M/s Pooja Industries, Parwanoo V. ITO, Solan

ITA 928/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73579 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 12-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITA NO. 928/CHD/2012 ASSESSMENT YEAR : 2009-10 POOJA INDUSTRIES VS. I.T.O. WARD 1, SOLAN PLOT NO. 75, SECTOR 1 PARWANOO DISTT. SOLAN AAGFP 3843 G (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SURINDER BABBAR DEPARTMENT BY: SHRI AKHILESH GUPTA DATE OF HEARING 1 1.3.2014 DATE OF PRONOUNCEMENT 20.3.2014 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 9.7 .2012 OF THE LD. CIT(A), SHIMLA. 2 IN THIS APPEAL THE ASSESSEE HAS FILED THE FOLLOWI NG GROUNDS: 1 ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) SH IMLA HAS ERRED IN CONCURRING WITH THE ITO, SOLAN IN REJECTIN G THE VALID CLAIM OF THE ASSESSEE U/S 80IC OF INCOME -TAX ACT, 1961. 2 ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A), SH IMLA HAS GROSSLY ERRED IN UPHOLDING THE REJECTION OF CLAIM O F RS. 1,61,64,296/-IN CONCURRENCE WITH THE ITO, SOLAN AND HOLDING THAT THE TERM FLOUR MILLS USED IN THE THIRTEENTH SCHED ULE OF THE INCOME -TAX ACT, 1961 INCLUDES ALL TYPES OF FLOUR M ILLS, WHETHER USED ROLL BODIES OR NOT? 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT THE C LAIM OF DEDUCTION U/S 80IC WAS REJECTED BY THE ASSESSING OF FICER BY OBSERVING THAT THE FLOOR MILL IS A SPECIFICALLY MEN TIONED IN SCHEDULE THIRTEENTH OF INCOME -TAX ACT, 1961 WHICH GIVES NEGATIVE LIST OF INDUSTRIES WHERE DEDUCTION IS NOT ALLOWABLE. 2 4 ON APPEAL THE LD. CIT(A) FOLLOWING THE EARLIER YE ARS ORDER, CONFIRMED THE DENIAL OF DEDUCTION. 5 AT THE OUTSET, THE LD. D.R. FOR THE REVENUE SUBMI TTED THAT THE ISSUE RAISED IN THIS APPEAL IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ITA NO. 11/CHD/2012. HE FURTHER POINTED OUT THAT THIS DECIS ION HAS BEEN CONFIRMED BY THE HON'BLE HIMACHAL PRADESH HIGH COUR T IN ITA NO. 4001 OF 2013 (COPY OF THIS DECISION IS FILED). 6 ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THIS ISSUE IS THOUGH COVERED BUT HE POINTED OUT THAT IN THE EARLIER DECISION THE TRIBUNAL HAS NOT C ONSIDERED THE DECISION OF HON'BLE SUPREME COURT IN CASE OF MEMBER SECRETARY, ANDHRA VS. ANDHRA PRADESH RAYONS LTD & O RS, 1988 SCR SUPPL (3) 380 WHEREIN IT HAS BEEN CLEARLY HELD THAT THERE IS NO EQUITY ABOUT THE TAX AND IF AN ITEM IS MENTIO NED IN A SCHEDULE THEN SAME MEANING HAS TO BE GIVEN TO THE S AME AND THERE IS NO SCOPE FOR INTENDMENTS. 7 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT THIS ISSUE CAME UP FOR CONSIDERATION OF THE TRIBUNAL IN ITA NO. 11/CHD/2012 FOR ASSESSMENT YEAR 2007-08 . IN FACT THE ARGUMENT NOW BEING MADE THAT WHATEVER IS MENTIO NED IN A SCHEDULE HAS TO BE GIVEN THE SAME MEANING WAS MADE EARLIER WHEN THE ISSUE CAME UP FOR CONSIDERATION WHILE ADJ UDICATING THE ORDER U/S 263 OF INCOME -TAX ACT, 1961. THE HO N'BLE SUPREME COURT IN CASE OF MEMBER SECRETARY, ANDHRA V S. ANDHRA PRADESH RAYONS LTD & ORS (SUPRA) HAS HELD AS UNDER: HELD - (I) THE ACT BEING FISCAL IN NATURE MUST BE STRICTLY CONSTRUED. THE QUESTION AS TO WHAT IS COVERED MUST BE FOUND OUT FROM THE LANGUAGE ACCORDING TO ITS NATURAL MEANING, FAIRLY A ND SQUARELY READ. [385F; 386B] (2) IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY A BOUT A TAX, THERE IS NO PRESUMPTION AS TO TAX. NOTHING IS TO BE READ IN, NO THING IS TO BE IMPLIED. [385H] 3 (3)WHETHER A PARTICULAR INDUSTRY IS AN INDUSTRY COV ERED IN SCHEDULE I HAS TO BE JUDGED NORMALLY BY WHAT THAT INDUSTRY PRODUCES MAIN LY, ITS PREDOMINANT PURPOSE AND PROCESS, AND NOT BY ANY ANCILLARY OR INCIDENTAL PROCESS CARRIED ON BY IT. [386D] (4) CHEMICAL PROCESS WOULD BE INVOLVED TO A CERTAIN EXTENT, MORE OR LESS IN ALL INDUSTRIES, BUT AN INDUSTRY WOULD BE KNOWN AS A CHE MICAL INDUSTRY IF IT CARRIES OUT PREDOMINANTLY CHEMICAL ACTIVITIES AND IS INVOLV ED IN CHEMICAL ENDEAVOURS. [386E] (5) TAXING CONSIDERATION MAY STEM FORM ADMINISTRATI VE EXPERIENCE AND OTHER FACTORS OF LIFE AND NOT ARTISTIC VISUALIZATION OR N EAT LOGIC AND SO THE LITERAL, THOUGH PEDESTRIAN, INTERPRETATION MUST PREVAIL. [38 6C] (6) ONE OF THE WELL RECOGNIZED CANONS OF CONSTRUCTION IS THAT THE LEGIS LATURE SPEAKS ITS MIND BY USE OF CORRECT EXPRESSION AND UNLESS THERE IS ANY AMBIG UITY IN THE LANGUAGE OF THE PROVISION THE COURT SHOULD ACCEPT LITERAL CONSTRUCT ION IF IT DOES NOT LEA TO AN ABSURDITY. [387E](7) THERE IS NO ABSURDITY IN THE L ITERAL MEANING. BROADLY AND LITERALLY IT CAN BE SAID THAT THE RAYON GRADE PULP IS NEITHER CHEMICAL INDUSTRY NOR TEXTILE INDUSTRY NOR PAPER INDUSTRY. [387G;386H ] IN RE MICKLETHWAIT., [1885] II EX 452. 456; TENANT V. SMITH. [1892] AC 150; ST. AUBYAN V. AG., [1951]2 AII E.R. 473; CAPE BRANDY SY NDICATE V. IRC., [1921] 1 KB 64 AT 71; GURSAHAI SAIGAL V. C.I.T. PUNJAB, [196 3] 3 SCR 893; C.I.T. MADRAS V. MR. P. FIRM. MUAR. [1965] 1 SCR 815; CONTROLLER OF ESTATE DUTY, GUJARAT V. KANTILAL TRIKAMLAL, [1977] 1 SCR 9; IRC V. DUKE OF WESTMINSTER , [1936] AC 1 AT 24; AV FERNANDEZ V. THE STATE OF KERALA, [1957] SCR 837; MARTAND DAIRY & FARM V. UNION OF INDIA, [1975] SUPP. SCR 265; LT. C OL. PRITHI PAL SINGH BEDI V. UNION OF INDIA, [1983] 1 SCR 393, REFERRED TO. PG N O 382 M/S. GWALIOR RAYON SILK MFG. (WVG.) CO. LTD. MAVOOR V. THE APPELLATE COMMITTEE FOR WATER CESS, TRIVANDRUM, A.I.R. 1983 K ERALA 110. OVERRULED. ABOVE CLEARLY SHOWS THAT IN THIS DECISION THE PRINC IPLE OF INTERPRETATION HAS BEEN EXPLAINED BY THE HON'BLE SU PREME COURT. WHEN WE DECIDED THIS ISSUE FOR ASSESSMENT Y EAR 2007- 08 IN ITA NO. 11/CHD/2012 WE HAVE TRIED TO INTERPRE T THE MEANING OF FLOUR MILLS GIVEN IN THIRTEENTH SCHEDU LE. THAT DECISION HAS BEEN ALREADY CONFIRMED BY THE HON'BLE HIGH COURT ALSO. EVEN AFTER CONSIDERING THE DECISION OF HON'B LE SUPREME COURT IN CASE OF MEMBER SECRETARY, ANDHRA VS. ANDHR A PRADESH RAYONS LTD & ORS (SUPRA), THERE IS HARDLY A NY POSSIBILITY OF GIVING A DIFFERENT MEANING TO THE EX PRESSION FLOUR MILLS THAN GIVEN BY US IN EARLIER ORDER. T HIS ISSUE WAS ADJUDICATED IN ITA NO. 11/CHD/2012 VIDE PARA 9 TO 1 2 WHICH IS AS UNDER: 9 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. WE FIND THAT THE LD. CIT(A) HAS DISCUSSED THE ISSUE IN DETAIL AN D IN THIS REGARD WE WOULD LIKE TO PRODUCE PARA 4 TO 4.4 OF HER ORDER WHICH ARE AS UNDER: 4 4 THE RIVAL SUBMISSIONS HAVE BEEN CONSIDERED. THE ENTRY AT SR NO. 8 IN SCHEDULE XIII, PART B READS FLOUR MILL/R ICE MILL. ON THE FACT OF IT, THE ENTRY MAKES IT CLEAR THAT ALL TYPES OF FLOUR MILLS AND RICE MILLS ARE COVERED BY THIS ENTRY. IT DOES NOT ELABORATE THE CATEGORIES OR TYPES OF FLOUR MILLS AND RICE MILLS. THE HEADING OF THE XIII SCHEDULE READS LIST OF ARTICLE OR THING. THEREFORE, IT IS CLEAR THAT WHAT IS PROHIBITED BY VIRTUE OF XIII SCH EDULE IS THE PRODUCTION/MANUFACTURING OF THE SPECIFIED ARTICLES OR THINGS. ACCORDINGLY, IT IS THE PRODUCTION OF FLOUR/RICE THR OUGH FLOUR MILL/RICE MILL WHICH IS BARRED FROM ENTITLEMENT U/S 80IC OF T HE INCOME-TAX ACT, 1961 BY VIRTUE OF SCHEDULE XIII. THUS THE PRO HIBITION IS IN RESPECT OF THE PRODUCTION OF FLOUR, AND IT IS IMMA TERIAL WHETHER THE FLOUR MILL PRODUCING THE FLOUR IS AN ORDINARY CHAKK I OR A ROLLER FLOUR MILL. IN FACT, LOGICALLY SPEAKING, THE PROVISIONS OF SECTION 80IC READ WITH SCHEDULE XIII WOULD HARDLY BE RELEVANT IN THE CASE OF AN ORDINARY CHAKKI WHICH DOES NOT INVOLVE SO MUCH OF I NVESTMENT, WHAT TO TALK OF SUBSTANTIAL EXPANSION AND SUCH OTHE R THINGS. FURTHER FLOUR MILLS CAN BE OF VARIOUS TYPES, SUCH A S STONE MILL, HAMMER MILL, PLATE MILL, PIN MILL, ROLLER MILL ETC. THE EQUIPMENT USED IN THESE MILLS CAN BE POWERED BY HAND, WATER, ANIMALS, ELECTRICITY OR DIESEL ENGINE. THE ONLY DIFFERENCE BETWEEN VARIOUS MILLING PROCESSES IS THAT OF TECHNIQUE AND SPEED. F LOUR IS A COMMON PRODUCT IN ALL KINDS OF MILLING PROCESSES. THEREFORE, IT CAN NOT BE SAID THAT WHAT IS INTENDED BY ENTRY NO.8 IN PART B OF SCHEDULE XIII IS ONLY A STONE MILL AND NOT A HAMMER MILL OR A PLATE MILL OR A PIN MILL OR A ROLLER FLOUR MILL. PUTTING SUCH AN INTERPRETATION WOULD REDUCE THE ENTRY TO A FARCE. 4.1 FURTHER, THE RELEVANT ENTRY OF FLOUR MILL/RICE MILLS IN SCHEDULE XIII ALSO MENTIONS AN EXCISE CLASSIFICATIO N OF 11.01 AGAINST IT. THIS CLASSIFICATION CODE REFERS TO CLA SSIFICATION OF PRODUCTS UNDER THE CENTRAL EXCISE TARIFF ACT, WHICH DEALS WITH PRODUCTS OF THE MILLING INDUSTRY. THERE IS NO DIST INCTION MADE IN THIS CHAPTER BETWEEN GOODS PRODUCED BY ROLLER FLOUR MILLS OR BY ANY OTHER TYPE OF FLOUR MILL. VARIOUS PRODUCTS ARE CLA SSIFIED AS PER THE STARCH CONTENT AND ASH CONTENT. THE CODE 11.01 REFE RS TO WHEAT FLOUR AND THERE IS NO DISTINCTION MADE AS TO WHETHE R THE WHEAT FLOUR IS MADE BY A ROLLER MILL OR BY ANY OTHER MILL . 4.2 CERTAIN DECISIONS UNDER THE CENTRAL EXCISE TARI FF ACT ALSO MAKE IT CLEAR THAT THE CLASSIFICATION CODE 11.01 IS A BROAD HEADING WHICH COVERS VARIOUS PRODUCTIONS OF THE MILLING IND USTRY. IN THE CASE OF BHAGYALAXMI POHA INDUSTRIES V. COMMISSIONER (2007) 215 ELT 458 (TRIB BANGALORE), IT WAS HELD THAT RICE FLA KES OR POHA ARE PRIME FACIE CLASSIFIABLE UNDER HEADING 11.01 OF THE CENTRAL EXCISE TAFIFF. IN ANOTHER CASE OF MAHAVIR FOOD PRODUCTS V COMMISSIONER (2007) 211 ELT 29 (TRIB LB), IT HAS BEEN HELD THAT MAKAI POHA I.E. CORN BOILED AND FLATTENED BETWEEN ROLLERS, IS CLASS IFIABLE UNDER THE HEADING 11.01 OF THE CENTRAL EXCISE TARIFF ACT. 4.3 THE ASSESSEES CONTENTION THAT THE STATE GOVERN MENT OF HIMACHAL PRADESH HAS ACCEPTED THE DISTINCTION BETWE EN FLOUR MILL AND ROLLER FLOUR MILL IS OF NO RELEVANT. THE SCHEM E OF SALES TAX INCENTIVES WHICH WAS IN FORCE IN THE STATE IN 1994 WAS ENTIRELY A SEPARATE SCHEME NOTIFIED BY THE STATE GOVERNMENT. THAT SCHEME HAS NO RELEVANCE OR CONNECTION WITH THE TAX HOLIDAY COMPRISED IN SECTION 80IC, WHICH WAS ENACTED BY THE FINANCE ACT, 2003 AS A PART OF THE NEW INDUSTRIAL POLICY OF THE CENTRAL GO VERNMENT ANNOUNCED IN 2003 FOR STATES LIKE H.P. THIS BECOME S FURTHER CLEAR BY THE FACT THAT THE LIST OF INELIGIBLE INDUSTRIES CONTAINED IN SCHEDULE XIII IS ALMOST ENTIRELY DIFFERENT IN CONTE NT FROM THE LIST OF UNITS DECLARED TO BE INELIGIBLE FOR SALES TAX INCEN TIVES BY THE STATE GOVERNMENT. FOR THE PURPOSE OF THE INCOME-TAX ACT, THE ENTRY IN SCHEDULE XIII HAS TO BE UNDERSTOOD IN ITS NORMAL SE NSE AND NOT IN TERMS OF ANY CLARIFICATIONS ISSUED BY THE STATE GOV ERNMENT UNDER AN ENTIRELY DIFFERENT SCHEME. 5 4.4 A STATUTE IS THE EDICT OF THE LEGISLATURE. THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR O F THE LEGISLATIVE INTENT. THE FIRST AND PRIMARY RULE OF CONSTRUCTION IS THAT ONE MUST GO BY THE INTENTION OF THE LEGISLATION ITSELF AS HE LD IN PADMASUNDRA RAO V STTE OF TN 255 ITR 147 (S.C); CGT V. LAXMI DE VI 220 ITR 50, CIT V.DEEP CHAND, 2547 ITR 756. IT WAS ALSO HE LD BY HON'BLE SUPREME COURT IN THE CASE OF VIKRANT TYRES V FIRST ITO, 247 ITR 821 (S.C) THAT UNLESS THERE IS AN INTENTION TO THE CONTRARY, THE WORDS IN A STATUTE SHOULD BE GIVEN THEIR ORDINARY GRAMMATICAL OR NATURAL MEANING (EMPHASIS SUPPLIED). THE RELEVANT PORTION OF SECTION 80IC READS AS UNDER : 80-IC. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE IN CLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), T HERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSES SEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE, (A) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SP ECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODU CES ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SP ECIFIED IN THE THIRTEENTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPA NSION DURING THE PERIOD BEGINNING THE THIRTEENTH SCHEDULE (SEE SECTIONS 80IB(4) AND 80IC(2)} LIST OF ARTICLES OR THINGS PART A FOR THE STATE OF SIKKIM --------------------------------------------------- --------------------------- SCHEDULE XIII LIST OF ARTICLES OR THINGS PART B FOR THE STATE OF HIMACHAL PRADESH AND THE STATE OF UTTARANCHAL S NO ACTIVITY OR ARTICLE OR THING EXCISE CLASSIFICATION SUB-CLASS UNDER NATIONAL INDUSTRIAL CLASSIFICATION (NIC) 1998 1 TOBACCO AND TOBACCO PRODUCTS INCLUDING CIGARETTES AND PAN MASALA 24.01 TO 24.04 AND 21.06 1600 2 THERMAL POWER PLANT (COAL / OIL BASED) 40102 OR 40103 6 3 COAL WASHERIES/DRY COAL PROCESSING 4 INOROGANIC CHEMICALSL LEXCLUDING MEDICINAL GRADE OXYGEN (2804.11), MEMDICINAL GRADE HYDROGEN PEROXIDE (2847.11), COMPRESSED AIR (2851.30) CHAPTER 28 5 ORGANIC CHEMICALS EXCLUDING PROVITAMINS/VITAMINS, HORMONES (29.36), GLYCOSIDES (29.39), SUGAR (29.40) CHAPTER 29 24117 6 TANNINGAND DYEING EXTRACTS, TANNINS AND THEIR DERIVATIVES, DYES, COL OURS, PAINTS AND VARNISHES, PUTTY, FILLERS AND OTHER MASTICS, INKS CHAPTER 32 24113 OR 24114 7 MARBLE AND MINERAL SUBSTANCES NOR CLASSIFIED ELSEWHERE 25.04 25.05 14106 OR 14107 8 FLOUR MILLS/RICE MILLS 11.01 15311 9 TO 20 FROM THE ABOVE IT IS CLEAR THAT DEDUCTION U/S 80IC IS AVAILABLE WHENEVER THE ASSESSEE UNDERTAKES A SUBSTANTIAL EXPA NSION. THE ISSUE RELATING TO SUBSTANTIAL EXPANSION HAS NOT BEE N DISPUTED BY THE ASSESSING OFFICER. HOWEVER, SUB-SEC (2) FURTHE R REQUIRES THAT DEDUCTION IS AVAILABLE ONLY TO SUCH UNDERTAKING WHI CH BEGINS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING WHICH A RE NOT MENTIONED IN SCHEDULE XIII, PART B. THUS IT IS CLEA R AS OBSERVED BY THE LD. CIT(A) THE DEDUCTION IS NOT DENIED ON A PAR TICULAR TYPE OF MILL BUT IT IS DENIED ON A PARTICULAR TYPE OF ARTIC LE OR THING WHICH IS MENTIONED THEREIN. IT SHOULD BE EMPHASIZED THAT PA RT B OF SCHEDULE XIII, ITEM 8 TALKS OF FLOUR MILL UNDER THE HEAD ACTIVITY OR ARTICLE OR THING BUT THAT HAS BEEN FURTHER CLARIFI ED IN THE SCHEDULE ITSELF BY WAY OF EXCISE CLASSIFICATION AS WELL AS S UB-CLAUSE UNDER NATIONAL INDUSTRIES CLASSIFICATION (N.I.C) 1998. T HE LD. CIT(A) HAS FURTHER OBSERVED THAT CENTRAL EXCISE TARIFF CLASSIF ICATION CODE 11.01 OF CENTRAL EXCISE ACT MAKES IT CLEAR THAT IT IS A B ROAD HEADING WHICH COVERS VARIOUS PRODUCTS OF THE MILLING INDUST RY. FURTHER N.I.C. 1998 GIVES VARIOUS CATEGORIES OF PRODUCTS UN DER VARIOUS HEADS KNOWN AS DIVISIONS. DIVISION 15 READS AS U NDER: DIVISION 15 MANUFACTURE OF FOOD PRODUCTS OF BREWAGES 15311 FLOUR MILLING THIS CLASSIFICATION UNDER VARIOUS NIC STANDS HAS BE EN ISSUED BY MINISTRY OF STATISTICS AND PROGRAMME IMPLEMENTATION , GOVERNMENT OF INDIA. CODE 15311 HAS BEEN MENTIONED IN PART B O F SCHEDULE XIII AT COL. 8. SINCE THIS DIVISION PERTAIN TO FOO D AND BREWAGES AND ONLY ONE ITEM IN RESPECT OF FLOUR MILLING IS T HERE, IT BECOMES CLEAR THAT THE PARLIAMENT WAS CLEAR IN ITS INTENTIO N THAT ACTIVITY OF FLOUR MILLING WOULD NOT BE ENTITLED TO DEDUCTION U/ S 80IC AND THAT IS WHY THE SAME HAS BEEN PLACED IN SCHEDULE XIII AL ONG WITH EXCISE CLASSIFICATION CODE 11.01 AS WELL AS NATIONA L INDUSTRIES 7 CLASSIFICATION UNDER DIVISION 15 AT SL NO. 15311. THEREFORE, THE ACTIVITY OF FLOUR MILLING OR ARTICLE OR THING UNDER WHICH CAN BE CALLED FLOUR IS NOT ELIGIBLE FOR DEDUCTION U/S 80 IC BY VIRTUE OF ITS ENTRY IN THE NEGATIVE LIST IN PART B OF SCHEDULE XI II. 10 THE LD. COUNSEL OF THE ASSESSEE THOUGH ARGUED T HAT THIS ITEM SHOULD BE INTERPRETED ON THE BASIS OF A TRADE NAME BUT NO TRADE JOURNAL OR ANY OTHER MATERIAL WAS PRODUCED TO SHOW THAT IN THE TRADE PARLANCE FLOUR MILL IS DISTINCT FROM R OLLER FLOUR MILL. IN ANY CASE THE ASSESSEE ITSELF HAS BEEN SHOWN TO B E RUNNING A FLOUR MILL AS PER THE TAX AUDIT REPORT (COPY OF WHI CH IS AVAILABLE AT PG 12 TO 20 AT SL NO. 8 WHICH DEALS WITH THE NAT URE OF BUSINESS, THE SAME HAS BEEN SHOWN AS FLOUR MILL. 11 WE HAVE ALSO PERUSED PAGE 25 OF THE PAPER BOOK W HICH IS AN ANNEXURE GIVING QUANTITATIVE DETAILS OF PRINCIPLE I TEMS OF RAW MATERIAL AND FINISHED PRODUCTS HAS BEEN FOLLOWED. ANNEXURE IV QUANTITATIVE DETAILS OF PRINCIPAL ITEMS OF RAW MATE RIAL ITEM WHEAT (IN QTLS) OPENING STOCK 14345.66 PURCHASE DURING THE PREVIOUS YEAR 140348.50 CONSUMPTION DURING THE PREVIOUS YEAR 149102.62 SALES DURING THE PREVIOUS YEAR NIL CLOSING STOCK 5591.54 YIELD OF FINISHED PRODUCTS FLOUR 118746 MAIDA/ SUZI 16984. 45 CHOKER 16586.46 %AGE OF YIELD 79.64% 11.39% 11.12% SHORTAGE/EXCESS, IF ANY PROCESS GAIN(QTLS) = (3214.29) 2.15% FROM THE ABOVE IT IS CLEAR THAT PRINCIPLE ACTIVITIE S REMAIN MILLING OF FLOUR AND 79.64% WHEAT CRUSHED RESULTS INTO MILLING OF FLOUR AND MAIDA AND SUZI IS ONLY AT 11.39% WHICH CAN BE CALLE D AS BI- PRODUCT. THUS IT IS CLEAR THAT MAIN ACTIVITY OF TH E ASSESSEE IS MILLING AND BY DOING THE ACTIVITY LISTED IN THE NEG ATIVE LIST IN PART B OF SCHEDULE XIII, DEDUCTION U/S 80IC, IS NOT AVAILA BLE. 12 THE LD. COUNSEL OF THE ASSESSEE HAD PUT UP LOT O F STRESS ON THE CLARIFICATION OF LEGAL EXEMPTION GRANTED BY THE GOVERNMENT OF HIMACHAL PRADESH. RELEVANT LETTER IS EXTRACTED BEL OW: IND(A)(F)6-16/94 GOVERNMENT OF HIMACHAL PRADESH INDUSTRIES DEPARTMENT THE D.C-CUM-SECRETARY (INDUSTRIES) TO THE GOVERNMENT OF HIMACHAL PRADESH TO THE DIRECTOR OF INDUSTRIES 8 HIMACHAL PRADESH, SHIMLA-1 DATED, SHIMLA-2 1.7.1994 JUNE 1994 SUB: SALES TAX EXEMPTION TO ROLLER FLOUR MILLS, CLARIFICATION THEREOF SIR, I AM DIRECTED TO REPLY TO YOUR LETTER NO. IN/DEV., F.19-18/91-IB DATED 20.4.94 IN THE ABOVE CITED SUBJECT AND TO SAY THAT THE MATTER HAS BEEN EXAMINED IN CONSULTATION WITH LAW DEPARTME NT. ACCORDING TO RULE 11.1 (D) OF THE REVISED RULES REG ARDING GRANT OF INCENTIVES TO INDUSTRIAL UNITS IN HIMACHAL PRADESH, ALL INDUSTRIAL UNITS RE ELIGIBLE FOR SALES TAX INCENTIVES WHICH AR E REGISTERED AS APPELLATE AUTHORITY DEALER UNDER THE H.P. GENERAL S ALES TAX ACT, 1968/CENTRAL SALES TAX ACT, 1956 AND COMPLY WITH IT S PROVISIONS, EXCEPT FOR THE INDUSTRIES NOTIFIED IN ANNEXURE-III OR AS NOTIFIED BY THE STATE GOVERNMENT FROM TIME TO TIME. ACCORDING TO SL NO. 1 OF ANNEXURE III OF THE SAID RULES, FLOUR MILLS ARE NOT ELIGIBLE FOR SALES TAX INCENTIVES. IN OTHER WORDS, THE ROLLER FLOUR M ILLS ARE NOT COVERED UNDER SL NO. 1 OF ANNEXURE III AND HENCE AR E ELIGIBLE FOR SALES TAX INCENTIVES SUBJECT TO FULFILLMENT OF OTHE R REQUIREMENTS. YOURS FAITHFULLY SD/- JOINT SECRETARY (INDUSTRIES) TO THE GOVERNMENT OF HIMACHAL PRADESH IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY BRUSHE D ASIDE THIS CLARIFICATION BECAUSE IT DEALS WITH THE SALES TAX E TC. WHICH IS A STATE SUBJECT AND THIS CLARIFICATION CAN NOT NEGATE S THE INTENTION OF THE PARLIAMENT GIVEN IN PART B OF SCHEDULE XIII WHI CH IS A NEGATIVE LIST FOR DEDUCTION U/S 80IC. IN THESE CIRCUMSTANCE S, WE ARE OF THE OPINION THAT THE ASSESSEE BY VIRTUE OF BEING PLACED IN PART B OF SCHEDULE XIII, IS NOT ENTITLED TO DEDUCTION U/S 80I C. THE ASSESSING OFFICER HAS BEEN MORE THAN REASONABLE FOR GRANTING DEDUCTION U/S 80IB @ 25%. IN THESE CIRCUMSTANCES W E FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONF IRM THE SAME. WHEN THE MATTER TRAVELED TO THE HON'BLE HIGH COURT , IT WAS OBSERVED AS UNDER: THE ONLY ARGUMENT CANVASSED, IN THIS APPEAL, IS THA T THE TRIBUNAL HAS MISDIRECTED ITSELF IN NOT EXTENDING THE BENEFIT AVAILABLE TO THE APPELLANT IN TERMS OF CIRCULAR DATED 1 ST JULY, 1994, WHICH HAS BEEN REPRODUCED IN PARAGRAPH 12 OF THE IMPUGNED DECISION. 2. THIS ARGUMENT CLEARLY OVERLOOKS THAT THE SAID C IRCULAR HAS BEEN ISSUED IN RELATION TO THE H.P. GENERAL SALES TAX ACT, 1968/ C ENTRAL SALES TAX ACT, 1956 AND THEREFORE, WILL HAVE NO APPLICATION TO THE PROC EEDINGS UNDER THE INCOME TAX ACT. 3. IT IS NOT THE CASE OF THE APPELLANT THAT UNDER T HE PROVISIONS OF INCOME TAX ACT, APPROPRIATE AUTHORITY HAS MADE DISTINCTION BETWEEN ROLLER FLOUR MILLS AND FLOUR MILLS / RICE MILLS. AS SUCH, IN ABSENCE T HEREOF, WE FIND NO REASON TO DIFFER FROM THE OPINION RECORDED BY THE TRIBUNAL IN PARAGRAPH 12 THAT THE CIRCULAR, PRESSED INTO SERVICE BY THE APPELLANT, WI LL BE OF NO AVAIL TO THE APPELLANT. HENCE, DISMISSED. 9 FOLLOWING THE ABOVE ORDER WE DECIDE THIS ISSUE AGAI NST THE ASSESSEE. 8 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 20.3.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20.3.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR