENT PROCEEDINGS, THUS, CANNOT BE F AULTED WITH UNDER THE SCHEME OF THE PROVISION. THE SAME DOES NOT GIVE RISE TO ANY LEGAL CHALLENGE, WHICH COULD ONLY BE IN THE ENSUING PENAL TY PROCEEDINGS. THE GROUNDS ARE WITHOUT MERIT. WE DECIDE ACCORDIN GLY. 8. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE , 2 019 -- SD/- DATED 17/6/2019 (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: .06.2019 /GP/SR/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: YASH RAJ SINGH, M/S. NAV BHARAT STEEL, POUNI CHAK, JAMMU-180016 (2) THE RESPONDENT: ITO-1(3), JAMMU (3) THE CIT(APPEALS), JAMMU (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 35 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NOS. 84, 83 & 82(ASR )/2014 ASST.YEARS:2006-07, 2007-08 & 2 008-09 YAS RAJ SINGH PROP. NAV BHARAT STEEL, POUNI CHAK, JAMMU [PAN:ACEPS 5319L] VS. INCOME TAX OFFICER, 1(3), JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY: SH. JOGINDER SINGH (LD. CA) RESPONDENT BY: SH. CHARAN DASS (LD. DR) DATE OF HEARING: 03.04.2019 DATE OF PRONOUNCEMENT: DISSENT ORDER PER N.K.CHOUDHRY, JM: THESE THREE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDERS DATED 06-12-2013, 29-11-2013 & 03 -12-2013 RELEVANT FOR THE ASSESSMENT YEARS 2006-07, 2007-08 & 20 08-09 RESPECTIVELY, PASSED BY THE LD. CIT(A), JAMMU U/S 250(6 ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. ALTHOUGH THE ASSESSEE HAS CHALLENGED THE VARIOUS ADDITIONS AFFIRMED BY THE LD. CIT(A), HOWEVER, AT TH E TIME OF HEARING EMPHASIZED ONLY ON THE SOLE GROUND QUA DISALLO WANCE OF DEDUCTION U/S 80IB OF THE ACT. AS IN ALL THE THREE APPE ALS, THE ISSUE RELATES TO THE DISALLOWANCE OF DEDUCTION U/S 80IB IS INVOLVED, THEREFORE, FOR THE SAKE OF BREVITY AND CONV ENIENCE, THE ITA NO.84/ASR/2014 HAS BEEN TAKEN AS LEAD CASE FOR ADJUD ICATION ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 36 AND THE RESULT OF THE SAME SHALL ALSO BE APPLICABLE MUTATIS MUTANDI TO THE OTHER APPEALS I.E. ITAS NO.83/ASR/2014 & 82/ASR/2014. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNIN G A FACTORY IN THE NAME AND STYLE OF M/S. RIGHTWAY INDUS TRIES & M/S. ADITYA ICE FACTORY. POUNICHAK, JAMMU AND HAD CLAIME D DEDUCTION U/S 80IB QUA 'ADITYA ICE FACTORY' FOR MANUFA CTURING ICE FROM WATER, WHICH WAS DENIED BY THE ASSESSING OFFICER VI DE ASSESSMENT ORDER DATED 24/12/2009 U/S 143(3) OF THE ACT B Y CONCLUDING AS UNDER: THUS KEEPING IN VIEW THE FACTS OF THE CASE AND ABOVE JUDICIAL PRONOUNCEMENTS, IT IS EVIDENT THAT CONVERSION O F WATER TO ICE DOES NOT AMOUNT TO MANUFACTURE AND, AS SUCH, IS NOT ENTITLED TO DEDUCTION U/S 80IB OF THE I.T. ACT, 1961. ACCORDINGLY, DEDUCTION U/S 80IB OF THE I.T. ACT, 1961 OF RS.16,48,449/- CLAIMED BY THE ASSESSEE IS DISALLOWED AND AN AMOUNT OF RS.16,48,449/- SUBJECTED TO TAX. 4. THE ASSESSEE IN ADDITION TO OTHER DISALLOWANCES, CHALLENGED THE SAID DISALLOWANCE U/S 80IB OF THE ACT, BEF ORE THE LD. CIT(A) , WHO UPHELD THE ACTION OF THE ASSESSING OFFI CER QUA DISALLOWANCE OF DEDUCTION U/S 80IB BY HOLDING AS UNDER: 3.3 I HAVE CONSIDERING THE RIVAL ARGUMENTS ABOVE, FIRST OF ALL THE DEFINITION OF MANUFACTURE IN SECTION 2(29B) OF INCOME TAX ACT IS TO BE CONSIDERED. ''MANUFACTURE' WITH ITS GRAMMATICAL VARIATIONS, MEA NS A CHANGE IN A NON LIVING PHYSICAL OBJECT OR ARTICLE O R THING- ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 37 A) RESULTING IN TRANSFORMATION OF THE OBJECT OR AR TICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME, CHARACTER AND USE; OR B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT O BJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSIT ION OR INTEGRAL STRUCTURE.' THE ESSENTIAL ELEMENT IN THE MANUFACTURE IS TRANSFORMATION OF OBJECT ARTICLE OR THING INTO A NE W DISTINCT OBJECT OR ARTICLE OR THING HAVING DIFFERENT NAME, C HARACTER AND USE OR BRINGING INTO EXISTENCE NEW AND DISTINCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPO SITION OR INTEGRAL STRUCTURE. BOTH ABOVE CRITERIA ARE NOT SAT ISFIED IN THIS CASE BECAUSE THERE IS NO DISTINCT NEW ARTICLE CAME INTO EXISTENCE WHEN WATER IS CONVERTED INTO ICE. THIS IS ONLY A PHYSICAL TRANSFORMATION WHEN LIQUID FORM IS CONVERT ED INTO SOLID FORM AND WHICH IS A REVERSIBLE PROCESS BECAUS E IF KEPT AT ROOM TEMPERATURE THE CHANGED SOLID FROM REG AINS THE ORIGINAL LIQUID FORM. FURTHER, THERE IS NO CHAN GE IN CHEMICAL COMPOSITION OF ICE VIS. A VIS. WATER. IN C ONVERSION OF WATER TO ICE NO ADDITION OF ANY CHEMICAL IS MADE . THERE IS NO DISTINCT ENTITY WHICH HAS COME INTO EXISTENCE BY THE MANUFACTURING PROCESS. THE RATIO OF FOLLOWING CASE LAW CLARIFY THE POSITIO N. 'PRODUCTION OF MINERAL WATER - THOUGH WATER IS RENDERED FREE OF IMPURITIES, MINERALS AND MICRO-ORG ANISMS AND THUS MADE MORE HYGIENIC AND SUITABLE FOR HUMAN CONSUMPTIONS, IT REMAINS ONLY AS DRINKING WATER I.E . WHAT IT WAS AT THE RAW MATERIAL STAGE-ITS NAME, CHARACTE R AND USE IS ONLY OF DRINKING WATER AND IS REGARDED AS SU CH BY THE BUYERS AS WELL AS THOSE WHO DEAL IN IT THUS NO NEW PRODUCT COMES INTO EXISTENCE SO AS TO QUALIFY IT AS MANUFACTURING PROCESS. ACQUA MINERALS (P) LTD. VS D CIT (ITAT, AHD) 96 ITD 417' FURTHER THE ARGUMENTS THAT THE SPECIFIC GRAVITY AND MELTING POINT OF ICE AND WATER ARE DIFFERENT HAS NO BEARING BECAUSE IT DOES NOT CHANGE THE NATURE OF SUBSTANCE. ALL MATTERS IN THE UNIVERSE CAN ATTAIN THE THREE PHYSIC AL STATES I.E. SOLID, LIQUID AND GAS AND ALL THESE THREE STAT ES HAVE DIFFERENT SPECIFIC GRAVITY, MELTING POINT AND BOILI NG POINT. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 38 MANUFACTURE IMPLIES A CHANGE, EVERY CHANGE IS NOT MANUFACTURE AND YET EVERY CHANGE OF AN ARTICLE IS T HE RESULT OF TREATMENT LABOUR AND MANIPULATION. THIS H AS BEEN OBSERVED BY THE HON'BLE SUPREME COURT IN THE CASE O F DELHI CLOTH MILLS PARAGRAPH 14. THEREFORE, MANUFACTURING IS NOT MERELY CHANGE OF FORM OR CHANGE OF ONE STATE TO ANO THER. THE CHANGE SHOULD BE PERMANENT AND NOT TEMPORARY WH ICH CAN WITHOUT THE INTERVENTION OF TREATMENT, LABOUR A ND MANIPULATION REGAIN ITS ORIGINAL FORM. THE ICE REGA INS LIQUID STATE WHEN KEPT AT ROOM TEMPERATURE. THERE IS AN ARGUMENT FROM THE APPELLANT THAT THERE HAD BEEN A VALUE ADDITION WHEN WATER IS CONVERTED I NTO ICE. THIS ARGUMENT IS NOT CONVINCING BECAUSE THERE IS MORE VALUE ADDITION IN THE PRODUCTION OF MINERAL WATER F ROM ORDINARY WATER OR DE-MINERALIZATION OF WATER FROM MUNICIPAL CORPORATIONS CHLORINATED WATER, YET THESE CANNOT BE CONSIDERED AS MANUFACTURE. THIS HAS BEEN HELD IN ACQUA MINERALS PVT. LTD VS DCIT (2005) 279 ITR ( AT) 106 (AHD). SIMILARLY, IT HAS BEEN HELD THAT CONVERSION OF ALCOHOL INDIAN MADE FOREIGN LIQUOR CANNOT BE TREATED AS MANUFACTURE FOR THE PURPOSE OF SECTION 80HH HELD BY TRIBUNAL SCOT DISTILLERIES PVT. LTD. VS ACIT(2002)2 55 ITR(AT) 14(CAL) (SB). THE DECISION RESTED ON THE VI EW THAT THE END PRODUCT IN THIS CASE WAS NOT TOTALLY A NEW COMMERCIAL COMMODITY AND THAT PROCESSING INVOLVED W AS ONLY AN ADDITION OF CERTAIN PERCENTAGE OF WATER, CO LOUR, ESSENCE AND BOTTLING FOR MARKETING. SIMILARLY IN PASTEURIZATION AND STANDARDIZATION OF MILK NO NEW COMMODITIES COME INTO EXISTENCE. THERE MAY BE PROCE SSING BUT IT DOES NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING SO AS TO RENDER THE PROCESS ELIGIB LE FOR RELIEF U/S 80IB. IT WAS DECIDED IN B.G. CHITALE VS DCIT (2 008) 305 ITR (AT) 1 PUNE (SB). IT WAS FOUND THAT MILK AF TER THIS PRODUCTION BECOMES CLEANER MORE FIT FOR CONSUMPTION AND NOTHING MORE. IN COMING TO THIS CONCLUSION TRIBUNAL REVIEWED A NUMBER OF CASES. THE ARGUMENT OF THE APP ELLANT WAS THAT PASTEURIZATION INVOLVED MORE THAN 15 PROCE SSES WITH THE HELP OF COSTLY EQUIPMENT AND SKILLED OPERA TORS BUT IT COULD NOT FIND FAVOUR WITH THE TRIBUNAL. IT IS VERY MUCH CLEAR THAT CONVERSION OF WATER INTO ICE IS NOT A MANUFACTURING. FURTHER THE EXPRESSION 'PRO DUCTS' THOUGH TAKEN IN MORE LIBERAL SENSE THAN MANUFACTURE , ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 39 NEVERTHELESS, THE END PRODUCT THAT IS ICE IS NOT A COMPLETE DISTINCT OBJECT, WHICH HAS DIFFERENT CHARACTER AND USE THOUGH THE NAME MAY BE DIFFERENT. IN THE COLD REGIO N OF THE COUNTRY THE WATER IS FROZEN INTO ICE BY THE NATURE. DOES THIS MEAN THAT NATURE IS MANUFACTURING ICE FROM WATER? T HESE ARE DIFFERENT STATES OF MATTER I.E. LIQUID, SOLID A ND GAS WHOSE CHARACTERS AND CHEMICAL COMPOSITION REMAIN TH E SAME. IN VIEW OF ABOVE DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THE DEDUCTION CLAIMED U/S 80IB IS NOT ADMISSIBLE AND I AGREE WITH THE DETAILED REASONING AND FINDINGS OF THE AO . THE ADDITION IS THUS CONFIRMED. 5. AGGRIEVED AGAINST THE AFFIRMATION OF DISALLOWANCE O F DEDUCTION U/S 80IB AS WELL AS OTHER DISALLOWANCES, THE ASSE SSEE FILED THE INSTANT APPEALS UNDER CONSIDERATION. THE ASSESSE E IN SUPPORT OF ITS CASE, IN ADDITION OF FILING ASSESSMENT ORDE R DATED 23-03-2013 OF A.Y. 2010-11, THE BALANCE SHEETS AS WELL AS VARIOUS JUDGMENTS, ALSO FILED COPIES OF FOLLOWING CERTI FICATES IN ORDER TO ESTABLISH THE ASSESSEE FIRM IS REGISTERED AS 'MANUFACTURING INDUSTRY OF ICE'. (I) REGISTRATION CERTIFICATE ISSUED BY THE DISTRICT IND USTRIES CENTER, JAMMU (II) VAT REGISTRATION CERTIFICATE ISSUED BY VAT REGISTRA TION OFFICER JAMMU (III) CERTIFICATE REGISTRATION ISSUED BY COMMERCIAL TA X OFFICER, CIRCULAR M JAMMU THE ASSESSEE FURTHER SUBMITTED THAT MORE OR LESS THE CASE OF THE ASSESSEE IS COVERED BY THE JUDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT OF JAMMU & KASHMIR, IN THE CASE OF GLACIER COLD STORAGE VS. ASSESSING AUTHORITY, SALES TAX, JAMMU (WRIT PETITION NOS.93 & 99 OF 1972) DECIDED ON 22 ND ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 40 JULY, 1974. THE ASSESSEE ALSO RELIED UPON OTHER JUDGMEN TS AND SUBMITTED THAT THE ASSESSEE IS ENTITLED TO GET THE BENEFI T OF SEC.80IB OF THE ACT, BECAUSE THE ASSESSEE CASE IS COVERED UNDE R THE PARAMETERS OF SECTION 80IB AND DEFINITION AS PRESCRIB ED IN SEC.2(29BA) OF THE ACT. 6. ON THE CONTRARY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND REITERATED THAT THE AUTHORITIES BELOW IN ADDITION TO CONSIDERING THE FACTS O F THE CASE, HAVE ALSO TAKEN JUDICIAL NOTE OF THE JUDGMENTS REFERRE D IN THE ORDERS AND THEREFORE THE ORDERS UNDER CHALLENGE DOES NO T SUFFERS FROM ANY PERVERSITY, ILLEGALITY AND/OR IMPROPRIETY A ND HENCE DOES NOT REQUIRE ANY INTERFERENCE BY THIS COURT. 7. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THOUGH THE REVENUE DEP ARTMENT WHILE MAKING THE DISALLOWANCE RELIED UPON VARIOUS JUDG MENTS INCLUDING OF THE APEX COURT IN THE CASE OF DCIT VS. PIO FOOD PACKER [1980] 46 STC 63 (SC) WHEREIN, IT HAS BEEN HELD THAT WHERE THERE IS NO ESSENTIAL DIFFERENCE IN THE IDENTITY OF ORIGINAL COMMODITY AND PROCESS ED ARTICLES, IT IS NOT POSSIBLE TO SHOW THAT ONE COMMODITY HAS BEEN CONSUMED IN THE MANUFACTURE OR ANOTHER ALTHOUGH IT IS UNDERGONE A DEGREE OF PROCESSING , IT MUST BE REGARDED AS STILL RETAINING THE ORIGINAL IDENTITY. IN THE CASE OF STATE OF ORISSA VS. TITAGHUR PAPER MILLS COMPANY LTD . [1985] 60 STC 213 (SC) THE APEX COURT HAS HELD THAT MERELY BECA USE CERTAIN ARTICLES ARE KNOWN BY DIFFERENT NAMES, IT DOES N OT MEAN THAT THESE ARE DIFFERENT COMMERCIAL COMMODITIES, IF IN F ACT THEY ARE MERELY DIFFERENT FORMS OF THE SAME COMMODITY. IN T HE CASE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 41 OF CST VS. DUNKEN COFFEE MANUFACTURING CO. [1975] 35 STC 493, WHEREIN THE BOMBAY HIGH COURT HAS HELD THAT MERE CHANG E IN THE NAME OF COMMODITY WILL NOT AMOUNT TO MANUFACTURE. THE LD. CIT(A) HELD THAT THE ESSENTIAL ELEMENT IN THE MANUFACTURE IS TRANSFORMATION OF OBJECT ARTICLE OR THING INTO A NEW DISTINCT OBJECT OR ARTICLE OR THING HAVING DIFFEREN T NAME, CHARACTER AND USE OR BRINGING INTO EXISTENCE NEW AND DISTINCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR I NTEGRAL STRUCTURE. BOTH THE ABOVE CRITERIA ARE NOT SATISFIED IN THIS C ASE BECAUSE THERE IS NO DISTINCT NEW ARTICLE CAME INTO EXISTENC E WHEN WATER IS CONVERTED INTO ICE. THIS IS ONLY A PHYSICAL TRANSFORMATION WHEN LIQUID FORM IS CONVERTED INTO SOLID FORM AND W HICH IS A REVERSIBLE PROCESS BECAUSE IF KEPT AT ROOM TEMPERAT URE THE CHANGED SOLID FROM REGAINS THE ORIGINAL LIQUID FORM. FURTHE R, THERE IS NO CHANGE IN CHEMICAL COMPOSITION OF ICE VIS. A VIS. W ATER. IN CONVERSION OF WATER TO ICE NO ADDITION OF ANY CHEMICAL IS MADE . THERE IS NO DISTINCT ENTITY WHICH HAS COME INTO EXISTENCE BY TH E MANUFACTURING PROCESS. THE LD. CIT(A) FURTHER HELD THAT IT IS VERY MUCH CLEAR THAT CONVERSION OF WATER INTO ICE IS NOT A MANUFACTURING . FURTHER THE EXPRESSION 'PRODUCTS' THOUGH TAKEN IN MORE LIBERAL SENSE THAN MANUFACTURE, NEVERTHELESS, THE END PRODUCT THAT IS ICE IS NOT A COMPLETE DISTINCT OBJECT, WHICH HAS DIFFERENT CHARACTER AND USE THOUGH THE NAME MAY BE DIFFERENT . IN THE COLD REGION OF THE COUNTRY THE WATER IS FROZEN INTO ICE BY THE NATURE. DOES THIS MEAN THAT NATURE IS MANUFACTURING ICE FROM WATER? THESE ARE DIFFERENT STATES OF MATTER I.E. LIQUID, SOLID AND GAS WHOSE C HARACTERS AND CHEMICAL COMPOSITION REMAIN THE SAME. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 42 7.1 THE CONCLUSION OF THE AFORESAID JUDGMENTS RELIED UPON B Y THE REVENUE DEPARTMENT, AND THE OBSERVATION OF THE A UTHORITIES BELOW IS THAT WHERE THERE IS NO ESSENTIAL DIFFERENCE IN THE IDENTITY OF ORIGINAL COMMODITY AND PROCESS ED ARTICLES AND MERELY BECAUSE CERTAIN ARTICLES ARE KNOWN BY DIFFERENT NAMES, DOES NOT MEAN THAT ONE COMMODITY HAS BEEN CONSUMED IN THE MANUFACTURE OR ANOTHER, ALTHOUGH THE SAME HAS UNDERGONE A DEGREE OF PROCESSING, IT MUST BE REGARDED AS STILL RETAINING THE O RIGINAL IDENTITY. 7.2 LET US TO REPRODUCE THE CONTENTS OF SEC.2(29BA) WHICH WA S INSERTED IN THE ACT, BY THE FINANCE (NO.2) ACT, 2009 W. E.F. 1 ST APRIL, 2009, RELATES TO THE DEFINITION OF MANUFACTUR ING. 'MANUFACTURE', WITH ITS GRAMMATICAL VARIATIONS, MEA NS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING, (A) RESULTING IN TRANSFORMATION OF THE OBJECT OR A RTICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME, CHARACTER AND USE; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICA L COMPOSITION OR INTEGRAL STRUCTURE; AS PER OXFORD DICTIONARY, THE DEFINITION OF MANUFACTUR E MEANS ' TO MAKE (SOMETHING) ON A LARGE SCALE USING MACHI NERY OR TO MAKE OR PRODUCE (SOMETHING ABSTRACT) IN A MERELY ME CHANICAL WAY' IN WIKIPEDIA, THE DEFINITION OF 'MANUFACTURING' HAS BEEN GIVEN AS: MANUFACTURING IS THE PRODUCTION OF PRODUCTS FOR USE OR ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 43 SALE USING LABOUR AND MACHINES , TOOLS , CHEMICAL AND BIOLOGICAL PROCESSING, OR FORMULATION. THE TERM MAY REFER TO A RANGE OF HUMAN ACTIVITY, FROM HANDICRAFT TO HIGH TECH , BUT IS MOST COMMONLY APPLIED TO INDUSTRIAL DESIGN, IN WHICH RAW MATERIALS ARE TRANSFORMED INTO FINISHED GOODS ON A LARGE SCALE. SUCH FINISHED GOODS MAY BE SOLD TO OTHER MANUFACTURERS FOR THE PRODUCTION OF OTHER, MO RE COMPLEX PRODUCTS, SUCH AS AIRCRAFT , HOUSEHOLD APPLIANCES , FURNITURE , SPORTS EQUIPMENT OR AUTOMOBILES , OR SOLD TO WHOLESALERS , WHO IN TURN SELL THEM TO RETAILERS , WHO THEN SELL THEM TO END USERS AND CONSUMERS . MANUFACTURING ENGINEERING OR MANUFACTURING PROCESS ARE THE STEPS THROUGH WHICH RAW MATERIALS ARE TRANSFORM ED INTO A FINAL PRODUCT. THE MANUFACTURING PROCESS BEGINS WITH THE PRODUCT DESIGN, AND MATERIALS SPECIFICATION FROM WHICH THE PRODUCT IS MADE. THESE MATERIALS ARE THEN MODIFIED THROUGH MANUFACTURING P ROCESSES TO BECOME THE REQUIRED PART. FROM THE COMBINED READING OF DEFINITIONS ABOVE, IT REFLECTS THAT THE 'MANUFACTURE', MEANS A CHANGE OR TRANSFORMATION OF RAW OBJECT OR ARTICLE OR THING INTO FINAL PRODUCT I N NEW AND DISTINCT FORM, DIFFERENT NAME, CHARACTER AND NEW US E OF ; OR BRINGING INTO EXISTENCE OF A NEW AND DISTINCT FINAL PRODUCT WITH A DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL S TRUCTURE OBJECT OR ARTICLE OR THING ON A LARGE SCALE USING M ACHINERY OR TO MAKE OR PRODUCE (SOMETHING ABSTRACT) IN A MECHAN ICAL WAY FOR USE OR SALE, USING LABOUR AND MACHINES , TOOLS , CHEMICAL AND BIOLOGICAL PROCESSING, OR FORMULATION, MAY INCL UDE A RANGE OF HUMAN ACTIVITY, FROM HANDICRAFT TO HIGH TECH , IN WHICH RAW MATERIALS ARE TRANSFORMED INTO FINISHED GOODS ON A LARGE SCALE. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 44 7.3 THE ASSESSEE AT THE TIME OF ARGUING THE APPEAL DEMONSTRATED THE MANUFACTURING PROCESS OF ICE (PAGES 1 T O2 OF PB), WHICH FOR THE SAKE OF BREVITY IS REPRODUCED HER EIN BELOW. MANUFACTURING PROCESS: PRODUCTION PROCESS FLOW CLEANING OF SHEET STEEL ICE CONTAINERS PLACING OF CONTAINERS IN WATER TANK FILLING OF SHEET STEEL ICE CONTAINERS WITH WATER MOVEMENT OF ICE BLOCKS BY HOOKS DELIVERY OF ICE BLOCKS EXTRACTING OF ICE BLOCKS FROM SHEET STEEL MOVEMENT OF ICE BLOCKS BY HOOKS DELIVERY OF ICE BLOCKS TEMP REDUCED TO -17`C TO -20`C ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 45 ICE CANS ARE PLACED IN CAN GRIDS AND MOVED TO BENEA TH THE FILLING TANK WHICH AUTOMATICALLY FILLS EACH CAN WITH PROPER LEVE L OF PRE-COOLED WATER AND THEN STOP. FILTERED WATER MUST BE USED TO MAKE ICE INTENDED FOR HUMAN CONSUMPTION. THE CANS ARE THEN HOISTED MID CARRIED TO THE BRINE TANK AND IMMERSED INSIDE. THE BRINE, WHICH IS A CALCIUM CHLORIDE SOLU TION KEPT AT A TEMPERATURE OF -10 DEGREE IS CONSTANTLY CIRCULATED BY AGITATOR IN ORDER TO KEEP THE TEMPERATURE CONSISTENT THROUGHOUT THE TANK . AIR IS BLOWN INTO THE CENTER OF THE CAN TO INDUCE A SWIRLING MOTION. THIS CAUSES ANY IMPURITIES AND AIR BUBBLES IN THE WATER TO BE COLLECTED IN THE CENTER OF CANS. PRIOR TO FINISH FREEZING, THIS CORE IS REMOVED BY A SUCTION PUMP AND REPLACED WITH FRESH PRE-COOLED WATER. THE TIME REQUIRED FOR THE WATER TO BE FROZEN VARIES ACCORDING TO THE SIZE OF CANS BEING USED. 150 IBS, BLOCK REQUIRES 24 HOURS, 300 IBS. TAKES 48 HOURS. WHEN THE ICE HAS COMPLETELY FORMED, THE GRIDS ARC L IFTED OP FROM THE BRINE TANK AND MOVED TO PLACE IN THE THAWING TANK. USING THE WARM WATER, WHICH HEATS THE CAN UNTIL THE ICE ALLOWED TO BE SLI D OUT. THE BLOCK ICE IS THEN REMOVED FROM THE CAN BY A CAN DUMPER. THE EMPTY CANS ARE RETURNED TO FILLING TANK FOR NEX T ICE MAKING CYCLE. THE ICE IS MOVED TO ICE STORAGE AND STACKED BY AN ICE S LACKER, OR IT CAN BE DELIVERED TO CUSTOMER RIGHT AWAY UPON REQUESTED. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 46 FROM THE MANUFACTURING PROCESS, IT REFLECTS THAT WHILE MAKING ICE FROM WATER VARIOUS STAGES ARE REQUIRED TO B E PASS THROUGH AND THEN ONLY THE WATER CONVERTS INTO ICE SUCH AS CLEANING OF STEEL CONTAINERS AND THEREAFTER PLACING OF CONTAINERS IN WATER TANK AND FILLING OF WATER IN STEEL CONTAINE RS AND THEREAFTER REDUCING THE TEMPERATURE TO -17 C TO -20C . DURING THE PROCESSING OF MANUFACTURING OF ICE, THE BRINE WHICH IS A CA LCIUM CHLORIDE SOLUTION IS REQUIRED TO BE KEPT AT A TEMPERAT URE OF -10 C DEGREE AND CONSTANTLY CIRCULATED BY THE AGITATOR FOR K EEPING THE TEMPERATURE CONSISTENT THROUGHOUT THE TANK. FURTHER TH E AIR IS BLOWN INTO THE CENTER OF THE CAN TO INDUCE A SWIRLING MOTION WHICH CAUSES ANY IMPURITIES AND AIR BUBBLES IN THE WATER, COLLECTED IN THE CENTER OF THE CANS AND TIME OF AROUND 24 TO 48 HOURS ARE REQUIRED FOR CONVERTING THE WATER TO ICE AS P ER THE SIZE OF CAN BEING USED. WHEN THE ICE HAS BEEN COMPLETELY FOR MED, THE GRIDS ARE LIFTED UP FROM THE BRINE TANK AND MOVE D TO PLACE IN THE THAWING TANK THEREAFTER WHILE USING WARM WATER I N ORDER TO SLID OUT THE ICE, THE BLOW PROCESS REMOVE FROM THE CAN BY A CAN DUMPER AND THE ICE IS MOVED TO ICE STORAGE AND STACKED BY AN ICE STACKER AND PROCESS OF MANUFACTURING OF ICE THEN COMPLE TES. THE ASSESSEE HAD DRAWN OUR ATTENTION TO THE USES OF WATER AND ICE, THE WATER CAN BE USED FOR DRINKING, PREPARING FOOD, BATHING, WASHING, WATERING THE YARD & GARDEN & IRRI GATION PURPOSES AND FOR OTHER INCIDENTAL PURPOSES WHEREAS THE ICE IS BEING USED BY FOOD INDUSTRIES, PRESERVATION OF FISH AND MEATS, IN RESTAURANTS AND HOTELS, ICE-CREAM SELLERS AND ICE HAS DISTINC T NAME, USES, STRUCTURE AND PROPERTIES THAN THE WATER AND EVEN THE ICE IS BEING USED AS COMMERCIAL COMMODITY, WHEREAS THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 47 WATER IS GENERALLY AVAILABLE FREE OF COSTS AND CANNOT SE RVE THE PURPOSE OF ICE. AS PER DEFINITION OF 'MANUFACTURING' MEANS A CHANGE IN NON-LIVING PHYSICAL OBJECTS OR ARTICLE OR THING, RESULTIN G INTO TRANSFORMATION INTO A NEW AND DISTINCT OBJECT OR ARTICL E OR THING HAVING A DIFFERENT NAME, CHARACTER AND USE. FROM THE MANUFACTURING PROCESS OF ICE, IT EMERGES, ONCE THE ICE MA DE FROM THE WATER, IT CHANGES IN NON-LIVING PHYSICAL ARTI CLE AND RESULTS INTO A NEW AND DISTINCT ARTICLE, HAVING DIFFERE NT NAME, CHARACTER AND USE, HENCE INFERENCE CAN BE DRAWN THAT 'ICE' IS THE FINAL PRODUCT OF WATER WHICH REQUIRES TRANSFORMATION OF WATER ( RAW PRODUCT) INTO FINAL PRODUCT (ICE), INDISPUTABLY HA VING A NEW AND DISTINCT FORM, NAME, CHARACTER AND USE, AND FOR BR INGING INTO FINAL PRODUCT SUCH AS TO MAKE OR PRODUCE 'ICE', DIFFEREN T CHEMICAL COMPOSITION FOR CHANGE OF INTEGRAL STRUCTURE ON A LARGE SCALE, A RANGE OF HUMAN ACTIVITIES, LABOUR AND USE OF MACHINERY IS BEING REQUIRED BY WHICH RAW MATERIAL (WATER) TRANSFORMED INTO FINISHED GOODS IN ORDER FOR USE OR SALE. 7.4 THE CONTROVERSY INVOLVED IN THE INSTANT CASE RELATES TO TREATMENT OF ICE AS WATER BY THE REVENUE DEPARTMENT, WHERE THE DEPARTMENT IS OF THE VIEW THAT CONVERSION OF WATER INT O ICE DOES NOT AMOUNT TO MANUFACTURE AND ICE AND WATER IS THE SAME , HOWEVER ON THE CONTRARY THE ASSESSE CLAIMED THAT BOTH AR E DISTINCT IN FORM AND QUALITY HAVING DISTINCT FEATURES , USES AND VALUE. IT IS UNDISPUTED FACT THAT NONE OF THE JUDGMENT S REFERRED AND RELIED UPON BY THE REVENUE AUTHORITIES AGAINST THE CLAIM OF THE ASSESSEE, DEALT WITH THE CONTROVERSY QUA MANUFACTURIN G OF ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 48 ICE, WHEREAS THE JURISDICTIONAL HIGH COURT IN THE CASE OF GLACIER COLD STORAGE & ICE MILLS & ORS. VS. ASSESSING AUTHORITY, S ALES TAX, JAMMU (SUPRA) IN PARA NO.6 ANALYZED THE DEFINI TION OF ICE AND DIFFERENTIATED THE WATER AND ICE. CONCLUDING PART OF THE DECISION, FOR THE SAKE OF BREVITY AND CONVENIENCE, IS RE PRODUCED HEREIN BELOW. PAGE NO.69 (PB) PARA-6.. 6. AN ANALYSIS OF THIS DEFINITION WOULD CLEARLY SH OW THAT ALTHOUGH ICE DERIVES ITS SOURCE OR GENUS FROM WATER BY BEING REDUCED TO A SOLID STATE, YET WATER ON SOLIDI FICATION INTO ICE COMPLETELY CHANGES ITS STATE AND BECOMES A DISTINCT ENTITY: THE SPECIFIC GRAVITY IS CHANGED, THE MELTING POINT HAS A TEMPERATURE OF 0C OR 32F AND THE SUBSTANCE WHICH FORMS AS ICE HAS HEXAGONAL CRYSTALS. IN THESE CIRCUMSTANC ES, THEREFORE, WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE PETITIONERS THAT ICE AND WATER ARE THE SAME THINGS AND WHEN THE NOTIFICATION INCLUDES WATER IN THE EXEMPTI ON LIST, IT WILL INCLUDE ICE ALSO. FURTHERMORE, EVEN ASSUMING THAT T HE ARGUMENT OF THE PETITIONERS IS CORRECT, THE GOVERNMENT WAS F ULLY ALIVE TO THE TWO FORMS OF WATER, NAMELY, WATER SIMPLICITER AND I CE, AND IF THE INTENTION OF THE GOVERNMENT WAS TO EXEMPT ICE ALSO THEN EITHER THEY SHOULD HAVE MENTIONED THIS SUBSTANCE IN ITEM 3 7 OF SCHEDULE II OR THEY SHOULD HAVE ADDED THAT WATER WO ULD BE EXEMPTED IN ANY FORM WHATSOEVER. ON THE OTHER HAND, THIS WELL- KNIT DISTINCTION BETWEEN WATER AND ICE WAS PRESENT IN THE MIND OF THE GOVERNMENT WHEN THE NOTIFICATION WAS ISSUED AND DESPITE THIS IF ICE WAS NOT SPECIFICALLY MENTIONED IN THE L IST OF EXEMPTION, THEN THE ONLY INFERENCE WOULD BE THAT THE NOTIFICAT ION DID NOT EXEMPT ICE FROM THE PROVINCE OF TAXATION. LASTLY, WATER IS OF UNIVERSAL AND COMMON USE AND THE GOVERNMENT DID NOT WANT TO MAKE IT COSTLY BY IMPOSING TAXATION ON ITS USE OR SUPPLY. ON THE OTHER HAND, ICE IS UNDOUBTEDLY AN AR TICLE OF LUXURY AND IS MANUFACTURED BY PERSONS WHO HAVE TO I NSTALL A FACTORY OR MACHINERY FOR THE PURPOSE OF MAKING IT . THE PERSONS PRODUCING ICE RUN A LUCRATIVE BUSINESS AND IT WOULD BE AGAINST THE VERY CONCEPT OF SALES TAX THAT THE GOVT . SHOULD EXEMPT ICE FROM THE OPERATION OF THE TAX TO BE IMPO SED ON VARIOUS ARTICLES THAT ARE MANUFACTURED BY VARIOUS PERSONS. FOR THESE REASONS, THEREFORE, WE OVER-RULE THE MAIN CONTENTIO N OF THE PETITIONERS IN THIS CASE, NAMELY, THAT THE WORD WAT ER IN ITEM 37 (SUPRA) INCLUDES ICE. WITH RESPECT WE DO NOT AGREE WITH THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 49 PERSONAL OPINION OF THE EXCISE AND TAXATION COMMISS IONER, CONVEYED IN HIS LETTER ANNEXURE A, PARTICULARLY WHE N HIS OPINION IS NOT BASED ON ANY REASONABLE OR RATIONAL CONSIDER ATION. 7.5 THE ALLAHABAD HIGH COURT IN THE CASE OF GOEL INDUSTRIE S PVT. LTD. VS. COMMISSIONER OF SALES TAX, DECIDED ON 12 TH JULY, 1971 [1971] 28 STC 729 (ALLAHABAD), ALSO ANALYZED TH E DIFFERENCE OF WATER & ICE AND MADE THE OBSERVATION THAT THE 'ICE' AND 'WATER' MAY HAVE SAME COMPOSITION, BUT IN COM MERCIAL AND POPULAR SENSE, THEY ARE DIFFERENT COMMODITIES. FURT HER OBSERVED THAT THOUGH THE CHEMICAL COMPOSITION OF ICE AND THAT OF THE WATER IS THE SAME BUT EVEN THEN, ICE CANNOT BE REGA RDED AS WATER. IT IS A MATTER OF COMMON EXPERIENCE THAT WHILE WATER IS GENERALLY AVAILABLE FREE, ICE IS ALWAYS SOLD IN THE MAR KET. 7.6 THE HONBLE MP HIGH COURT IN THE CASE OF CIT VS. EVEREST COLD STORAGE [1966] 220 ITR 241 (MP) WHILE DEALING WITH THE ISSUE QUA ICE MANUFACTURING PLANT, NOT ONLY AFFIRMED BU T ALSO JUSTIFIED THE VIEW OF THE COMMISSIONER TO THE EFFECT THA T ICE PLANT IS A MANUFACTURING UNIT AND IS ENTITLED TO BE GIVEN IN VESTMENT ALLOWANCES U/S 32A OF THE ACT. 7.7 EVEN OUR ATTENTION WAS DRAWN BY THE ASSESSEE TO THE ASSESSMENT ORDER DATED 22/03/2013 PASSED U/S 143(3) OF T HE ACT RELEVANT FOR THE ASST. YEAR 2010-11, WHEREIN THE A SSESSING OFFICER HAS NOT ONLY ACCEPTED 'ADITYA ICE FACTORY', AS EN GAGED IN THE BUSINESS OF 'MANUFACTURING OF ICE' AND BUT ALSO ACCEPT ED THE DEDUCTION OF RS.3,37,039/- WHICH WAS CLAIMED U/S 80IB OF THE ACT BY THE ASSESSEE. I DO NOT FIND ANY MATERIAL BY WHICH THE ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 50 DEFINITION OF 'MANUFACTURING' OF ICE CAN BE READ AGAI NST THE ASSESSEES CLAIM, NOR EVEN BROUGHT ON RECORD OR CITED BY TH E REVENUE DEPARTMENT AGAINST THE ANALYZATIONS QUA 'IC E' AND TREATMENT OF 'ICE' PLANT AS A MANUFACTURING UNIT, BY THE HIGH COURTS INCLUDING JURISDICTIONAL AND EVEN OTHERWISE TO DE MOLISH THE CASE OF THE ASSESSEE. IT IS CARDINAL PRINCIPLE OF LAW AND ONEROUS DUTY OF THE COURT TO DRAW THE INTERFERENCE IF , ANY DISCERNABLE FROM THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND/OR ANY JUDGMENT OF THE HIGHER AUTHORITY AND/OR OF THE CO- ORDINATE BENCH AND TO APPLY THE DICTUM APPROPRIATELY FOR THE ENDS OF JUSTICE. THE JURISDICTIONAL HIGH COURT IN THE C ASE OF GLACIER COLD STORAGE & ICE MILLS & ORS. VS. ASSESSING AUTHOR ITY, SALES TAX, JAMMU (SUPRA), WHILE DEALING WITH THE CLAI M OF ASSESSEE LODGED UNDER THE JAMMU AND KASHMIR SALES TAX ACT, ANALYZED THE DEFINITION OF ICE AND CLEARLY HELD THAT WATER ON SOLIDIFICATION INTO ICE, COMPLETELY CHANGES ITS STATE AND BECOMES A DISTINCT ENTITY AND THE SPECIFIC GRAVITY IS CHANGED, THE MELTING POINT HAS A TEMPERATURE OF 0C OR 32F AND THE SUBSTANCE WHICH FORMS AS ICE HAS HEXAGONAL CRYSTALS. FURTHER HELD THAT WATER IS OF UNIVERSAL AND COMMON USE AND ON THE OTHER HAN D, ICE IS UNDOUBTEDLY AN ARTICLE OF LUXURY AND IS MANUFACTURE D BY PERSONS WHO HAVE TO INSTALL A FACTORY OR MACHINERY FOR THE PURPOSE OF MAKING IT. FURTHER THE HONBLE MP HIGH COURT IN THE CASE OF CIT VS. EVEREST COLD STORAGE (SUPRA) ALSO AFFIRME D AND JUSTIFIED THE TREATMENT OF ICE PLANT AS A 'MANUFACTURIN G UNIT' AND THEREFORE ENTITLED TO BE GIVEN INVESTMENT ALLOWANCES U /S 32A OF THE ACT. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 51 IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HAS BEEN REGISTERED WITH THE DISTRICT INDUSTRIES CENTER AS M/S ADITA ICE FACTO RY AND ITEM AND MANUFACTURE OF ACTIVITY RECOGNIZED AS ACTIVITY AS 'MANUFACTURE OF ICE' , WITH THE REGISTERING AUTHORITY OF VALUE ADDED TAX, JAMMU AS 'ADITYA ICE FACTORY', WITH REGISTE RING AUTHORITY OF COMMERCIAL TAXES OFFICER UNDER CENTRAL SA LES TAX (REGISTRATION AND TURN OVER) RULES 1957 AS 'ADITYA ICE FACTORY' FOR THE BUSINESS OF 'MANUFACTURING OF ICE' . THE ASSESSEE ALSO FILED ITS VAT FORM NO.53 WHEREIN THE NATURE OF BUSI NESS HAS BEEN MENTIONED AS ' MANUFACTURE ', FURTHER FILED ITS ANNUAL VALUE ADDED TAX RETURNS AND TAX REMISSION CLAIM FORMS. ADMIT TEDLY THE REVENUE DEPARTMENT HAS NOT REFUTED THE CLAIM OF THE A SSESSEE. HENCE, WHILE RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE JURISDICTIONAL HIGH COURT, ALLAHABAD AND MADHYA PRADESH HIGH COURT AND ANALYZING AND CONSIDERING THE RELEVANT COR ROBORATIVE MATERIAL AVAILABLE ON RECORD SUCH AS THE PROCESS OF 'ICE' MANUFACTURING AS EXPLAINED BY THE ASSESSEE AND DISCERNIBL E FROM THE DEFINITION AS PRESCRIBED U/S 2(29BA) OF THE A CT AND THE ASSESSMENT ORDER DATED 22/03/2013 PASSED U/S 143(3) OF TH E ACT RELEVANT FOR THE ASST. YEAR 2010-11, WHEREIN THE A SSESSING OFFICER HAS ACCEPTED 'ADITYA ICE FACTORY', AS ENGAGED IN T HE BUSINESS OF MANUFACTURING OF ICE AND ALLOWED THE ASSESSEE U/S 80IB OF THE ACT, I DO NOT HAVE ANY HESITATION TO HOLD THAT MAKING OF ICE FROM WATER IS A 'MANUFACTURING' AS PER THE ACT AND THEREFORE THE ASSESSEE IS ENTITLED TO GET THE DEDUCTION AS CLAIMED U/S 80IB OF THE ACT, CONSEQUENTLY THE DISALLOWANCE OF D EDUCTION IS LIABLE TO BE DELETED, HENCE THE SAME STANDS DELETED. GROUND NO. 2 STANDS ALLOWED. ITA NOS.82 TO 84 /ASR/2014 (ASST. YEARS: 2008-09, 2007-08 & 2006-07) 52 8. THE ASSESSEE DID NOT RAISE GROUND NO. 3, SPECIFICALLY, AND GROUND NO. 1 & 4 ARE FORMAL IN NATURE, HENCE DOES NOT REQUIRE ADJUDICATION IN PARTICULAR. 9. IN THE RESULT, THE APPEAL I.E. ITA NOS.84 (ASR)/2014 FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. 10. ITA NOS.82 (ASR)/2014 AND 83/(ASR)/2014 IN VIEW OF JUDGMENT IN ITA NOS.84/(ASR)/20, THE APPEA LS I.E. ITA NOS. 82 & 83(ASR)/2014 ALSO STANDS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON ... SD/- 5/07/19 (N.K.CHOUDHRY) JUDICIAL MEMBER DATED: .07.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) YAS RAJ SINGH PROP., M/S. RIGHTWAY INDUSTRIES & M/S. ADITYA ICE FACTORY. POUNI-CHAK, JAMMU (3) THE CIT(A), JAMMU (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER