The Dy.Commissioner of Income Tax Circle-1(1)(1), Ahmedabad V. M/s. Anil Bioplus Ltd., Ahmedabad

ITA 902/AHD/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7510 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-01-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 08-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 13; 22; 131

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 902/AHD/2016 ( ASSESSMENT YEAR : 2011-12) DCIT CIRCLE 1(1)(1), A WING, ROOM NO.309, 3 RD FLOOR, PRATYAKSH KAR BHAVAN, AMBAWADI, AHMEDABAD 380015 / VS. M/S. ANIL BIOPLUS LTD. ANIL STARCH PREMISES, ANIL ROAD, NARODA, AHMEDABAD 380025 ./ ./ PAN/GIR NO. : AABCA6331J ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI LAXMAN SINGH GURJAR, SR.DR / RESPONDENT BY : NONE DATE OF HEARING 29/01/2020 !'# / DATE OF PRONOUNCEMENT 30/01/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, AHMEDABAD (CIT(A) IN SHORT), DATED 29.01.2016 ARI SING IN THE ASSESSMENT ORDER DATED 27.03.2014 PASSED BY THE ASS ESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T) CONCERNING AY 2011-12. 2. THE GROUND OF APPEAL FILED BY THE REVENUE READS AS UNDER: ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 2 - THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80JJA OF THE I.T. ACT, EVEN THOUGH NO BIOLOGICAL AGENTS ARE MANUFACTURED AND BIO-DEGRA DABLE WASTES ARE NOT USED AS RAW MATERIALS. 3. BRIEFLY STATED, THE ASSESSEE, A LIMITED COMPA NY, CARRIES ON BUSINESS OF MANUFACTURING OF STARCH DEXTROSE AND RELATED PRO DUCT AND IS ALSO ENGAGED IN THE BUSINESS OF TRADING OF MAIZE FEED AN D MAIZE OIL. THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2011-12 DECLARING TOTAL INCOME AT RS.2,15,67,890/-. THE RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASSESSMENT. THE AO INTER ALIA REJECTED THE CLAIM OF DEDUCTION OF RS.1,91,83,323/- CLAIMED UNDER S.80 JJA OF THE ACT. 4. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) RECORDED SUBMISSIONS OF THE AO CONTESTING THE AFORE SAID ACTION OF THE AO WHICH IS REPRODUCED HEREUNDER: '3.2 IN THIS CONNECTION, APPELLANT SUBMITS THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS IT HAS MADE DETAILED SUBMISS ION ON HOW IT IS ENTITLED TO DEDUCTION U/S 80JJA WHICH MAINLY INCLUD ES: (I) ENTIRE PROCESS OF PRODUCTION OF BIOFEEDS FROM BIODEGRADABLE WASTE (II) PRODUCTION OF BIOLOGICAL AGENTS (III) INGREDIENTS PURCHASED FOR PROCESSING AND TREATING WASTE (IV) DETAILS OF MACHINERY USED IN THE PRODUCTIO N PROCESS (V) TRADING AND PROFIT & LOSS ACCOUNT OF BIO F EEDS (VI) DETAILS OF PURCHASE AND SALE MADE FROM VARIOUS PARTIES ALONG WITH LEDGER ACCOUNTS THE ASSESSING OFFICER HAS COMPLETELY IGNORED THE SU BMISSION AND DETAILS SUBMITTED BY APPELLANT AND DISALLOWED ENTIR E DEDUCTION U/S 80JJA WITHOUT GIVING ANY VALID REASONS AND EVEN ON IMAGINATIVE AND FANCIFUL FACTORS WITHOUT CALLING AN Y FURTHER INFORMATION FROM APPELLANT- THE ASSESSING OFFICER H AS MADE CERTAIN UNWARRANTED OBSERVATION WITHOUT ANY SUPPORT ING EVIDENCES AND AS IF HE HAS SO MUCH TECHNICAL KNOWLE DGE OF ENTIRE MANUFACTURING PROCESS CARRIED OUT BY APPELLANT. . 2.3 THE APPELLANT INVITES REFERENCE TO PROVISIONS O F SECTION 80JJA WHICH READS AS UNDER: 'WHERE THE GROSS TOTAL INCOME OF AN ASSESSES INCLUD ES ANY PROFITS AND GAINS DERIVED FROM THE BUSINESS OF COLLECTING AND PROCESSING OR TREATING OF BIO-DEGRADABLE WASTE FOR GENERATING POWER OR PRODUCING BIO FERTILIZERS, BIO-PESTICIDES OR OTHER BIOLOGICAL AGENTS OR FOR PRODUCING BIO-GAS OR MAKING PELLETS OR BRIQUETTES F OR FUEL OR ORGANIC ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 3 - MANURE, THERE SHALL BE ALLOWED, IN COMPUTING THE TO TAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO THE WHO LE OF SUCH PROFITS AND GAINS FOR A PERIOD OF FIVE CONSECUTIVE ASSESSME NT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS Y EAR IN WHICH SUCH BUSINESS COMMENCES.' FURTHER THE APPELLANT WOULD LIKE TO DRAW ATTENTION TOWARDS THE CIRCULAR NO.772 DATED 23/12/1998 WHEREIN THE INTENTION OF IN TRODUCING SECTION 80JJA HAS BEEN EXPLAINED. THE RELEVANT EXTRACTS OF THE CIRCULAR ARE AS FOLLOWS: 80JJA DEDUCTION IN RESPECT OF PROFITS AND GAINS FRO M BUSINESS OF COLLECTING AND PROCESSING OF BIO-DEGRADABLE WASTE 44.1 INCREASING POPULATION AND URBANIZATION POSE CHALLEN GES FOR PLANNERS. WASTE MANAGEMENT HAS BEEN ONE AREA OF SER IOUS CONCERN, WHICH SO FAR HAS BEEN PRIMARILY THE RESPONSIBILITY OF LOCAL BODIES. WASTE IS NOW BEING THOUGHT NOT AS A USELESS RESOURC E BUT A RE-CYCLABLE AND REUSABLE ONE GIVEN THE PROPER FRAMEWORK. THE WASTE CAN BE UTILIZED FOR GENERATING ENERGY AND USEFUL RESOURCES BY WAY OF COMPOSTING, VERMI-COMPOST AND ANAEROBIC DIGESTION. THE POTENTIAL FOR POWER GENERATION IS ALSO TREMENDOUS. 44.2 ACCORDINGLY, A NEW SECTION 80JJA HAS BEEN INSERTED WITH A VIEW TO PROVIDING THAT WHERE THE GROSS TOTAL INCOME OF A N ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM THE BUSINESS OF COLLECTING AND PROCESSING OR TREATING OF BIO-DEGRADABLE WASTE FOR GENERATING POWER, PRODUCING BIO-GAS, MAKING PELLETS OR BRIQUETTES FOR FUEL OR ORGANIC MANURE,............ ON THE BASIS OF CIRCULAR IT IS CLEAR THAT INTENTION WAS MAINLY TO OVERCOME THE PROBLEM OF WASTE MANAGEMENT AND TO CRE ATE EMPLOYMENT OPPORTUNITIES. AN INCREASING TREND WAS SEEN TOWARDS RECYCLING OF WASTE WHICH COULD BE USED FOR PRODUCTIVE ACTIVITIES AND P RODUCTION OF SOME USEFUL RESOURCES . HENCE SECTION 80JJA WAS INTRODUCED TO PROMOTE THE ACTIVITIES LIKE RECYCLING OF WASTE WHICH COULD IN T URN BE CONVERTED INTO SOME USEFUL RESOURCES. 3.4 ON PERUSAL OF THE ABOVE SECTION IT CAN BE S TATED THAT DEDUCTION UNDER SECTION 80JJA OF THE ACT IS ELIGIBL E TO BE CLAIMED, IN OTHER WORDS, BUSINESS WOULD BE CONSIDER ED AS ELIGIBLE BUSINESS IF IT INVOLVES THE FOLLOWING ACTI VITIES: - COLLECTION OF BIODEGRADABLE WASTE - TREATING/PROCESSING OF BIODEGRADABLE WASTE - GENERATION OF POWER OR PRODUCTION OF BIO FERTILIZ ERS, BIOPESTICIDES OR OTHER BIOLOGICAL AGENTS OR FOR PRO DUCING BIO-GAS OR MAKING PELLETS OR BRIQUETTES FOR FUEL OR ORGANIC MANURE IN LIGHT OF ABOVE IT IS SUBMITTED THAT THE APPELLAN T TREATS AND PROCESSES BIODEGRADABLE WASTES TO PRODUCE BIOLOGICA L AGENT 'BIOFEEDS'. IT CAN BE VERY WELL CONSTRUED THAT THE ACTIVITIES OF PRODUCTION OF BIO-FEED IN THE CASE OF THE ASSESSEE COMPANY IS CLEARLY IN LINE AND COINCIDES WITH THE CONDITIONS S TATED OUT IN THE ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 4 - PROVISIONS OF SECTION 80JJA OF THE ACT. HENCE AS TH E BASIC CONDITIONS OF COLLECTION AND PROCESSING OF BIODEGRA DABLE WASTE IN ORDER TO GENERATE/MANUFACTURE BIOFEEDS (BIOLOGIC AL AGENTS) ARE MET WITH, THE DEDUCTION UNDER SECTION 80JJA IS ELIGIBLE TO BE CLAIMED. 3.5 IN THIS CONNECTION APPELLANT STATES THAT IT IS ENGAGED IN THE MANUFACTURING OF 'BIOFEEDS' WHICH ARE NOVEL BIOLOGI CAL AGENTS. THEY ARE NUTRITION BOOSTER DERIVED BY A COMBINATION OF VARIOUS BIOLOGICAL PROCESSES FOR THE USE IN ANIMAL HEALTHCA RE INDUSTRY. THE APPELLANT COMPANY MANUFACTURES BIO FEED PRODUCT BY USING AGRO PRODUCTS LIKE WHEAT BRAN, GROUND NUT CAKE, SOY A CAKE, CORN MEAL, GLUTEN AND CRUDE ENZYME AND PHYTASE. FIRST TH IS AGRO WASTE IS MIXED AFTER WHICH STERILIZATION IS DONE AN D THEN SEED BACTERIAL CULTURE IS ADDED. IT IS THEN INCUBATED FO R 72HRS AT REQUIRED TEMP AND HUMIDITY. AFTER COMPLETING INCUBA TION PERIOD THIS MATERIAL IS DRIED IN DRYER AT 55C TEMP AND MOI STURE IS REMOVED AFTER WHICH THE MATERIAL IS GRINDED IN GRIN DER. IT THEN UNDERGOES PROCESS OF BLENDING IN BLANDER. PROTEIN A ND OIL CONTENT AS PER PRODUCT PRICING AND COSTUMER REQUIRE MENT IS MAINTAINED. THE ASSESSEE COMPANY USES PAPER BAG FOR PACKING PURPOSE. THUS THE UN-WANTED BIO-DEGRADABLE WASTE, ARE FURTHE R TREATED THROUGH A SERIES OF BIOLOGICAL PROCESSES WITH THE H ELP OF BIOTECHNOLOGY TO PRODUCE THESE BIOFEEDS (BIOLOGICAL AGENTS) WHICH ARE RICH IN ENERGY VALUES. BIOFEEDS HELP IN I MPROVING THE DIGESTION IN ANIMALS AND POULTRY AND THE BIOLOGICAL AGENTS PRESENT IN BIOFEEDS CAN ALSO BE USED TO REPLACE CHE MICAL BASED ANTIBIOTICS IN ANIMALS AND POULTRY. CONSIDERING THE ENTIRE PROCESS, APPELLANT IS ENTITLED TO DEDUCTION U/S 80J JA AS CLAIMED IN RETURN OF INCOME. 3.6 THE ACTIVITIES REFERRED HEREIN ABOVE AT PARA 3. 4 WHICH RELATES TO ELIGIBILITY OF DEDUCTION U/S 80JJA IS FU LFILLED BY APPELLANT AS UNDER: (A) COLLECTION OF BIODEGRADABLE WASTE THE APPELLANT COMPANY SUBMITS THAT ONE OF THE PRELI MINARY ACTIVITIES OF THE COMPANY IS MANUFACTURING OF BIOFE EDS AND HENCE ALL THE MATERIAL (WASTE) REQUIRED IN THE PROCESS OF MANUFACTURING OF BIOFEEDS ARE PURCHASED FROM OUTSIDE AND ARE NOT WASTE WHICH ARE OBTAINED AS BY-PRODUCT OF ANY MANUFACTURING PRO CESS. MATERIALS SUCH AS BRAN, FEED, FEED EZ PLUS, GLUTEN, WET BRAN, GERMS, ETC, ARE PURCHASED FOR PRODUCTION OF BIOLOGI CAL AGENTS (BIOFEEDS). THESE WASTE MATERIALS PURCHASED ARE OTH ERWISE UNUSABLE OR ARE HAVE A VERY LOW WORTH. HOWEVER, CON VERTING THESE WASTE MATERIALS INTO BIO-FEEDS MAKE IT COMMER CIALLY MARKETABLE. IT IS AN ADMITTED POSITION IN THE CASE OF THE ASSES SEE COMPANY THAT IT COLLECTS THE WASTE MATERIAL FROM OTHER ENTI TIES AFTER HAVING MADE PAYMENT FOR THE SAME. THEREFORE, THE AF ORESAID ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 5 - REQUIREMENT OF COLLECTING AS PROVIDED UNDER SECTION 80JJA IS SATISFIED (B) PROCESS OF BIODEGRADABLE WASTE THE ASSESSEE COMPANY SUBMITS TYPICAL AND DETAILED MANUFACTURING PROCESS OF PRODUCTION OF BIOFEEDS AND SAME WAS ALSO GIVEN TO ASSESSING OFFICER: GRIND RESIDUAL MAIZE TO FINE POWDER FORM ADDITION OF BIO-DEGRADABLE WASTE LIKE FIBR E (WET BRAN), PROTEIN (GLUTEN), GERM TO GROUND MAIZE POWDER IN FERMENTER (BIO REACTORS) STERILISATION AND REACTION OF ALL THESE RA W MATERIAL AT 121 DEGREE C TO MAKE BIOLOGICAL BROTH COOLING OF THE BROTH REACTION THE ENZYMES AT SPECIFIC TEMPERATU RE, PH AND DISSOLVED OXYGEN AND TIME HARVESTING OF BROTH STABILISATION OF BROTH BY PROPER MIXING DRYING GRINDING CRUDE BIOLOGICAL AGENT (BIOFEEDS) TO 30 MESH POWDER. SCREENING THROUGH VIBRO MACHINE STANDARDISATION AND PACKING THUS IT CAN BE PERUSED THAT THE MANUFACTURING PROCE SS OF BIOFEEDS INVOLVES A COMPLEX AND TYPICAL TREATMENT AND PROCES SING OF BIODEGRADABLE WASTE. (C) PRODUCTION OF BIOLOGICAL AGENTS THE UN-WANTED BIO-DEGRADABLE WASTE, ARE FURTHER TRE ATED THROUGH A SERIES OF BIOLOGICAL PROCESSES WITH THE HELP OF BIO TECHNOLOGY TO PRODUCE 'BIOFEEDS' WHICH ARE NOVEL BIOLOGICAL AGENTS RICH IN ENERGY VALUES. THEY ARE NUTRITION BOOSTER DERIVED BY A COM BINATION OF VARIOUS BIOLOGICAL PROCESSES FOR THE USE IN ANIMAL HEALTHCA RE INDUSTRY. BIOFEEDS HELP IN IMPROVING THE DIGESTION IN ANIMALS AND POULTRY. THEY HELP IN BREAKING DOWN THE COMPLEX FEEDS INTO SIMPLE R COMPOUNDS THUS MAKING IT EASY FOR THE ANIMAL / POULTRY TO GET THE EXTRA ENERGY WHICH IS LOCKED IN THE COMPLEX FEEDS. IN CATTLE, BIOFEEDS GI VES NOTICEABLE IMPROVEMENT IN THE HEALTH OF THE CATTLE, INCREASE I N MILK YIELDS AND ALSO IMPROVE QUALITY OF MILK. THE BIOLOGICAL AGENTS PRES ENT IN BIOFEEDS CAN ALSO BE USED TO REPLACE CHEMICAL BASED ANTIBIOTICS IN ANIMALS AND POULTRY. AS APPELLANT HAS SATISFIED ALL THE CONDITI ONS PRESCRIBED U/S 80JJA, ASSESSING OFFICER WAS NOT JUSTIFIED IN REJEC TING SUCH DEDUCTION. 3.7 WITH REGARDS TO OBSERVATION OF ASSESSING OFFICE R THAT RAW MATERIAL USED BY APPELLANT IS NOT BIODEGRADABLE WAS TE AND REFERENCE TO DEFINITION OF 'BIO DEGRADABLE WASTE' AS PER DEFINIT ION OF EUROPEAN ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 6 - COMMISSION FOR ENVIRONMENT (HEREIN AFTER ECFE), APP ELLANT SUBMITS THAT ASSESSING OFFICER HAS FAILED TO APPRECIATE INT ER ALIA: (I) THAT DEFINITION REFERRED BY ASSESSING OFFICER A S MENTIONED BY ECFE IS FOR BIO-WASTE AND NOT FOR BIODEGRADABLE WAS TE. THE RELEVANT DEFINITION GIVEN IN SAID WEB SITE CLEARLY STATES AS UNDER: ' BIO-WASTE IS DEFINED AS BIODEGRADABLE GARDEN AND PARK WASTE, FOOD AND KITCHEN WASTE FROM HOUSEHOLDS, RESTAURANTS, CAT ERERS AND RETAIL PREMISES, AND COMPARABLE WASTE FROM FOOD PROCESSING PLANTS. IT DOES NOT INCLUDE FORESTRY OR AGRICULTURAL RESIDUES, MANU RE, SEWAGE SLUDGE, OR OTHER BIODEGRADABLE WASTE SUCH AS NATURAL TEXTIL ES, PAPER OR PROCESSED WOOD. IT ALSO EXCLUDES THOSE BY-PRODUCTS OF FOOD P RODUCTION THAT NEVER BECOME WASTE.' THE ASSESSING OFFICER HAS SUITABLY REPLACED THE WOR D ' BIO-WASTE' REFERRED SUPRA AS 'BIO-DEGRADABLE WASTE' AND IT CAN BE SEEN FROM AFORESAID DEFINITION THAT BIO-WASTE DOES NOT INCLUD E CERTAIN BIODEGRADABLE WASTE WHEREAS SECTION 80JJA, REFERENC E IS TO 'BIO- DEGRADABLE WASTE' THUS MEANING OF BOTH BIO-WASTE AN D BIO DEGRADABLE WASTE IS DIFFERENT. (II) THAT EVEN OTHERWISE WASTE HAS NOT BEEN DEFIN ED IN THE INCOME TAX ACT. AS PER OXFORD DICTIONARY, DEFINITION OF WASTE IS AS UNDER: 'UNWANTED OR UNUSABLE MATERIAL, SUBSTANCES, OR BY-P RODUCTS' FURTHER, THE TERM 'BIODEGRADABLE' HAS NOT BEEN DEFI NED IN THE ACT. COLLINS DICTIONARY GIVES THE DEFINITION OF BIODEGRA DABLE AS FOLLOWS: 'CAPABLE OF BEING DECOMPOSED BY BACTERIA OR OTHER L IVING ORGANISMS AND THEREBY AVOIDING POLLUTION' BIO-DEGRADABLE MEANS IT CAN BE DEGRADED. AGRICULTUR AL WASTES BEING WASTES GENERATED FROM FARMING ACTIVITIES AND THESE SUBSTANCES ARE MOSTLY BIODEGRADABLE. FURTHER AS PER UNITED NATIONS STATISTICS DIVISION (U.N.S.D.): 'WASTES ARE MATERIALS THAT ARE NOT PRIME PRODUCTS ( THAT IS PRODUCTS PRODUCED FOR THE MARKET) FOR WHICH THE GENERATOR HA S NO FURTHER USE IN TERMS OF HIS/HER OWN PURPOSES OF PRODUCTION, TRANSF ORMATION OR CONSUMPTION, AND OF WHICH HE/SHE WANTS TO DISPOSE. WASTES MAY BE GENERATED DURING THE EXTRACTION OF RAW MATERIALS, T HE PROCESSING OF RAW MATERIALS INTO INTERMEDIATE AND FINAL PRODUCTS, THE CONSUMPTION OF FINAL PRODUCTS, AND OTHER HUMAN ACTIVITIES. RESIDUALS REC YCLED OR REUSED AT THE PLACE OF GENERATION ARE EXCLUDED.' AS PER DICTIONARY OF WIKIPEDIA, BIODEGRADABLE WASTE IS A TYPE OF WASTE WHICH CAN BE BROKEN DOWN, IN A REASONABLE AMOUNT OF TIME, INTO ITS BASE COMPOUNDS BY MICROORGANISMS AND OTHER LIVING T HINGS, REGARDLESS OF WHAT THOSE COMPOUNDS MAY BE. (III) THAT THE APPELLANT COMPANY PURCHASES ITEMS SU CH AS BRAN, FEED, FEED EZ PLUS, GLUTEN, WET BRAN, GERMS, ETC. WITHOUT ANY STRETCH OF ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 7 - IMAGINATION IT CAN BE CONSTRUED THAT THE WASTE OBTA INED PALPABLY FALLS UNDER THE PARLANCE OF 'BIODEGRADABLE WASTE' AS THEY ARE AGRICULTURAL WASTE; OR WASTE OR BY-PRODUCTS FROM AGRO PROCESSING INDUSTRY WHICH ARE CAPABLE OF BEING DECOMPOSED IN NATURE WITHOUT C REATING ANY DAMAGE TO NATURE. IN THIS CONTEXT IT SHALL BE NOTED AS THESE ITEMS ARE BIODEGRADABLE IN NATURE, ANY FURTHER PROCESSING WIL L NOT CHANGE ITS BASIC CHARACTERISTICS. IN FURTHERANCE TO THIS, THE ASSESSEE COMPANY SUBMITS THAT THESE BIODEGRADABLE WASTES ARE BEING F URTHER TREATED THROUGH BIOLOGICAL PROCESSES OF COMPOSTING, REACTIO N WITH ENZYMES ETC. TO MAKE BIOFEEDS. (IV) THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PADMA S. BORA [2013] 355 ITR 368 HAS HELD AS UNDER: THERE COULD BE NO UNIVERSAL DEFINITION OF THE WORD 'WASTE'. THE TERM WASTE HAS TO BE UNDERSTOOD CONTEXTUALIV I.E. PLACE WHERE IT ARISES AND THE MANNER IN WHICH IT ARISES DURING THE PROCESSING OF SOME ARTICLE. IN THE ABOVE CASE THE A.O HAD HELD THAT BAGASSE BEI NG A BY-PRODUCT OF THE SUGAR INDUSTRY AND BEING A SALEABLE PRODUCT CAN NOT BE CONSIDERED AS WASTE. IN THE ABOVE STATED ORDER IT WAS HELD BY THE HONORABLE HIGH COURT THAT THERE IS NOTHING LIKE WASTE IN THE UNIVE RSE AND EVERYTHING HAS A USE AND THAT IS HOW SYSTEM IS CREATED OR EVOL VED ON THIS PLANET- EARTH. THE EXPRESSION 'WASTE' HAS TO BE UNDERSTOOD DEPENDING ON THE PERSON OWNING SUCH WASTE AS SUCH THE EXPRESSION IS GENERIC IN ITS USE. THUS IT WAS DULY HELD THAT WHETHER A SUBSTANCE IS A WASTE OR NOT HAS TO BE SEEN WITH REFERENCE TO THE PERSON WHO GENERATES IT. THUS, IT CAN BE CONCLUDED THAT THERE EXISTS NO UNIV ERSAL DEFINITION OF WASTE AND THUS IT HAS TO BE UNDERSTOOD CONTEXTUALLY AS EXPLICITLY STATED BY THE HIGH COURT OF BOMBAY IN IT ABOVE REFERRED JU DICIAL PRONOUNCEMENT. (V) THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S, APPELLANT HAS SUBMITTED A CERTIFICATE FROM HIGHLY QUALIFIED BIO-T ECHNOLOGISTS WHEREIN HE HAS EXPLICITLY CERTIFYING THAT THE WASTE MATERIA L OBTAINED AND USED IN THE PRODUCTION PROCESS OF BIOFEED; FALLS UNDER THE AMBIT OF TECHNICAL PARLANCE OF 'BIODEGRADABLE WASTE' AND ALSO THAT THE BIOFEEDS OBTAINED AS AN END PRODUCT ON TREATMENT OF THIS WASTE ARE 'B IO-LOGICAL AGENTS'. CONSIDERING THE ABOVE FACTS, APPELLANT HAS FULFILLE D THE ALL CRITERIA LAID DOWN U/S 80JJA OF THE ACT. 3.7.1 WITH REGARDS TO OBSERVATION OF AO AT PAGE 6 O F THE ORDER THAT APPELLANT HAS CLAIMED THAT ALL THE WASTAGES ARE GEN ERATED DURING THE MANUFACTURING PROCESS OF PRODUCING STARCH, APPELLAN T SUBMITS THAT ASSESSING OFFICER HAS PROCEEDED TO MAKE DISALLOWANC E ON WRONG FOOTING BY OBSERVING THAT ALL WASTE ARE GENERATED DURING MA NUFACTURING PROCESS CARRIED OUT BY IT BUT APPELLANT IN ITS WRITTEN SUBM ISSION DATED 21 ST MARCH 2014(NO RELEVANT EXTRACTS WERE PRODUCED BY AS SESSING OFFICER IN ASSESSMENT ORDER) CATEGORICALLY STATE THAT 'ONE OF THE PRELIMINARY ACTIVITY OF THE COMPANY IS MANUFACTURING OF BIOFEED S AND HENCE AIL THE MATERIAL REQUIRED IN THE PROCESS OF MANUFACTURING O F BIOFEEDS ARE PURCHASED FROM OUTSIDE AND ARE NOT WASTE WHICH ARE OBTAINED AS BY- PRODUCT OF ANY MANUFACTURING PROCESS'. ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 8 - THIS ONCE AGAIN PROVE THAT ASSESSING OFFICER WANTED TO MAKE DISALLOWANCE U/S 80JJA IN ANY MANNER IN THE CASE OF APPELLANT HENCE WITHOUT APPRECIATING AND UNDERSTANDING THE FACTS OF APPELLANT'S CASE, HE MADE AFORESAID UNWARRANTED ASSUMPTION AND PRESUM PTION WITHOUT CONFIRMING THE FACTS WITH APPELLANT. 3.8 APART FROM ABOVE, APPELLANT RELIES ON DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PADMA S. BORA [20 131 355 ITR 368 WHEREIN IT IS HELD AS UNDER: 'SECTION 80JJA OF THE INCOME-TAX ACT, 1961 - DEDUCT IONS - PROFITS AND GAINS FROM BUSINESS OF COLLECTING AND PROCESSING OF BIO-DEGRADABLE WASTE - FUEL BRIQUETTES -ASSESSMENT YEARS 2003-04 A ND 2004-05 - WHETHER ASSESSEE, ENGAGED IN BUSINESS OF MANUFACTUR ING FUEL BRIQUETTES FROM BAGASSE WAS ENTITLED TO DEDUCTION UNDER SECTIO N 80JJA - HELD, YES [PARA 7] [IN FAVOUR OF ASSESSEE]' IT IS SUBMITTED THAT THE FACTS AND CIRCUMSTANCES AR E VERY MUCH ANALOGOUS TO THE CASE OF THE APPELLANT COMPANY. BAG ASSE IS OBTAINED AS A RESIDUAL PRODUCT DURING THE PROCESS OF MANUFACTUR ING SUGAR IN A SUGAR INDUSTRY. FURTHER BAGASSE IS OBTAINED FROM SU GARCANE WHICH IS AN AGRO COMMODITY. IT WAS USED TO MAKE FUEL BRIQUETTES HAVING HIGH CALORIFIC VALUE. REGARDING THE OBJECTION PUT FORWAR D BY THE A.O RELATING TO THE END-PRODUCT AFTER PROCESSING BEING ONE AND THE SAME AS THE WASTE COLLECTED, THE HON'BLE HIGH COURT DISAGRE ED WITH THE SAID OBJECTION AS THERE WAS GREAT AMOUNT OF CHANGE IN TE RMS OF CALORIC VALUE OF THE BRIQUETTES BEFORE AND AFTER THE SAID PROCESS ING OR TREATMENT. SIMILARLY ON GOING THROUGH THE FACTS AND SUBMISSION S GIVEN BY THE APPELLANT IT CAN BE VERY WELL GATHERED THAT THE APP ELLANT TOO USES SIMILAR AGRO COMMODITY I.E RESIDUAL MAIZE AND ALLIE D PRODUCTS FOR THE PRODUCTION OF BIOFEED. ALSO ON GOING THROUGH THE TY PICAL MANUFACTURING PROCESS AS DISCUSSED HEREIN ABOVE, THESE LOW VALUE RESIDUARY WASTES PURCHASED ARE CONVERTED INTO BIOFEEDS WHICH ARE NOV EL BIOLOGICAL AGENTS. THESE BIOFEEDS ARE HAVING HIGH ENERGY AND N UTRITION VALUE. THUS APPELLANT IS ENTITLED TO DEDUCTION U/S 80J JA OF THE ACT. 3.9 APART FROM ABOVE, CIRCULAR NO.772 DATED 23/12/1 998 WHEREIN THE INTENTION OF INTRODUCING SECTION 80JJA HAS BEEN EXP LAINED AND FROM SAME, IT IS EMERGING THAT SECTION 80JJA WAS INTRODU CED TO PROMOTE THE ACTIVITIES LIKE RECYCLING OF WASTE WHICH COULD IN T URN BE CONVERTED INTO SOME USEFUL RESOURCES. IN THE PRESENT CASE THE APPE LLANT HAS TREATED WASTE TO PRODUCE BIOFEEDS WHICH ARE RICH IN NUTRITI ONAL VALUE AND GIVES NOTICEABLE IMPROVEMENT IN THE HEALTH OF THE CATTLE, INCREASE IN MILK YIELDS AND ALSO IMPROVE QUALITY OF MILK. FURTHER IT INVOLVES A SEPARATE SERIES OF PROCESSES WHICH REQUIRE ADDITIONAL STAFF THROUGH WHICH IT HAS CREATED EMPLOYMENT OPPORTUNITIES AS WELL. THUS LOOK ING AT THE BASIC INTENT OF LEGISLATURE IT CAN BE MAINTAINED THAT THE ANY RECYCLING OF WASTE THAT GIVES RISE TO BIOLOGICAL AGENTS (USEFUL RESOURCES) WOULD BE AN ELIGIBLE ACTIVITY UNDER THE PROVISIONS OF SECTIO N 80JJA. FURTHER THE SAID EXPLANATION DOES NOT IMPLY THAT TH E EXPRESSION 'WASTE' MEANS THE ONE WHICH IS FREELY AVAILABLE. IN FACT, I T EXPLAINS THAT THE WASTE IS SUBSTRATE OR RAW MATERIAL FOR MANY OTHER U SEFUL ACTIVITIES, ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 9 - WHEN RECYCLED. IN VIEW OF THE ABOVE IT CAN BE SEEN THAT A STAND HAS BEEN TAKEN THAT THE EXPRESSION 'WASTE' BEING UNDEFINED I N THE ACT, GENERAL MEANING NEEDS TO BE ADOPTED AND THE PROVISION OF SE CTION 80JJA HAS TO BE INTERPRETED BY APPLYING THE PRINCIPLES OF LITERA L INTERPRETATION OF JURISPRUDENCE. 3.10 APART FROM ABOVE, ASSESSING OFF ICER HAS ALSO MADE CERTAIN UNWARRANTED OBSERVATION WHILE MAKING DISALL OWANCE U/S 80JJA WHICH ARE DEALT AS UNDER (A) ASSESSING OFFICER AT PAGE 6 OF HIS ORDER HAS OB SERVED THAT BOTH APPELLANT AND ANIL LIMITED(BOTH SISTER CONCERN ) HAS CLAIMED TO BE ENGAGED IN MANUFACTURING BIO FEEDS BU T RAW MATERIAL USED FOR SUCH PRODUCTION OF FINAL PROD UCTS ARE DIFFERENT WHICH CREATES DOUBT OF APPELLANT'S CL AIM FOR DEDUCTION U/S 80JJA. IN THIS CONNECTION, APPELLANT SUBMITS THAT WHILE MA KING SUCH OBSERVATION, ASSESSING OFFICER HAS FAILED TO APPRECIATE INTER ALIA (I) THAT IF HE HAD ANY CONFUSION REGARDING DIFFEREN T RAW MATERIAL USED BY BOTH THE CONCERNS REFERRED SUPRA, HE OUGHT TO HAVE ASKED APPELLANT TO CLARIFY OR CALLED FOR FURTHER EXPLANATION. (II) THAT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, APPELLANT VIDE ITS LETTER DATED 23/12/2013 HAS STAT ED THAT FOLLOWING FINISHED PRODUCTS ARE PRODUCED AS A RESUL T OF THE ABOVE MENTIONED PROCESS. BIOFEED S BIOFEED - SC 6 BIOFEED ENZ PHYTASE ENZYMES FURTHER, ANIL LIMITED ALSO VIDE ITS LETTER DATED 23 /12/2013 HAS SUBMITTED SUCH DETAILS AS UNDER: BIOFEED ACTIVE BIOFEED PLUS BIOFEED ULTRA THUS, IT CAN BE SEEN FROM AFORESAID DETAILS THAT TH OUGH BOTH COMPANIES ARE ENGAGED IN PRODUCTION OF BIO-FEE DS, BUT THEY ARE MANUFACTURING DIFFERENT TYPES OF SUCH BIO- FEEDS HENCE RAW MATERIAL REQUIREMENT FOR BOTH THE COMPANIES ARE DIFFERENT. (III) THAT HE IS NOT SUCH A TECHNICAL PERSON WHO CA N SIMPLY MAKE DISALLOWANCE OF DEDUCTION U/S 80JJA ON COMPARI NG DATA OF TWO COMPANIES WITHOUT GOING TO ROOT OF THE CASE OR WITHOUT THOROUGH EXAMINING THE FACTS OF APPELLANT ' S CASE. THE LEARNED ASSESSING OFFICER OUGHT TO HAVE UNDERST OOD THAT MANUFACTURING BIO-FEEDS IS MAIN CATEGORY OF PRODUCTION BUT DIFFERENT TYPES OF BIO-FEEDS ARE PRE PARED AND ONE CANNOT PRESUME THAT ONLY ONE BIO-FEED CAN B E PRODUCED. IT IS JUST LIKE MANUFACTURING OF MEDICINE S. ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 10 - THERE ARE NUMBER OF PHARMACEUTICAL COMPANIES WHICH ARE MANUFACTURING MEDICINES BUT ONE CANNOT COMPARE MEDICINE PREPARED FOR HEART ATTACK WITH CANCER. (IV) THAT APPELLANT HAS DURING ASSESSMENT PROCEEDIN GS SUBMITTED COMPLETE DETAILS OF PURCHASE AND SALE ALO NG WITH MANUFACTURING PROCESS AND HE HIMSELF HAS ACCEP TED BOOK RESULTS AND YIELD SHOWN BY APPELLANT WHICH ITS ELF SUGGEST THAT THERE CANNOT BE ANY DOUBT; FOR ACTUAL PRODUCTION ACTIVITY CARRIED OUT BY APPELLANT. THUS IT IS SUBMITTED THAT IN SUPPORT OF AFORESAID B OLD OBSERVATION. ASSESSING OFFICER HAS NOT BROUGHT ANY POSITIVE EVIDENCE OR EVEN LEARNED ASSESSING OFFICER IS NOT T ECHNICALLY COMPETENT ENOUGH TO GIVE THIS VAGUE. (B) THE LEARNED ASSESSING OFFICER AT PAGE 6 HAS ALS O OBSERVED THAT APPELLANT HAS CLAIMED THAT FOR CARRYING OUT PRODUCTION, APPELLANT DOES NOT HAVE BOILER/FURNESS FOR GENERATING 121 DEGREE C AND DETAILS OF MACHINERY SUBMITTED BY APPELLANT DOES NOT FIGURE STERILIZER, FERMENTER ETC. IN THIS CONNECTION, APPELLANT SUBMITS THAT BOILER R EQUIRED FOR SUCH PRODUCTION PROCESS WAS OWNED BY ANIL LIMIT ED AND WAS PART OF FIXED ASSET BLOCK OF SAID COMPANY. EVEN DURING THE YEAR UNDER CONSIDERATION, APPELLANT HAS PAID SERVICE UTILITY CHARGES OF RS 95.22 LACS TO ANIL LI MITED WHICH INCLUDES PAYMENT FOR USAGE OF FIXED ASSETS OW NED BY ANIL LIMITED AND THESE FACTS ARE CLEARLY MENTION ED AT CLAUSE 18 'PAYMENT TO RELATED PARTIES' IN TAX AUDIT REPORT. IT IS FURTHER SUBMITTED THAT ASSESSING OFFI CER HAS NOT RAISED ANY DOUBT ON THIS ISSUE IN SHOW CAUSE NO TICE ISSUED BY HIM NOR CALLED FOR ANY FURTHER EXPLANATIO N DURING ASSESSMENT PROCEEDINGS. THESE FACTS ITSELF S UGGEST THAT ASSESSING OFFICER HAS MADE ENTIRE DISALLOWANCE ON PREJUDICIAL APPROACH. (C) WITH REGARDS TO OBSERVATION OF ASSESSING OFFICE R AT PAGE 8 OF HIS ORDER THAT TWO PARTIES FROM WHOM APPELLANT H AS MADE PURCHASES ARE NOT REGISTERED WITH VAT AUTHORIT IES, IT IS SUBMITTED THAT AS BOTH THE PARTIES ARE DEALING W ITH AGRO PRODUCTS, THEY ARE NOT LIABLE TO PAY VAT HENCE VAT REGISTRATION IS NOT REQUIRED. EVEN ASSESSING OFFICE R HAS NOT CALLED FOR SUCH CLARIFICATION IN HIS SHOW CAUSE NOTICE BUT THE AUTHORIZED REPRESENTATIVE HAS EXPLAINED SUC H FACTS TO ASSESSING OFFICER. (D) WITH REGARDS TO OBSERVATION OF ASSESSING OFFI CER THAT APPELLANT HAS SUBMITTED ONLY FEW COPIES OF BILLS AN D FAILED TO PRODUCE PRELIMINARY DOCUMENTS TO PROVE PURCHASES AND RECEIPT OF GOODS, APPELLANT SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS FILED FOLLOWING W RITTEN SUBMISSION DATED 21/03/2014 TO AO: ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 11 - 'IN ORDER TO SUBSTANTIATE THE PURCHASES AS GENUINE, THE ASSESSEE COMPANY SUBMITS THE FOLLOWING BEFORE YOUR GOOD SELVES: E. COPY OF SALES BILLS ALONG WITH DELIVERY CHALLAN IN FEW CASES, ISSUED BY THE ABOVE THREE PARTIES ON A SAMPL E BASIS VIDE ANNEXURE-1(A) . THE BILL EXPLICITLY REFLECTS ADDITIONAL DETAILS REQUIRED SUCH AS MODE OF TRANSPORT, TRUCK/T EMPO NUMBER ETC. FURTHER THE ASSESSEE COMPANY SUBMITS TH AT ALL THE BILLS PERTAINING TO PURCHASES ARE AVAILABLE WIT H THE ASSESSEE COMPANY WHICH WOULD BE WILLINGLY PRODUCED IF REQUIRED BY YOUR GOOD SELVES IN FUTURE. F. COPY OF LEDGER ACCOUNT OF THE ASSESSEE COMPANY I N THE BOOKS OF THE PARTIES UNDER CONSIDERATION DULY CONFI RMED BY THE RESPECTIVE PARTIES VIDES ANNEXURE-1(B) . G. RELEVANT EXTRACTS OF THE BANK STATEMENT DULY REF LECTING THE PAYMENTS MADE TO THE ABOVE THREE PARTIES VIDE ANNEXURE- 1(C) . YOUR GOOD SELVES SHALL APPRECIATE THE FACT THAT A LL THE PAYMENTS HAVE BEEN ROUTED THROUGH THE BANK; WHI CH HAVE BEEN HIGHLIGHTED FOR YOUR GOOD SELVES' KIND PE RUSAL. H. FURTHER THE ASSESSEE COMPANY SUBMITS THAT TWO OU T OF THERE PARTIES I.E. SHAMIKSHA MARKETING PVT. LTD & A NIL TRADECOM; FROM WHOM PURCHASES HAVE BEEN MADE ARE GROUP COMPANIES. HENCE IN ORDER TO EXPLAIN THE ENTI RE FLOW OF PAYMENTS IN CASE OF THESE TWO PARTIES THE A SSESSEE COMPANY HAS PREPARED A CHART REFLECTING THE FLOW OF PAYMENTS STARTING FROM THE ASSESSEE COMPANY TO THE END PARTY. ON PERUSAL OF THIS IT CAN BE CONSTRUED THAT EVENTUALLY THE PAYMENTS MADE ARE GOING OUT OF THE N ET OF GROUP COMPANIES. THE CHART IS HEREBY SUBMITTED VIDE ANNEXURE-1(D) . I. ALSO IN ORDER TO JUSTIFY GENUINENESS OF PURCHASE S, THE ASSESSEE COMPANY HAS MANAGED TO ARRANGE FOR VAT RET URN OF ONE OF THE PARTIES FROM WHOM PURCHASES ARE MADE; HEREBY SUBMITTED VIDE ANNEXURE-1(E) . DETAILS PERTAINING TO SALES OF BIO FEEDS WITH REGARD TO CLAIM OF DEDUCTION U/S 80JJA OF THE ACT; YOUR GOOD SELVES HAVE ASKED THE ASSESSEE COMPANY TO SUBMIT DE TAILS PERTAINING TO SALES OF BIO FEEDS TO 11 DIFFERENT PERSONS. IN ORDE R TO SUBSTANTIATE THE SALES AS GENUINE THE ASSESSEE COMPANY SUBMITS THE F OLLOWING BEFORE YOUR GOOD SELVES: A. COPY OF SALES BILLS ISSUED BY THE PARTIES UNDER CONSIDERATION ON A SAMPLE BASIS VIDES ANNEXURE-2(A). THE ASSESSEE COMPANY WOULD LIKE TO BRING TO YOUR KIND ATTENTION THE FACT THAT ALL S ALES HAVE BEEN MADE EX- FACTORY, HENCE DETAILS OF MODE OF TRANSPORTATIO N ARE NOT AVAILABLE IN ALL CASES. FURTHER THE ASSESSEE COMPANY SUBMITS THA T ALL THE BILLS PERTAINING TO SALES ARE AVAILABLE WITH THE ASSESSEE COMPANY WHICH WOULD BE WILLINGLY PRODUCED IF REQUIRED BY YOUR GOO D SELVES IN FUTURE. ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 12 - B. LEDGER ACCOUNT OF THE PARTIES UNDER CONSIDERATIO N IN THE BOOKS OF THE ASSESSEE COMPANY DULY CONFIRMED BY THE RESPE CTIVE PARTIES VIDES ANNEXURE-2(C). C. RELEVANT EXTRACTS OF THE BANK STATEMENT DULY REF LECTING THE PAYMENTS RECEIVED FROM THE PARTIES UNDER CONSIDERAT ION VIDE ANNEXURE- 2(D) . YOUR GOOD SELVES SHALL APPRECIATE THE FACT THAT A LL THE PAYMENTS HAVE BEEN ROUTED THROUGH THE BANK; WHICH HAVE BEEN HIGHLIGHTED FOR YOUR GOOD SELVES' KIND PERUSAL. FURTHER THE ASSESSEE COMPANY HEREBY SUBMITS MONTH W ISE DETAILS PERTAINING TO PURCHASE AND SALES OF BIOFEEDS AND CO NSUMPTION OF RAW MATERIAL DETAILS FOR THE YEAR VIDE ANNEXURE-3 FOR YOUR GOOD SELVES' KIND PERUSAL.' IT CAN BE SEEN FROM AFORESAID SUBMISSION THAT (I) APPELLANT HAS SUBMITTED SAMPLE COPIES OF BILLS ALONG WITH DELIVERY CHALLANS AND CATEGORICALLY STATED THAT ALL THE BILLS PERTAINING TO PURCHASES ARE AVAILABLE WITH APPELLAN T WHICH WOULD BE PRODUCED, IF REQUIRED. BUT ASSESSING OFFIC ER HAS NOT CALLED FOR ANY FURTHER DETAILS FROM APPELLANT HENCE APPELLANT THOUGHT NO FURTHER BILLS ARE REQUIRES TO BE PRODUCE D. (II) THE APPELLANT HAS SUBMITTED SAMPLE COPIES OF B ILLS ALONG WITH DELIVERY CHALLAN TO ASSESSING OFFICER AND SUCH DETA ILS INCLUDES ADDITIONAL DETAILS LIKE MODE OF TRANSPORT, TRUCK/TE MPO NO ETC. THIS FACT IS ALSO ACCEPTED BY ASSESSING OFFICER AT TOP OF PAGE 9 BUT AT MIDDLE OF PAGE 9, HE STATES THAT APPELLANT H AS NOT PRODUCED ANY PROOF REGARDING ACTUAL RECEIPT OF MATE RIAL WHICH ITSELF SUGGEST THAT ASSESSING OFFICER IS MAKING CON TRADICTORY OBSERVATION AND THAT TOO WITHOUT VERIFYING DETAILS SUBMITTED BY APPELLANT. EVEN LD ASSESSING OFFICER HIMSELF HAS ACCEPTED BOOK RESULTS SHOWN BY APPELLANT HENCE HE WAS NOT JUSTIFIED IN MA KING OBSERVATION THAT APPELLANT HAS FAILED TO PRODUCE AN Y EVIDENCE TO SHOW ACTUAL PURCHASE OF GOOD. HE OUGHT TO HAVE APPR ECIATED THAT WITHOUT MAKING PURCHASES, APPELLANT WOULD NOT HAVE ACHIEVED SO MUCH HUGE TURNOVER. (III) THE APPELLANT HAS SUBMITTED LEDGER ACCOUNT OF PARTIES FROM PURCHASES WERE MADE ALONG WITH CONFIRMATIONS OF SUC H PARTIES WHICH SUGGEST THAT INITIAL BURDEN CAST UPON APPELLA NT TO PROVE GENUINENESS OF PURCHASES ARE PROVED. THE PAYMENTS A RE MADE THOUGH ACCOUNT. PAYEE CHEQUES WHICH ALSO PROVE THAT PURCHASES ARE GENUINE. THE ASSESSING OFFICER HAS OBSERVED THAT APPELLANT H AS NOT SUBMITTED ADDRESS OR PAN OF CREDITORS. IN THIS CONN ECTION, APPELLANT SUBMITS THAT NAME AND ADDRESSES OF CREDIT ORS WERE ALREADY GIVEN TO ASSESSING OFFICER VIDE SUBMISSION DATED 02/09/2013 AND STILL HE HAS ANY ISSUE, HE SHOULD HA VE CALLED FOR SUCH DETAILS FROM APPELLANT. IT IS FURTHER SUBMITTE D THAT COPIES OF BILLS SUBMITTED BY APPELLANT ALSO REFLECTS THE ADDR ESSES OF THE ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 13 - SAID PARTY. FURTHER, ANIL TRADECOM FROM WHOM APPELL ANT HAS MADE PURCHASES IS ASSESSED TO SAME CIRCLE AND DETAI LS WERE ALREADY AVAILABLE ON RECORD OF ASSESSING OFFICER. S O FAR AS PAN OF SAMIKSHA MARKETING LIMITED IS CONCERNED, ASSESSI NG OFFICER HIMSELF AT BOTTOM OF PAGE 8 STATED THAT PAN OF SAID PARTY AS SUBMITTED BY APPELLANT IS AACCS8742J. THIS FACT ONE MORE TIME PROVES THE APPROACH OF ASSESSING OFFICER. (E) WITH REGARDS TO OBSERVATION OF ASSESSING OFFICE R THAT CHEQUES OF RS 29,00,000 ISSUED TO SHAMIKSHA MARKETI NG PVT. LIMITED (SMPL) AGAINST PURCHASES WERE ULTIMATELY DE POSITED IN THE BANK ACCOUNT OF JALARAM COMMODITIES PVT. LIMITE D (JCPL) WHICH AGAIN PROVE THAT SMPL IS PAPER ENTITY, APPELL ANT SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS EXPLAINED TO ASSESSING OFFICER THAT NAME OF SMPL HA S BEEN CHANGED TO JCPL AND CERTIFICATE ISSUED BY REGISTRAR OF COMPANIES, GUJARAT WAS ALSO SUBMITTED. THUS BOTH TH E NAMES REFERRED BY ASSESSING OFFICER ARE OF SAME PARTY AND CHEQUE ISSUED TO SMPL WAS DEPOSITED IN ITS BANK ACCOUNT ON LY. THE APPELLANT HAS SUBMITTED COPY OF BANK STATEMENT OF A PPELLANT AS WELL AS OF SAID PARTY VIDE ITS REPLY DATED 21/03/20 14. IT IS SUBMITTED THAT NAME OF PARTY WAS CHANGED FROM 20/07/2011 HENCE NAME OF CREDITOR IN THE RELEVANT FINANCIAL YE AR WAS ONLY SMPL AND COPY OF APPELLANT'S BANK STATEMENT SHOWN T HAT PAYMENT WAS MADE IN THE NAME OF SMPL ONLY AND EVEN IN BANK STATEMENT OF SAID COMPANY, NAME OF ACCOUNT HOLDER I S MENTIONED AS SMPL. THE ASSESSING OFFICER DURING ASSESSMENT PR OCEEDINGS CALLED FOR XEROX COPY OF ONE CHEQUE AND IN WHICH AC COUNT, SAME HAS BEEN CLEARED AND AT THAT TIME, BANK OF INDIA HA S FORWARDED COPY OF CHEQUE ALONG WITH BANK STATEMENT IN WHOSE A CCOUNT SAME WAS FORWARDED AND IT WAS FOUND TO BE IN THE NAME OF JCPL. AS AT THE TIME OF ASSESSMENT PROCEEDINGS, NAME OF SMPL WA S CHANGED TO JCPL, BANK HAS FORWARDED BANK STATEMENT IN THE N AME OF JCPL AND ON SOLE SUCH BASIS, ASSESSING OFFICER CAME TO CONCLUSION THAT CHEQUE ISSUED IN FAVOUR OF SMPL WAS ACTUALLY DEPOSITED BY JCPL BUT HAS FAILED TO APPRECIATE THAT BOTH SMPL AND JCPL IS SAME PARTY. IT IS FURTHER SUBMITTED THAT IN THE BANK STATEMENT PROVIDED BY BANK ACCOUNT NUMBER IS MENTIONED AS 201720100000001 5 WHICH EXACTLY TALLIES WITH BANK STATEMENT GIVEN BY APPELL ANT. EVEN PAN OF ACCOUNT HOLDER MATCHES WITH THE PAN OF SMPL WHIC H ONCE AGAIN PROVES THAT BOTH SMPL AND JCPL IS SAME PARTY. THIS SHOW THAT ASSESSING OFFICER HAS ADOPTED VERY CASUAL APPR OACH IN MAKING ADDITION AND THAT TOO WITHOUT VERIFYING FACT S HENCE SUCH UNWARRANTED ASSUMPTION IS UNCALLED FOR AND SMPL IS NOT PAPER ENTITY. (F) WITH REGARDS TO OBSERVATION OF SMPL IS NOT REGI STERED WITH ROC OF COMPANIES AND ON THE BASIS OF SEARCHING PAN, IT WAS FOUND THAT SAME IS REGISTERED IN THE NAME OF JA LARAM TRADING PVT. LIMITED WHICH IS REGISTERED WITH ROC, MUMBAI AND SAID COMPANY WAS 'DORMANT' COMPANY, APPELLANT SUBMI TS THAT AS SMPL WAS SELLING AGRICULTURE PRODUCE, PROVISIONS OF VAT ARE ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 14 - NOT APPLICABLE HENCE SAME IS NOT REQUIRED TO HAVE V AT REGISTRATION. IT IS FURTHER SUBMITTED THAT NAME OF SMPL HAS BEEN CHANGED TO JCPL AND SAME IS ALSO UPDATED ON WEBSITE OF INCOMETAXINDIAEFIING.GOV.IN AND SAID COMPANY IS REG ULARLY FILING RETURN OF INCOME WITH PAN SUPPLIED BY APPELLANT HEN CE SAID COMPANY IS DORMANT COMPANY IS FACTUALLY INCORRECT A ND EVEN ASSESSING OFFICER HAS EXTRACTED DETAILS OF JALARAM TRADING PVT. LIMITED AND NOT OF JALARAM COMMODITIES PVT. LIMITED . IT IS FURTHER SUBMITTED INSTEAD OF SEARCHING DATA BASE FO R VAT AUTHORITIES, HAD ASSESSING OFFICER ONCE SEEN THE WE BSITE WWW.INCOMETAXINDIAEFILINQ.GOV.IN AND SEARCH THE NAM E OF THE COMPANY BASED ON PAN PROVIDED BY APPELLANT IN THE S ECTION 'KNOW YOUR JURISDICTION', HE WOULD HAVE EASILY FOUN D THAT PAN IS IN THE NAME OF JCPL (FORMERLY KNOWN AS SMPL) AND EVEN ITD SOFTWARE, AVAILABLE WITH ASSESSING OFFICER, HE WOULD HAVE EASILY OBTAINED JURISDICTION OF THE COMPANY AND WOU LD HAVE GATHERED ALL THE INFORMATION OF SAID COMPANY VERY E ASILY. THUS, AFORESAID OBSERVATION OF ASSESSING OFFICER IS FACTUALLY INCORRECT. CONSIDERING THE FACTS OF APPELLANT CASE AS DISCUSSE D HEREIN ABOVE, AS APPELLANT HAS SATISFIED ALL THE CONDITIONS REQUIRED FOR CLAIMING DEDUCTION U/S 80JJA, ADDITION MADE BY ASSESSING OFF ICER DESERVES TO BE DELETED'. 5. BASED ON THE SUBMISSIONS NOTED ABOVE, THE CIT(A) HAS RENDERED THE FINDINGS PARTLY ALLOWING THE CLAIM OF THE ASSES SEE TO THE EXTENT OF RS.1,54,15,286/- UNDER S.80JJA OF THE ACT. THE REL EVANT OPERATIVE PARA IS REPRODUCED HEREUNDER: 2.4 . I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND SUBMISSION FILED BY THE APPELLANT. THE ASSESSING OFFICER HAS C ONTENDED THAT APPELLANT HAS CLAIMED DEDUCTION U/S 80JJA ON MANUFA CTURING OF 'BIOFEEDS' WHICH ARE NOT BIOLOGICAL AGENTS AND ARE NUTRITION BOOSTER DERIVED BY COMBINATION OF BIOLOGICAL PROCESSES FOR USE IN ANIMAL HEALTHCARE INDUSTRY. IT WAS CONTENDED BY AO THAT AP PELLANT HAS USED RAW MATERIAL NAMELY BIOFEED ENZ, FEED, JUTE BAGS, H USK, MAIZE, RAPE DOC AND SOYA BEEN DOC WHICH ARE NOT BIODEGRADABLE WASTE WHICH IS ONE OF THE CONDITIONS FOR CLAIMING DEDUCTION U/S 80JJA. IT WAS ALSO CONTENDED BY AO THAT DEDUCTION IS AVAILABLE FOR GENERATION OF POWER, PRODUCING BIO-FERTILIZER, BIO-PESTICIDES OR OTHER BIOLOGICAL AGENTS OR FOR PRODUCING BIO-GAS OR MAKING PELLETS OR BRIQUETTES F OR FUEL OR ORGANIC MANURE BUT APPELLANT HAS FAILED TO PRODUCE ANY SUCH ARTICLE HENCE DEDUCTION U/S 80JJA OF THE ACT IS NOT AVAILABLE TO IT. IT IS ALSO OBSERVED THAT THOUGH APPELLANT AND ANIL LIMITED BOTH HAS SAM E FINAL PRODUCTS, RAW MATERIAL USED FOR SUCH PRODUCTION ARE DIFFERENT WHICH CREATES DOUBT REGARDING ACTUAL PRODUCTION ACTIVITY FOR WHIC H APPELLANT HAS CLAIMED DEDUCTION U/S 80JJA. THE LIST OF MACHINERY SUBMITTED BY THE APPELLANT DOES NOT FIGURE ANY STERILIZER, FERMENTER ETC TO SUSTAIN THE CLAIM OF THE ASSESSEE FOR PRODUCTION ACTIVITY. IT W AS ALSO OBSERVED BY ASSESSING OFFICER THAT THE TWO PARTIES BEING SAMIKS HA MARKETING PVT LIMITED(SMPL) AND VISION TRADERS FROM APPELLANT COM PANY HAS MADE ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 15 - PURCHASES ARE NOT REGISTERED WITH VAT AUTHORITY WHI CH CREATE DOUBT FOR GENUINENESS OF PURCHASE. THE APPELLANT HAS SUBMITTE D ONLY FEW BILLS OF PURCHASES AND LEDGER ACCOUNTS SUBMITTED BY APPELLAN T DO NOT CONTAIN PAN, ADDRESS OF THE PARTY OR VAT NO. THE APPELLANT HAS FAILED TO PROVE ACTUAL DELIVERY OF GOODS. THE CHEQUE OF RS 29,00,00 0/- ISSUED BY APPELLANT TO SMPL AGAINST PURCHASES WERE ULTIMATELY DEPOSITED IN BANK ACCOUNT OF M/S JATARAM COMMODITIES PVT LIMITED (JCP L) WHICH ALSO PROVE THAT SMPL IS PAPER ENTITY. THUS ASSESSING OFF ICER MADE DISALLOWANCE U/S 80JJA FOR RS 1,91,83,323/-. 2.4.1. ON THE OTHER HAND, APPELLANT HAS ARGUED THAT THE M ANUFACTURING PROCESS OF VARIOUS AGRO-PRODUCTS E.G. WHEAT FLOUR, GROUNDNUT, MAIZE, ETC. EVOLVES CRUSHING AND THEN SEPARATION FROM OTHE R UN-WANTED MATERIAL WHICH ARE WASTE. THESE WASTE MATERIALS CON SIST OF RESIDUAL GRAIN GRITS, SOME UN-WANTED PROTEINS, FIBRES (WET B RAN), SEEDS, ETC AND THESE WASTE MATERIAL IS PURCHASED BY APPELLANT AND BIOLOGICAL PROCESSES IS CARRIED OUT WITH THE HELP OF FERMENTAT ION TO PRODUCE THESE ENZYMES (BIOLOGICAL AGENTS) WHICH ARE BIOCATALYST A ND ARE RICH IN ENERGY VALUES. BIOFEEDS HELP IN IMPROVING THE DIGES TION IN ANIMALS AND POULTRY. SO FAR AS ARGUMENT OF AO THAT WASTES PURCH ASED BY APPELLANT ARE NOT BIODEGRADABLE, APPELLANT HAS ARGUED THAT MA TERIAL PURCHASED BY IT ARE AGRICULTURAL WASTE OR BY-PRODUCTS FROM AGRO PROCESSING INDUSTRY WHICH ARE CAPABLE OF BEING DECOMPOSED IN NATURE WIT HOUT CREATING ANY DAMAGE TO NATURE PRODUCE BIOLOGICAL AGENT 'BIOFEEDS ' AND THEY ARE NUTRITION BOOSTER DERIVED BY A COMBINATION OF VARIO US BIOLOGICAL PROCESSES FOR THE USE IN ANIMAL HEALTHCARE INDUSTRY . THE APPELLANT HAS ALSO SUBMITTED ENTIRE MANUFACTURING PROCESS OF BIOL OGICAL AGENTS ALONG WITH CERTIFICATE FROM HIGHLY QUALIFIED BIO-TECHNOLO GISTS IN SUPPORT OF ITS CLAIM THAT AS IT HAS SATISFIED ALL THE CONDITIONS L AID DOWN U/S 80JJA, IT IS ENTITLED TO SUCH DEDUCTION AS CLAIMED IN RETURN OF INCOME. WITH REGARDS TO OBSERVATION OF ASSESSING OFFICER THAT BO TH APPELLANT AND ANIL LIMITED PRODUCES BIO FEEDS BUT RAW MATERIAL US ED FOR SUCH PRODUCTION ARE DIFFERENT, APPELLANT HAS ARGUED THAT BOTH THE COMPANIES PRODUCES DIFFERENT TYPES OF BIO FEEDS HENCE RAW MAT ERIAL USED BY BOTH PARTIES CANNOT BE COMPARED. WITH REGARDS TO OBSERVA TION OF ASSESSING OFFICER THAT BOILER REQUIRES FOR PRODUCTION PROCESS IS NOT OWNED BY APPELLANT, APPELLANT HAS ARGUED THAT SUCH ASSETS AR E OWNED BY ANIL LIMITED AND FOR SAME, UTILITY SERVICE CHARGES OF RS 95.22 LACS IS ALSO PAID BY APPELLANT. THE APPELLANT HAS ALSO SUBMITTED THAT PARTIES FROM WHOM PURCHASES WERE MADE WERE DEALING WITH AGRO PRO DUCTS WHICH DO NOT REQUIRE VAT REGISTRATION. THE APPELLANT HAS ALS O SUBMITTED THAT IT HAS SUBMITTED SAMPLE COPIES OF INVOICES ALONG WITH DELIVERY CHALLANS WHICH INCLUDES MODE OF TRANSPORT, TRUCK NO ETC, LED GER ACCOUNT, CONFIRMATION OF PARTIES TO PROVE GENUINENESS OF PUR CHASES AND EVEN ASSESSING OFFICER HAS ACCEPTED BOOK RESULTS WHILE P ASSING THE ASSESSMENT ORDER. WITH REGARDS TO OBSERVATION OF AS SESSING OFFICER THAT SMPL IS NOT REGISTERED WITH ROC OF COMPANIES, APPEL LANT HAS SUBMITTED NAME OF SMPL HAS BEEN CHANGED TO JCPL AND NOT JALAR AM TRADING PVT. LIMITED AS OBSERVED BY ASSESSING OFFICER AND EVEN T HESE DETAILS ARE AVAILABLE ON WEB SITE OF INCOME TAX DEPARTMENT. WIT H REGARDS TO OBSERVATION OF ASSESSING OFFICER THAT CHEQUE ISSUED TO SMPL AGAINST PURCHASES ARE DEPOSITED IN BANK ACCOUNT OF JCPL, AP PELLANT SUBMITTED THAT WHEN BANK SUBMITTED DETAILS REGARDS CLEARANCE OF CHEQUE, NAME OF ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 16 - SMPL WAS CHANGED TO JCPL HENCE SUCH DETAILS WERE PR OVIDED BY BANK HENCE SAME CANNOT ADVERSELY AFFECT DISALLOWANCE U/S 80JJA OF THE ACT. 2.4.2. ON CAREFUL CONSIDERATION OF ENTIRE FACTS, IT IS OB SERVED THAT ISSUE REGARDING DISALLOWANCE UNDER SECTION 80JJA WAS RAIS ED IN A.Y. 2010- 11 BEING THE FIRST YEAR OF THE CLAIM AND DISALLOWAN CE MADE BY ASSESSING OFFICER WAS DELETED BY UNDERSIGNED VIDE ORDER DATED 27/01/2016 IN APPEAL NO. 66/CIT(A)-1 AND HELD AS UNDER: 2.6. ON CAREFUL CONSIDERATION OF ENTIRE FACTS AS DISCUS SED HEREIN ABOVE, DEDUCTION U/S 80JJA IS AVAILABLE TO A SSESSES WHEN IT SATISFIES FOLLOWING TWIN CONDITIONS:- (I) PROFITS AND GAINS SHOULD BE DERIVED FROM THE BUSINESS OF COLLECTING AND PROCESSING OR TREATING O F BIO- DEGRADABLE WASTE, AND (II) PROFIT AND GAIN SHOULD BE OUT OF ACTIVITY BEIN G GENERATING POWER OR PRODUCING BIO FERTILIZERS, BIO- PESTICIDES OR OTHER BIOLOGICAL AGENTS OR FOR PRODUC ING BIO- GAS OR MAKING PELLETS OR BRIQUETTES FOR FUEL OR ORG ANIC MANURE. IT IS FURTHER OBSERVED THAT TERM BIO-DEGRADABLE WAS TE IS NOT DEFINED IN INCOME TAX ACT. HOWEVER, AS PER OXFORD D ICTIONARY, WASTE MEANS 'UNWANTED OR UNUSABLE MATERIAL, SUBSTAN CES, OR BY- PRODUCTS' AND BIODEGRADABLE AS PER COLLINS DICTIONA RY MEANS CAPABLE OF BEING DECOMPOSED BY BACTERIA OR OTHER LI VING ORGANISMS AND THEREBY AVOIDING POLLUTION'. EVEN AS PER DICTIONARY OF WIKIPEDIA, BIODEGRADABLE WASTE IS A T YPE OF WASTE WHICH CAN BE BROKEN DOWN, IN A REASONABLE AMOUNT OF TIME, INTO ITS BASE COMPOUNDS BY MICRO-ORGANISMS AND OTHER LIV ING THINGS, REGARDLESS OF WHAT THOSE COMPOUNDS MAY BE. THE AO H AS OBSERVED THAT MATERIAL PURCHASED BY APPELLANT AND F URTHER TREATED ARE NOT BIODEGRADABLE BUT HAS NOT GIVEN ANY REASONING WHY SUCH WASTE IS NOT BIODEGRADABLE. THE AO HAS REF ERRED TO DEFINITION OF BIODEGRADABLE WASTE AS PER DEFINITION OF EUROPEAN COMMISSION FOR ENVIRONMENT BUT THE SAID DEFINITION IS ACTUALLY FOR BIO WASTE AND SUCH DEFINITION IS GIVEN IN WEB S ITE OF ECFE WHICH READS AS UNDER: ' BIO-WASTE IS DEFINED AS BIODEGRADABLE GARDEN AND PARK WASTE, FOOD AND KITCHEN WASTE FROM HOUSEHOLDS, RESTAURANTS , CATERERS AND RETAIL PREMISES, AND COMPARABLE WASTE FROM FOOD PROCESSING PLANTS. IT DOES NOT INCLUDE FORESTRY OR AGRICULTURA L RESIDUES, MANURE, SEWAGE SLUDGE, OR OTHER BIODEGRADABLE WASTE SUCH AS NATURAL TEXTILES, PAPER OR PROCESSED WOOD. IT ALSO EXCLUDES THOSE BY-PRODUCTS OF FOOD PRODUCTION THAT NEVER BECOME WA STE.' IT CAN BE SEEN FROM ABOVE DEFINITION THAT BIODEGRAD ABLE WASTE IS DIFFERENT THAN BIO-WASTE AND BIO WASTE DOES NOT INC LUDE BIODEGRADABLE WASTE HENCE, RELIANCE ON SUCH DEFINIT ION WHILE DENYING DEDUCTION U/S 80JJA CANNOT BE PLACED. THE A PPELLANT HAS USED WHEAT BRAN, GROUND NUT CAKE, SOYA CAKE, COM ME AL, GLUTEN, HUSK ETC DURING PRODUCTION PROCESS OF ARTICLES AND THINGS ELIGIBLE ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 17 - FOR DEDUCTION U/S 80JJA AND SUCH WASTE ARE MAINLY D ERIVED FROM AGRO PROCESSING INDUSTRY WHICH ARE CAPABLE OF BEING DECOMPOSED IN NATURE AND SQUARELY CONSIDERED AS BIODEGRADABLE WASTE AS PER DEFINITION OF BIODEGRADABLE GIVEN IN DICTIONARY OF COLLINS. 2.7. DURING THE COURSE OF ASSESSMENT PROCEEDING AS WELL AS APPELLATE PROCEEDINGS, APPELLANT HAS SUBMITTED PROD UCTION PROCESS CARRIED OUT BY IT AND SUCH PROCESS HAS NOT BEEN FOUND TO BE INCORRECT BY AO OR NO DEFECTS HAVE BEEN POINTED OUT BY HIM. IT IS FURTHER OBSERVED THAT APPELLANT HAS TREATED ABOV E REFERRED BIODEGRADABLE WASTE INTO BIOLOGICAL PROCESSES WITH THE HELP OF FERMENTATION TO PRODUCE THESE ENZYMES (BIOLOGICAL A GENTS) WHICH ARE BIOCATALYST. SPECIFIC MICROORGANISMS ARE ADDED IN THE FERMENTATION PROCESS WHICH AT SPECIFIC CONTROLLED P ARAMETERS OF PH, TEMPERATURE, AERATION AND TIME PRODUCES SPECIFI C ENZYMES. FOR EACH ENZYME A SPECIFIC MICROORGANISM IS USED WI LL CHANGING THE RAW MATERIAL (BIO-DEGRADABLE WASTE) PROPORTIONS . ENZYMES HELP IN IMPROVING THE ANY METABOLIC REACTION IN VAR IOUS INDUSTRIAL APPLICATIONS. THEY HELP IN SPEEDING UP T HE BREAKING DOWN THE COMPLEX COMPOUNDS INTO SIMPLER COMPOUNDS T HUS HELPING TO AVOID USING CONVENTIONAL AND HAZARDOUS C HEMICALS WHICH ARE HARMFUL TO THE ENVIRONMENT THE APPELLANT HAS MANUFACTURED BIO DEGRADABLE AGENTS LIKE BIOFEED S, BIOFEED-SC 6, BIOFEED ENZ, ETC., AND THESE BIOLOGICAL AGENTS H AVE HELPED IN IMPROVING THE DIGESTION IN ANIMALS AND POULTRY. THE Y HAVE HELPED IN BREAKING DOWN THE COMPLEX FEEDS INTO SIMP LER COMPOUNDS THUS MAKING IT EASY FOR THE ANIMAL /POULT RY TO GET THE EXTRAENERGY WHICH IS LOCKED IN THE COMPLEX FEEDS. T HE BIOLOGICAL AGENTS PRESENT IN BIOFEEDS ARE ALSO USED TO REPLACE CHEMICAL BASED ANTIBIOTICS IN ANIMALS AND POULTRY. IN ENTIRE PROCESS, APPELLANT HAS PRODUCED BIOLOGICAL AGENTS AND DEDUCT ION U/S 80JJA SIMPLY STATE THAT APPELLANT SHOULD PRODUCE OR MANUFACTURE BIOLOGICAL AGENTS AND AO HAS NOT DISPROVED THE CONT ENTION OF APPELLANT THAT ITEMS MANUFACTURED BY APPELLANT ARE NOT BIOLOGICAL AGENTS. 2.8. IT IS FURTHER OBSERVED THAT DURING THE COURSE OF A SSESSMENT PROCEEDINGS FOR A. Y. 2011-12, APPELLANT HAS SUBMIT TED CERTIFICATE OF QUALIFIED BIO-TECHNOLOGIST WHEREIN H E HAS SUBMITTED AS UNDER: 'THIS IS TO CERTIFY THAT OUR R&D IS RECOGNISED BY DEPARTMENT OF SCIENCE AND INDUSTRIAL RESEARCH (DSIR ). WE ARE WELL AWARE OF APPLICATIONS AND MANUFACTURING PROCESSES OF THE PRODUCTS MANUFACTURES AT M/S. ANIL BIOPLUS LTD (ABL). ABL ALSO PRODUCES VARIOUS BIOLOG ICAL AGENTS SUCH AS BIOFEED S, BIOFEED SC-6, BIOFEED ENZ AND PHYTASE ENZYMES. THESE PRODUCTS ARE BIOLOGICALLY AC TIVE IN NATURE. THE BIOLOGICAL AGENTS FIND APPLICATIONS IN DEGRADATION OF VARIOUS COMPLEX MATERIALS SUCH AS PROTEINS, CARBOHYDRATES, CELLULOSIC MATERIALS, FATS , ETC. DURING THE DEGRADATION PROCESS, THESE BIOLOGICAL AG ENTS BREAK COMPLEX MATERIALS INTO SIMPLE MOLECULES. THES E SIMPLE MOLECULES ARE READILY ABSORBED BY ANIMALS, B IRDS, ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 18 - SOIL, PLANTS, ENVIRONMENT, ETC. THESE SIMPLE MOLECU LES ACT AS NUTRIENTS AND FIND VARIOUS APPLICATIONS. TO PROD UCE ABOVE BIOLOGICAL AGENTS, VARIOUS BIODEGRADABLE AGRICULTURAL WASTE OR BIO-DEGRADABLE WASTE OR BY-PR ODUCTS FROM AGRO PROCESSING INDUSTRY ARE USED. THESE ARE W HEAT BRANCH, GROUNDNUT CAKE, SOYA CAKE, CORN MEAL GLUTEN , CRUDE ENZYMES AND PHYTASE. USING BIOTECH PROCESS, T HESE MATERIALS ARE PROCESSED TOGETHER WITH SEED BACTERIA L CULTURE AT REQUIRED PROCESSING CONDITIONS.' THE ABOVE TECHNICAL CERTIFICATE ISSUED BY CONCERNED PERSON WAS NOT FOUND TO BE INCORRECT BY AO AND AO HAS BROUGHT ANY OTHER EVIDENCES INCLUDING CERTIFICATE OF TECHNICAL PERSON TO SUBSTANTIATE ITS CLAIM THAT WASTE PROCURED BY APPEL LANT ARE NOT BIODEGRADABLE WASTE OR ARTICLES PRODUCED BY IT ARE NOT BIOLOGICAL AGENTS. IT IS PERTINENT TO NOTE THAT EVEN CIRCULAR NO 772 DATED 23/12/1998 WHEREIN INTENTION OF INTRODUCING PROVISI ONS OF SECTION 80JJA HAS BEEN EXPLAINED, IT HAS BEEN CATEG ORICALLY STATED THAT SECTION IS INTRODUCED TO PROMOTE ACTIVI TIES LIKE RECYCLING OF WASTE WHICH COULD IN TURN BE CONVERTED INTO USEFUL RESOURCES. THE ACTIVITIES CARRIED OUT BY APPELLANT AS STATED HEREIN ABOVE CLEARLY SUGGEST THAT IT HAS PRODUCED B IOLOGICAL AGENTS WHICH ARE RICH IN NUTRITIONAL VALUE AND SAME IS GENERATED OUT OF BIODEGRADABLE WASTE HENCE PROFIT AND GAINS E ARNED FORM SUCH PROCESS IS ENTITLED TO DEDUCTION U/S 80JJA OF THE ACT. REFERENCE IS ALSO DRAWN TO DECISION OF HON'BLE SUPR EME COURT IN THE CASE OF BAJAJ TEMPO LTD. V. CIT [1992] 196 ITR 188 WHEREIN IT WAS HELD THAT A PROVISION IN A TAXING STATUTE GR ANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHO ULD BE CONSTRUED LIBERALLY. SINCE THE PROVISIONS INTENDED FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY THE RESTRICTION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE SECTION AND NOT TO FRUSTRATE IT. CONSIDERING TH E FACTS OF THE CASE AS DISCUSSED HEREIN ABOVE, IT IS HELD THAT APP ELLANT HAS PRODUCED BIOLOGICAL AGENTS AFTER UTILIZING BIODEGRA DABLE WASTE AND PROFITS AND GAINS EARNED FROM SUCH ACTIVITY ENT AILS APPELLANT DEDUCTION U/S 80JJA OF THE ACT. 2.9. SO FAR AS ISSUE OF ALLOCATION OF EXPENDITURE BETWE EN ACTIVITIES ELIGIBLE FOR DEDUCTION U/S 80JJA AND OTH ER ACTIVITIES, IT IS OBSERVED THAT APPELLANT HAS CLAIMED PURCHASES ON ACTUAL BASIS AND SAME CANNOT BE ALLOCATED ON THE BASIS OF TURNOV ER BASIS. SO FAR AS ALLOCATION OF OTHER EXPENDITURE, IT IS OBSER VED THAT WHEN ASSESSEE CAN ALLOCATE PARTICULAR EXPENDITURE TO UNI T TO WHICH IT ATTRIBUTES ON SCIENTIFIC BASIS, THERE IS NO NEED TO ALLOCATE EXPENDITURE ON TURNOVER BASIS AS OBSERVED BY A.O. T HE ALLOCATION OF EXPENDITURE ON TURNOVER BASIS NEED TO BE THE LAST RESORT FOR ALLOCATING EXPENDITURE AND SAME CAN BE A DOPTED WHEN OTHER SCIENTIFIC FORMULA IS NOT AVAILABLE HENCE ARG UMENT OF AO FOR ALLOCATING EXPENDITURE ON TURNOVER BASIS CANNOT BE ACCEPTED. THE APPELLANT HAS ALLOCATED POWER & FUEL AND STORES & SPARES CONSUMPTION ON ACTUAL BASIS AND THIS ALLOCATION IS NOT FOUND TO BE INCORRECT BY AO. HOWEVER, IT IS OBSERVED THAT AP PELLANT HAS NOT ALLOCATED INTEREST & FINANCE CHARGES AS WELL RE SEARCH & DEVELOPMENT EXPENDITURE TO SALES PERTAINING TO 80JJ A ACTIVITY ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 19 - WHICH NEED TO BE ALLOCATED TO SUCH ACTIVITY ON TURN OVER BASIS. THE APPELLANT HAS CLAIMED SUCH EXPENDITURE AT RS 41 .49 LACS AND AMOUNT ALLOCATED TO 80JJA SALES WOULD BE 24.06 LACS HENCE REVISED PROFIT & GAINS ELIGIBLE FOR DEDUCTION U/S 8 0JJA WOULD BE AT RS 1,06,90,000/- AS AGAINST RS 1,30,95,557/- AS CLAIMED IN RETURN OF INCOME. THUS AO IS DIRECTED TO ALLOW DEDU CTION U/S 80JJA AT RS 1,06,90,000/- AND THE RELATED GROUND OF APPEAL IS PARTLY ALLOWED '. 2.4.3. IT IS PERTINENT TO NOTE THAT WHILE MAKING DISALLOW ANCE UNDER SECTION 80JJA IN YEAR UNDER CONSIDERATION ASSESSING OFFICER HAS RAISED CERTAIN OBJECTIONS WHICH ARE DEALT WITH AS UNDER: (I) THE ASSESSING OFFICER HAS CONTENDED THAT BOTH APPELLANT AND ANIL LIMITED ARE PRODUCING BIOFEED BUT RAW MATERIAL CONSUMED IN SUCH PROCESS ARE DIFFERENT, WHICH CREATES DOUBT FOR APPELLANT'S CLAIM FOR DEDUCTION UNDER SECTION 80JJA. THIS CONTE NTION OF ASSESSING OFFICER CANNOT BE ACCEPTED BECAUSE ASSESS ING OFFICER HAS NOT BROUGHT OUT ANY EVIDENCES WHICH CAN SUGGEST THAT RAW MATERIAL USED BY APPELLANT IS NOT REQUIRED IN THE P RODUCTION OF BIOLOGICAL AGENT BEING BIOFEEDS. THOUGH BOTH THE CO MPANIES PRODUCE BIOFEEDS, BOTH ARE ENGAGED IN PRODUCTION OF DIFFERENT TYPES OF BIOFEEDS WHICH IS EVIDENT FROM DETAILS OF FINISHED GOODS PRODUCED BY APPELLANT AS WELL AS ANIL LIMITED FROM SUBMISSION DATED 23RD DECEMBER, 2013. THE APPELLANT IS PRODUCI NG BIOFEED S, BIOFEED ENZ, ETC., WHEREAS ANIL LIMITED IS PRODU CING BIOFEED ACTIVE, BIOFEED PLUS, ETC. (II) THE OBSERVATION OF ASSESSING OFFICER THAT APP ELLANT DOES NOT HAVE BOILER/FURNACE FOR GENERATING 121 DEGREE CELSI US AND EVEN STERILIZER OR FERMENTER ARE NOT AVAILABLE WITH APPE LLANT WHICH IS REQUIRED IN PRODUCTION PROCESS. EVEN THIS OBSERVATI ON OF ASSESSING OFFICER CANNOT BE ACCEPTED AS NO SPECIFIC SHOW CAUSE NOTICE HAS BEEN ISSUED WITH REGARDS TO SUCH OBSERVA TION IN ASSESSMENT ORDER. IT IS PERTINENT TO NOTE THAT APPE LLANT IS USING FIXED ASSETS OWNED BY ANIL LIMITED FOR ITS PRODUCTI ON PROCESS AND IT HAS BEEN PAYING UTILITY CHARGES OF RS. 95.22 LAC S IN YEAR UNDER CONSIDERATION AND SUCH CHARGES INCLUDE CHARGES FOR USAGE OF FIXED ASSETS AND SUCH DETAILS ARE ALREADY SUBMITTED BY APPELLANT AT CLAUSE - 18 OF TAX AUDIT REPORT. (III) THE ASSESSING OFFICER HAS ALSO OBSERVED SMPL AND VISION TRADERS FROM WHOM APPELLANT HAS PURCHASED GOODS ARE NOT REGISTERED WITH VAT AUTHORITIES. IT IS OBSERVED THA T AS BOTH PARTIES ARE DEALING IN AGRO-PRODUCTS, THEY ARE NOT REQUIRED TO OBTAIN VAT NUMBER HENCE NON-REGISTRATION WITH VAT A UTHORITIES BY THOSE PARTIES DOES NOT MEAN THAT APPELLANT IS NO T ENTITLED FOR DEDUCTION UNDER SECTION 80JJA OF THE ACT. (IV) THE ASSESSING OFFICER HAS A/SO OBSERVED THAT S MPL IS NOT REGISTERED WITH ROC BUT WHEN DETAILS OF SUCH COMPAN Y ARE SEARCHED IT WAS FOUND THAT SAME IS REGISTERED IN TH E NAME OF JALARAM TRADING PVT, LIMITED WHICH IS A DORMANT COM PANY. THE APPELLANT HAS SUBMITTED DETAILS REGARDING CHANGE OF NAME OF SMPL TO JALARAM COMMODITIES PVT. LIMITED FROM 20TH JULY, ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 20 - 2011. THESE DETAILS ARE CONSIDERED AND IT HAS BEEN FOUND THAT NAME OF SMPL WAS CHANGED AS JCPL AND NOT JALARAM TR ADING PVT. LIMITED. EVEN WEBSITE OF INCOME TAX DEPARTMENT WHEREIN DETAILS OF PAN CAN BE OBTAINED IN THE SECTION 'KNOW YOUR JURISDICTION' CLEARLY SHOWS THAT PAN IS IN THE NAME OF JCPL FORMERLY KNOWN AS SMPL THESE FACTS CLEARLY SUGGEST THAT ASSESSING OFFICER HAS MADE FALLACIOUS OBSERVATION T HAT SMPL IS NOT REGISTERED WITH ROC OR IS A DORMANT COMPANY. (V) THE ASSESSING OFFICER HAS A/SO OBSERVED THAT CH EQUES OF RS.29,00,000/- ISSUED TO SMPL IS ULTIMATELY DEPOSIT ED IN JCPL WHICH PROVES THAT SMPL IS PAPER COMPANY. IT IS PERT INENT TO NOTE THAT BOTH SMPL AND JCPL ARE SAME COMPANY AS OBSERVE D IN PRECEDING PARA HENCE OBSERVATION OF ASSESSING OFFIC ER THAT SMPL IS PAPER COMPANY IS INCORRECT. IT IS OBSERVED THAT APPELLANT HAS SUBMITTED COPIES OF BANK STATEMENTS W HICH CLEARLY INDICATE THAT PAYMENT OF RS. 29,00,000/- IS MADE TO SMPL ONLY. EVEN APPELLANT HAS SUBMITTED COPIES OF BANK STATEME NTS OF SMPL WHICH CLEARLY REFLECT THESE TRANSACTIONS. THE ASSES SING OFFICER HAS REPRODUCED SCANNED COPY OF BANK STATEMENT IN AS SESSMENT ORDER WHEREIN ABOVE PAYMENTS ARE REFLECTED IN BANK ACCOUNT HELD IN THE NAME OF JCPL IT IS PERTINENT TO NOTE TH AT BANK ACCOUNT OF SMPL AND JCPL SHOWS SAME BANK ACCOUNT NU MBER WHICH FURTHER PROVES THAT NAME OF SMPL IS CHANGED T O JCPL AS ASSESSING OFFICER HAS CALLED FOR DETAILS DURING ASS ESSMENT PROCEEDINGS, I.E. DURING FY 2013-14, NAME OF SMPL W AS ALREADY CHANGED TO JCPL HENCE DATA BASE OF BANK SHOWS NAME AS JCPL. THUS, THE ENTIRE OBSERVATION OF ASSESSING OFFICER F OR MAKING IMPUGNED DISALLOWANCE ON THE GROUND THAT SMPL IS PA PER COMPANY IS FACTUALLY INCORRECT. (VI) THE ASSESSING OFFICER HAS ALSO OBSERVED THAT APPELLANT HAS FAILED TO PROVIDE PURCHASE BILLS/DELIVERY CHALLANS IN ORDER TO PROVE PURCHASES MADE BY IT AS GENUINE PURCHASES. TH E REPLY FILED BY APPELLANT TO ASSESSING OFFICER IS REPRODUCED AT PARA - 3.10(D) IN APPELLANT'S SUBMISSION WHEREIN APPELLANT HAS CAT EGORICALLY STATED THAT SAMPLE COPIES OF INVOICES ALONG WITH DE LIVERY CHALLANS ARE PRODUCED AND IF FURTHER DETAILS ARE RE QUIRED, SAME CAN BE SUBMITTED. HOWEVER, ASSESSING OFFICER HAS NO T ASKED THE APPELLANT TO SUBMIT FURTHER COPIES OF BILLS HENCE H E IS INCORRECT IN OBSERVING THAT REQUIRED DETAILS WERE NOT PRODUCE D. THE APPELLANT HAS ALSO SUBMITTED COPIES OF CONFIRMATION S OF PARTIES FROM WHOM GOODS ARE PURCHASED AND EVEN SMPL AND ANI L TRADECOM ARE GROUP COMPANIES OF APPELLANT COMPANY A ND SALES MADE TO APPELLANT ARE OFFERED FOR TAXATION IN BOTH THE COMPANIES HENCE PURCHASES CANNOT BE TREATED AS BOGUS PURCHASE S. IT IS PERTINENT TO NOTE THAT THOUGH WHILE MAKING DISALLOW ANCE UNDER SECTION 80JJA, ASSESSING OFFICER HAS CREATED DOUBT OF NON- GENUINE PURCHASES, HE HAS ACCEPTED BOOK RESULTS SHO WN BY APPELLANT WHILE PASSING ASSESSMENT ORDER AND EVEN N O DISALLOWANCE REGARDING NON-GENUINE PURCHASES OF INF LATED PURCHASES IS MADE WHICH PROVES THAT ASSESSING OFFIC ER WAS NO JUSTIFIED IN MAKING OBSERVATION REGARDING ALLEGED B OGUS PURCHASES ONLY WHILE MAKING DISALLOWANCE OF DEDUCTI ON UNDER SECTION 80JJA. ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 21 - CONSIDERING THE FACTS DISCUSSED HEREIN ABOVE, ASSES SING OFFICER IS NOT JUSTIFIED IN MAKING DISALLOWANCE UNDER SECTI ON 80JJA. 2.4.4. IT IS PERTINENT TO NOTE THAT ASSESSING OFFICER HAS NOT MADE ANY ALTERNATE DISALLOWANCE UNDER SECTION 80JJA ON ACCOU NT OF NON- ALLOCATION OF EXPENDITURE BETWEEN SALES ELIGIBLE FO R DEDUCTION UNDER SECTION 80JJA AND OTHER SALES. HOWEVER, THIS ISSUE WAS DEALT WITH BY UNDERSIGNED IN A. Y. 2010-11 AS UNDER: 'SO FAR AS ISSUE OF ALLOCATION OF EXPENDITURE BETWE EN ACTIVITIES ELIGIBLE FOR DEDUCTION U/S 80JJA AND OTHER ACTIVITI ES, IT IS OBSERVED THAT APPELLANT HAS CLAIMED PURCHASES ON AC TUAL BASIS AND SAME CANNOT BE ALLOCATED ON THE BASIS OF TURNOV ER BASIS. SO FAR AS ALLOCATION OF OTHER EXPENDITURE, IT IS OBSER VED THAT WHEN ASSESSEE CAN ALLOCATE PARTICULAR EXPENDITURE TO UNI T TO WHICH IT ATTRIBUTES ON SCIENTIFIC BASIS, THERE IS NO NEED TO ALLOCATE EXPENDITURE ON TURNOVER BASIS AS OBSERVED BY AO. TH E ALLOCATION OF EXPENDITURE ON TURNOVER BASIS NEED TO BE LAST RE SORT FOR ALLOCATING EXPENDITURE AND SAME CAN BE ADOPTED WHEN OTHER SCIENTIFIC FORMULA IS NOT AVAILABLE HENCE ARGUMENT OF AO FOR ALLOCATING EXPENDITURE ON TURNOVER BASIS CANNOT BE ACCEPTED. THE APPELLANT HAS ALLOCATED POWER & FUEL AND STORES & S PARES CONSUMPTION ON ACTUAL BASIS AND THIS ALLOCATION IS NOT FOUND TO BE INCORRECT BY AO. HOWEVER, IT IS OBSERVED THAT AP PELLANT HAS NOT ALLOCATED INTEREST & FINANCE CHARGES AS WELL RE SEARCH & DEVELOPMENT EXPENDITURE TO SALES PERTAINING TO 80JJ A ACTIVITY WHICH NEED TO BE ALLOCATED TO SUCH ACTIVITY ON TURN OVER BASIS. THE APPELLANT HAS CLAIMED SUCH EXPENDITURE AT RS 41 .49 LACS AND AMOUNT ALLOCATED TO 80JJA SALES WOULD BE 24.06 LACS HENCE REVISED PROFIT & GAINS ELIGIBLE FOR DEDUCTION U/S 8 0JJA WOULD BE AT RS 1,06,90,000 AS AGAINST RS 1,30,95,557 AS CLAI MED IN RETURN OF INCOME. THUS AO IS DIRECTED TO ALLOW DEDUCTION U /S 80JJA AT RS 1,06,90,000 AND THE RELATED GROUND OF APPEAL IS PARTLY ALLOWED .' 2.4.5. IT IS OBSERVED THAT EVEN IN YEAR UNDER CONSIDERATI ON APPELLANT HAS NOT ALLOCATED FINANCIAL CHARGES AS WELL AS RESE ARCH AND DEVELOPMENT EXPENDITURE TO SALES ELIGIBLE FOR 80JJA HENCE THESE EXPENDITURE ARE ALLOCATED IN THE RATIO OF TURNOVER AS HELD IN A.Y. 2010- 11. THE TOTAL EXPENDITURE DEBITED IN BOOKS OF ACCOU NT IS RS.54,95,674/- AND ALLOCATION TO SALES UNDER SECTION 80JJA WORKS O UT TO R$. 37,68,037/- AND TO THAT EXTENT DEDUCTION CLAIMED IN RETURN OF INCOME IS REDUCED. THUS AO IS DIRECTED TO ALLOW DEDUCTION U/S 80JJA AT RS 1,54,75,286/- AND THE RELATED GROUND OF APPEAL IS PARTLY ALLOWED . 6. AGGRIEVED BY THE PARTIAL RELIEF GRANTED IN FAVOU R OF THE ASSESSEE, THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL TO IMPUGN THE ORDER OF CIT(A). 7. WHEN THE MATTER WAS CALLED FOR HEARING, NONE APP EARED FOR THE ASSESSEE. REPEATED ATTEMPTS WERE MADE TO SERVE THE NOTICE ON THE ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 22 - ASSESSEE. AS PER THE COMMUNICATION DATED 29.01.202 0 FROM THE DEPARTMENT, IT WAS NOTICED THAT THE PREMISES OF THE ASSESSEE ARE FOUND CLOSED AND THEREFORE, THE NOTICE WAS SERVICED THROU GH AFFIXTURE. IN THE CIRCUMSTANCES, THE MATTER WAS PROCEEDED EX PARTE IN THE ABSENCE OF ASSESSEE. 8. THE LEARNED DR FOR THE REVENUE RELIED UPON THE O RDER OF THE AO. 9. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER O F THE AO AND APPELLATE ORDER OF CIT(A). THE CLAIM OF DEDUCTION UNDER S.80JJA OF THE ACT ON PROCESSING OF BIODEGRADABLE WASTE FOR GENERA TION OF BIOFEEDS (BIOLOGICAL AGENTS) IS IN QUESTION. THE CIT(A) HAS FOUND MERIT IN THE CLAIM OF DEDUCTION ON PRINCIPLES. THE CIT(A) HAS T AKEN NOTE OF THE SUBMISSIONS OF THE ASSESSEE TOWARDS PROCESS OF PROD UCTION OF BIOFEEDS IN THE NATURE OF BIOLOGICAL AGENTS FROM BIODEGRADABLE WASTE, INGREDIENTS PURCHASED FOR PROCESSING AND TREATING WASTE, DETAIL S OF MACHINERY USED IN PRODUCTION, DETAILS OF PURCHASE AND SALE MADE FROM VARIOUS PARTIES ETC. THE CIT(A) FOUND MERIT IN THE CASE OF THE ASSESSEE FOR ELIGIBILITY OF DEDUCTION UNDER S.80JJA OF THE ACT FROM ON PROFITS ARISING FROM ACTIVITY OF COLLECTION AND PROCESSING OF BIODEGRADABLE WASTE IN ORDER TO GENERATE/MANUFACTURE BIOFEEDS/BIOLOGICAL AGENTS WHI CH ARE ESSENTIALLY NUTRITION BOOSTER DERIVED BY A COMBINATION OF VARIO US BIOLOGICAL PROCESSES FOR THE USE IN ANIMAL HEALTHCARE INDUSTRY . AS PER PROCESS ADOPTED, UNWANTED WASTE ARE FURTHER TREATED THROUGH A SERIES OF BIOLOGICAL PROCESS WITH THE HELP OF BIOTECHNOLOGY T O PRODUCE BIOFEEDS WHICH ARE RICH IN ENERGY VALUES. BIOFEEDS ARE STAT ED TO HELP IN IMPROVING THE DIGESTION IN ANIMALS AND POULTRY AND THE BIOLOGICAL AGENTS PRESENT IN BIOFEEDS ARE STATED TO BE USED TO REPLAC E CHEMICAL BASED ANTIBIOTICS IN ANIMAL AND POULTRY. ON THESE FACTS, THE CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE UNDER S. 80JJA O F THE ACT ON FIRST PRINCIPLE BUT RE-ALLOCATED A PART OF EXPENDITURE AS CONSIDERED ATTRIBUTABLE TO THE ACTIVITY DERIVED FROM THE BUSINESS OF COLLEC TING AND PROCESSING OR TREATING BIODEGRADABLE WASTE FOR PRODUCTION OF BIOL OGICAL AGENTS. OWING TO REALLOCATION OF EXPENSES, THE CIT(A) RESTRICTED THE CLAIM TO THE EXTENT ITA NO. 902/AHD/16 [DCIT VS. M/S. ANIL BIOPLUS LTD.] A.Y. 2011-12 - 23 - OF RS.1.54 CRORES AS AGAINST THE CLAIM OF THE ASSES SEE AMOUNTING TO RS.1.91 CRORE. WE FIND CONSIDERABLE SUBSTANCE IN T HE PROCESS OF REASONING ADOPTED BY THE CIT(A) WHILE CONCLUDING TH E ISSUE IN FAVOUR OF THE ASSESSEE. THE CIT(A), IN OUR VIEW, HAS DEALT W ITH THE ISSUE OBJECTIVELY AND HENCE DOES NOT WARRANT INTERFERENCE . THE REVENUE HAS FAILED TO REBUT THE FINDINGS OF THE CIT(A) IN ANY A SSERTIVE MANNER. WE THUS DECLINE TO INTERFERE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 30/01/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 30/01/2 020