ACIT, New Delhi V. M/s. LVP Foods Pvt. Ltd., New Delhi

ITA 937/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6469 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 115JB; 80IB; 201; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: E NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI K.N. CHARY, JUDICIAL MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.937/DEL/2017 ASSESSMENT YEAR: 2013-14 ACIT, CIRCLE-15(1), NEW DELHI VS. M/S. LVP FOODS PVT. LTD, 3, LINK HOUSE, 4 TH FLOOR, BAHADUR SHAH ZAFAR MARG, PRESS AREA, NEW DELHI PAN :AABCL2517K (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST OR DER DATED 21/12/2016 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-5, DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2013-14 RAISING FOLLOWING GROUNDS: 1. THAT THE ORDER OF LEANED CIT (APPEALS) IS ERRONE OUS & CONTRARY TO FACTS & LAW. APPELLANT BY SH. GAUTAM PUNDIR, SR.DR RESPONDENT BY SH. GAUTAM JAIN, ADV. DATE OF HEARING 18.08.2021 DATE OF PRONOUNCEMENT 08.09.2021 2 ITA NO.937/DEL/2017 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED DELETING THE DI SALLOWANCE MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE U/S 80L B (11 A) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS. 4,83 J6,9 46/- 3 THAT THE ORDER OF THE CIT (A) IS IN CONTRA VENTION TO IN CONTRAVENTION TO THE SECTION 801 B(11 A) OF THE INCOME-TAX ACT, 1 961. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND (S) OF THE APPEAL REISED ABOVE AT THE TIME O F HEARING. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF DAIRY PRODUCTS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 30/11/2013, WHEREIN THE ASSESSEE CLAIMED 100% DEDUC TION OF INCOME DECLARED OF 4,83,16,946/- UNDER SECTION 80IB(11A) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) AND D ECLARED BOOK PROFIT OF 5,84,92,531/- UNDER SECTION 115JB OF THE ACT. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT. THE ASSESSING OFFICER COMPLETED SCRUTIN Y ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 29/03 /2016 AND DISALLOWED THE CLAIM OF DEDUCTION BY THE ASSESSEE, DEPRECIATION ON PLANT AND MACHINERY AND INTEREST CORRESPONDING T O INTEREST- FREE LOAN GIVEN TO RELATED PARTIES. ON FURTHER APPE AL, THE LD. CIT(A) DELETED ALL THE DISALLOWANCES. AGGRIEVED, TH E REVENUE HAS CHALLENGED ONLY DELETION OF DISALLOWANCE OF DEDUCTI ON UNDER SECTION 80IB OF THE ACT. 3. BEFORE US, THE PARTIES APPEARED THROUGH VIDEO CONFE RENCING FACILITY AND FILED PAPER-BOOK AND OTHER DOCUMENTS T HROUGH EMAIL. 4. THE GROUNDS NO.1 & 4 ARE GENERAL IN NATURE AND THE REFORE WE ARE NOT REQUIRED TO ADJUDICATE UPON SEPARATELY. 3 ITA NO.937/DEL/2017 5. THE GROUND NO. 2 & 3 OF THE APPEAL ARE RELATED TO DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB(11A) O F THE ACT AMOUNTING TO 4,83,16,946/-. 5.1 BRIEF FACTS QUA THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH MOTHER DAIRY FRUIT AND VEGETABLE PRIVATE LIMITED (IN SHORT MOTHER DAIRY) FOR PROC ESSING, PRESERVATION AND PACKAGING OF MILK, UNDER WHICH MO THER DAIRY SUPPLIED PASTEURIZED/RAW CHILLED MILK AND COMMODITI ES FOR PROCESSING AND PACKAGING OF LIQUID MILK IN POLY PAC KS OF DIFFERENT CATEGORIES OF MILK. AS THE ASSESSEE COMPANY WAS NOT HAVING ITS OWN FACILITY, IT ENTERED INTO BACK-TO-BACK AGREEMEN T WITH ONE OF ITS RELATED PARTY I.E. UMANG DAIRY LTD. (UMANG). AT THE TIME OF THE AGREEMENT, UMANG WAS UNDER BIFR PROCESS. UNDE R THE AGREEMENT ASSESSEE COMPANY PROVIDED FUNDS TO UMANG FOR CONSTRUCTION OF FACTORY BUILDING ON THE LAND OF UM ANG. THE SAID FACTORY BUILDING WAS TO BE TRANSFERRED BACK TO THE ASSESSEE AT THE AGREED COST AFTER ITS COMPLETION AND AFTER TAKING A PPROVAL FROM APPROPRIATE AUTHORITIES INCLUDING BIFR. THE ASSESSE E COMPANY PURCHASED PLANTS & MACHINERY FOR THE PURPOSE OF PRO CESSING, PRESERVATION AND PACKAGING AND CONTRACTED WITH UMA NG FOR ITS OPERATION AND MAINTENANCE, SINCE THEY HAD EXPERTISE FOR SUCH ACTIVITIES AND FOR THIS PURPOSE THE ASSESSEE COMPAN Y PAID CONVERSION CHARGES OF 15.34 CRORES TO UMANG. THE ASSESSING OFFICER OBSERVED THAT NO MANUFACTURING CHARGES WERE DEBITED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT EXCEPT PAYMENT OF CONVERSION CHARGES TO UMANG. THEREFORE, ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS NOT ENGAGED IN THE MANUFACTURING ACTIVITY AND THEREFORE NOT ENTITLED F OR DEDUCTION 4 ITA NO.937/DEL/2017 UNDER SECTION 80IB OF THE ACT. HE ALSO HELD THAT U MANG WAS A BIFR COMPANY AND IN VIEW OF LARGE AMOUNT OF CARRY-F ORWARD LOSSES, THERE WOULD NOT BE ANY BENEFIT OF DEDUCTION AND THE ASSESSEE HAS CREATED COLOURABLE DEVICE TO EAVDE TAX ES AND CLAIMED DEDUCTION. HE, ACCORDINGLY, DISALLOWED THE CLAIM OF THE ASSESSEE. THE LD. CIT(A), HOWEVER, AFTER CONSIDERIN G THE SUBMISSION OF THE ASSESSEE AND ANALYZING THE PROVIS IONS OF THE ACT IN RESPECT OF DEDUCTION UNDER SECTION 80 IB(11A ) OF THE ACT, HE DELETED THE DISALLOWANCE. THE DETAILED FINDING OF T HE LD. CIT(A) IS REPRODUCED AS UNDER: 3.3.1 FOLLOWING THESE SUBMISSIONS MADE BEFORE THE UNDERSIGNED DATED 14.09.2016, IT WAS CONSIDERED APPROPRIATE TO UNDERTAKE THE EXERCISE OF EXAMINING WHETHER ALL THE CONDITIONS RE QUIRED FOR FULFILLING CLAIM OF DEDUCTION U/S 80IB(11A) HAD BEE N FULFILLED BY THE APPELLANT AS THE ASSESSMENT ORDER DID NOT DEMONSTRA TE THAT THE AO HAD EXAMINED THE ELIGIBILITY CRITERIA QUA SECTION 8 0IB(11A). THE ELIGIBILITY CRITERIA AND THE FACTS OF THE APPELLANT 'S CASE HAVE BEEP SUBMITTED BY THE APPELLANT DURING THE COURSE OF HEA RING ALONG WITH SUBSTANTIATING DOCUMENTS, THE GIST OF WHICH READS A S UNDER:- SEC.80IBI11A) CONDITIONS - APPELLANTS SUBMISSIONS 1. THIS DEDUCTION IS AVAILABLE IN CASE OF AN UNDERTAKING DERIVING PROFIT FROM THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF DAIRY PRODUCTS. THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF DAIRY PRODUCTS AS IS EVIDENT F ROM CERTIFICATE ISSUED BY FOOD SAFETY AND STANDARD AUTHORITY OF INDIA ENCLOSED (ANNEX:A- 1). 2. THE PROVISIONS OF SECTION SHALL NOT APPLY TO AN UNDERTAKING ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF DAIRY PRODUCTS IF IT BEGINS TO OPERATE SUCH BUSINESS BEFORE THE 1ST DAY OF APRIL, 2009 THE COMPANY IS ENGAGED IN THE BUSINES S SINCE SEPTEMBER2009 AS EVIDENT FROM APPELLANTS ANNUAL ACCOUNTS (F.Y.2009-10 : ANNEX.B- 1 / F.Y-2010-11 : ANNEX. C-1 / F.Y.2011- 12 : ANJJMX.D- 1) AND TAX AUDIT REPORT (F.Y.2009-10 : AHNEX.E-1 / F.Y.2010 - 11 : ANNEX. F-1 / F.Y-2.011- 12 : ANNEX.G-1). 5 ITA NO.937/DEL/2017 3. IT IS NOT FORMED BY SPLITTING UP OR THE RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE THE BUSINESS OF THE APPELLANT IS NEW ONE AS IS EVIDENT FROM ANNUAL ACCOUNTS FOR THE F.Y. 2009- 10 ENCLOSED AS ANNEXURE B-1. 4. IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. ALL THE PLANT & MACHINERY USED FOR SUCH BUSINESS ARE NEW AND WAS NOT AT ANY TIME PREVIOUS TO THE DATE OF THE INSTALLATION BY THE APPELLANT USED IN INDIA. THE SAME IS EVIDENT FROM FIXED ASSETS SCHEDULE FORMING PART OF ANNUAL ACCOUNTS (ANNEX.B- 1) AND TAX AUDIT REPORT OF F.Y.2009- 10 (ANNEX.E- 1) READ WITH FORM 10CCB (ANNEX.H- 1) OF PAPER BOOK DATED 14.09.2016). 5. IT MANUFACTURERS OR PRODUCES ANY ARTICLE OR THING NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF DAIRY PRODUCTS WHICH IS NOT SPECIFIED IN ELEVENTH SCHEDULE OF THE ACT. FOR READY REFERENCE, THE ELEVENTH SCHEDULE O F THE ACT IS ENCLOSED (ANNEX:H-1) 6. THE UNDERTAKING EMPLOYS TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. COPY OF CERTIFICATE IS ENCLOSED (ANNEX: 1-1). FINANCIALS OF UMANG DAIRIES LTD FOR THE PERIOD FROM APRIL 2009 TO MARCH 2013 IS ALSO ENCLOSED AS (ANNEX.J-1). 3.4 I HAVE GIVEN MY CAREFUL CONSIDERATION TO THE IS SUE AS TO WHETHER THE APPELLANT FULFILLED ALL THE CONDITIONS ELIGIBLE FOR DEDUCTION U/S 80IB (11A). THE PROVISIONS OF SECTION 80IB (11A) WA S INTRODUCED BY FINANCE ACT, 2001 AND INITIALLY BENEFIT WAS GIVEN T O THE BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOOD GRAINS . LATER ON THE BENEFIT WAS EXTENDED TO THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS AND VEGETABLES BY FINANCE A CT, 2004 W.E.F. 01.04.2005 AND THEREAFTER BY FINANCE ACT, 2009 W.E. F. 01.04.2010 THE BENEFIT WAS FURTHER EXTENDED TO THE MEAT PRODUC TS AND POULTRY OR MARINE OR DAIRY PRODUCTS. THE APPELLANT FALLS UNDER THE PROVISO TO AS IT BEGAN OPERATION OF BUSINESS AFTER 01.04.2009. TH IS IS EVIDENT FROM THE ANNUAL ACCOUNTS OF THE COMPANY FOR THE A.Y. 201 0-11 WHEREIN, 6 ITA NO.937/DEL/2017 FOR PART OF THE YEAR SINCE THE START OF COMMERCIAL PRODUCTION W.E.F 11.09.2009, THE APPELLANT HAD A TURNOVER OF RS. 87. 71 CRORES. THE APPELLANT HAD MADE HIS CLAIM FOR THE FIRST TIME IN THE IMPUGNED ASSESSMENT YEAR AS THERE WERE LOSSES INCURRED IN TH E PRECEDING YEARS. I HAVE ALSO PERUSED THE FINANCIALS OF THE CO MPANY FOR A.Y. 2010- 11 WHEN COMMERCIAL PRODUCTION STARTED. I FIND THAT THE APPELLANT INVESTED RS. 19.79 CRORES IN FIXED ASSETS AND ANOTHER 15 CRORES IN CAPITAL WORK IN PROGRESS. THE OTHER COND ITIONS THAT WERE APPLICABLE FOR THE DEDUCTION U/S 80IB (2) ARE ALSO FOUND FULFILLED IN THE APPELLANT'S CASE AND DISCUSSED SERIALLY AS UNDE R: (I) THE UNDERTAKEN SHOULD NOT BE FORMED BY SPLITTIN G UP OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE - THE FINANCIALS FOR AND FROM A.Y. 2007-08 DO NOT SHOW THAT THE COMPANY WAS FORMED BY SPLITTING UP OF AN EXISTING BUSINESS. (II) THE UNDERTAKING IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY AND PLANT PREVIOUSLY USED FOR ANY PURP OSE - IT IS SEEN THAT THE COMPANY WAS INCORPORATED IN A.Y. 2007-08 A ND NO ACTIVITIES WERE CARRIED OUT IN THE YEARS PRECEDING A.Y. 2010-1 1. IN A.Y. 2009- 10 EXCEPT FOR SECURING TERM LOAN OF RS. 5.87 CRORES FROM AXIS BANK AND UNSECURED LOAN OF RS. 4 CRORES FROM ITS HOLDING COMPANY BENGAL AND ASSAM COMPANY LTD. WHICH HAS BEEN ADVANCED TO U MANG DAIRY LTD. FOR CONSTRUCTION OF FACTORY BUILDING, NO COMMERCIAL ACTIVITIES WERE CARRIED OUT. FURTHER THE BALANCE SH EET OF M/S UMANG DAIRY LTD. FOR A.YS 2010-11 ONWARDS WERE ALSO REQUI SITIONED IN ORDER TO EXAMINE WHETHER ANY EXISTING PLANT AND MAC HINERY HAD BEEN TRANSFERRED TO THE APPELLANT. THE BALANCE SHEE T OF M/S UMANG DAIRY LTD. FOR A.Y. 2010-11 REVEALS THAT THERE IS N O TRANSFER OF ANY FIXED ASSET TO ANYBODY INCLUDING THE APPELLANT. (III) THE UNDERTAKING MANUFACTURES OR PRODUCES ANY ARTICLE OR CLAIM NOT BEING ANY ARTICLE OR CLAIM SPECIFIED IN THE LIS T IN 11TH SCHEDULE - I HAVE PERUSED THE 11TH SCHEDULE AND FIND THAT DAIRY PRODUCTS ARE NOT SPECIFIED IN THE 11TH SCHEDULE. (IV) THE UNDERTAKING EMPLOYS 10 OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER OR EMPLOYS 20 OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITHO UT THE AID OF POWER - IN THIS REGARD, THE AR HAS FURNISHED A CERT IFICATE FROM THE CHIEF EXECUTIVE - WORKS OF UMANG DAIRIES LTD. STATI NG THAT FOR PURPOSES OF DISCHARGING THE OBLIGATIONS UNDER THE A GREEMENT DATED 4.7.2008 WITH UMANG DAIRIES, UMANG HAD EMPLOYED MOR E THAN 10 WORKERS WHICH WERE NOT LESS THAN 26 AT ANY TIME DUR ING THE F.Y. 2012-13 FOR THE ACTIVITY OF PROCESSING, PRESERVATIO N AND PACKAGING OF DAIRY PRODUCTS. THE MONTHWISE LIST OF EMPLOYEES ON THE PAYROLL OF UMANG DAIRIES ALONG WITH THEIR EPF AND EPS CONTRIBU TION, HAVE ALSO BEEN SUBSEQUENTLY FILED. IN THIS REGARD, THE AR WAS REQUESTED TO 7 ITA NO.937/DEL/2017 INFORM HOW THE DEDUCTION COULD BE ALLOWED AS SECTIO N 80 IB(2)(IV) SPECIFICALLY MENTIONS THAT THE UNDERTAKING SHOULD ' EMPLOY' 10 OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER WHEN THE APPELLANT WAS ITSELF NOT THE EMPLOYE R AND THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE W ORKERS AND THE APPELLANT COMPANY. IT WAS POINTED OUT TO HIM TH AT THE ALLAHABAD HIGH COURT HELD THAT THE WORKFORCE EMPLOYED BY A CO NTRACTOR WOULD NOT QUALIFY FOR THE PHRASE 'EMPLOY' THAT WAS USED I N SECTION 80I(2)(IV) AND THERE SHOULD BE EMPLOYER - EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE WORKER. THE AR HAS BRO UGHT TO MY NOTICE THE SUBSEQUENT DECISION OF THE BOMBAY HIGH C OURT IN THE CASE OF JYOTI PLASTIC WORKS PVT. LTD. (ITA NO.5045/2010 DATED 15.11.2011) WHEREIN, IN THE CONTEXT OF SECTION 80IB (2)(IV) FOR A.Y. 1999-2000, THE HIGH COURT DISAGREED WITH THE VIEWS EXPRESSED BY THE ALLAHABAD HIGH COURT. IT HAS ALSO BEEN BROUGHT TO MY NOTICE THAT AGAINST THE ORDER OF THE BOMBAY HIGH COURT, THE DEP ARTMENT'S SLP HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT IN CIVIL APPEAL NO. 1004/2014 DATED 28.4.2015. THESE FACTS ARE ALSO DISCUSSED IN THE ITAT ORDER IN THE CASE OF JYOTI PLASTIC WORKS P VT. LTD. FOR A.Y. 2011-12,(ITA NO.7013/MUM/2014 DATED 22.06.2016). FR OM THE DECISION OF THE BOMBAY HIGH COURT, IT IS SEEN THAT THE HON'BLE HIGH COURT, IN THE ABSENCE OF THE DEFINITION OF THE EXPR ESSION 'WORKER' IN THE INCOME TAX ACT, CHOSE TO GO BY THE DEFINITION A S PER BLACK'S LAW DICTIONARY AND U/S 2(L) OF THE FACTORIES ACT, 1948, THAT IS, THE EXPRESSION 'WORKER' MEANS A PERSON EMPLOYED DIRECTL Y OR BY OR THROUGH ANY AGENCY (INCLUDING A CONTRACTOR) WITH OR WITHOUT THE KNOWLEDGE OF THE PRINCIPAL EMPLOYER, WHETHER FOR RE MUNERATION OR NOT, IN ANY MANUFACTURING PROCESS, OR IN ANY OTHER KIND OF WORK INCIDENTAL TO OR CONNECTED WITH THE MANUFACTURING P ROCESS. THE HIGH COURT HELD THAT IT WOULD NOT BE PROPER TO GIVE A RE STRICTED MEANING TO THE EXPRESSION WORKER AND IT WAS IMMATERIAL AS TO W HETHER THE WORKERS WERE DIRECTLY EMPLOYED OR EMPLOYED THROUGH CONTRACTOR AND HENCE THE CONDITION IMPOSED U/S 80IB(2)(IV) COULD B E SAID TO HAVE BEEN MET. THE ISSUE IS THUS SETTLED, WITH THE DISMI SSAL OF THE SLP BY THE HON'BLE SUPREME COURT IN FAVOUR OF THE ASSESSEE AND IT IS FOUND THAT THE DEDUCTION CANNOT BE DENIED ON THE GROUND T HAT REQUISITE NUMBER OF WORKERS WERE NOT EMPLOYED BY THE APPELLAN T. 3.5 IT CAN BE SEEN FROM THE DISCUSSION IN THE PRECE DING PARAGRAPH THAT THE CONDITIONALITIES SPECIFIED UNDER SUB SECTI ON (2) OF SECTION 80IB ARE FULFILLED. THE ONLY ISSUE THAT REMAINS TO BE EXAMINED IS WHETHER, AS THE AO HAS HELD, THE ASSESSEE CLAIMING THE BENEFIT OF DEDUCTION U/S 80IB(11A) SHOULD ITSELF BE ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF DAIRY PRO DUCTS, OR, AS THE APPELLANT HAS ARGUED. ANY PROFIT, DERIVED FROM SUCH A BUSINESS REFERRED TO ABOVE, EVEN THOUGH THE SAME IS OUTSOURC ED TO ANOTHER ENTITY, IS ELIGIBLE FOR DEDUCTION. A PERUSAL OF SEC TION 80IB(2) WHICH IS THE MACHINERY PROVISION, REVEALS THAT THE CONDITION RELATING TO 8 ITA NO.937/DEL/2017 MANUFACTURE AND PRODUCTION OF AN ARTICLE OR THING N EEDS TO BE SPECIFICALLY RESTRICTED TO INDUSTRIAL UNDERTAKING F ALLING UNDER SUBSECTIONS (3) TO (5) OF SECTION 80IB. THE SUBSEQU ENT SUB SECTIONS ARE APPLICABLE TO ENTITIES CARRYING OUT SPECIFIC BU SINESSES, SUCH AS SHIP, HOTEL, CONVENTION CENTRE, MULTIPLEX THEATRE, COMMERCIAL PRODUCTION OF MINERAL OIL, DEVELOPMENT OF HOUSING P ROJECT ETC. WHEN THE PROVISIONS OF 80IB(11A) ARE EXAMINED CLOSELY, I T IS FOUND THAT THE ONLY CONDITION IS THAT THE UNDERTAKING SHOULD BE DE RIVING PROFIT FROM THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAG ING OF DAIRY PRODUCTS. WHEN THERE IS NO PARTICULAR RESTRICTION U NDER I.T ACT, SUCH INTERPRETATION CANNOT BE DERIVED ARTIFICIALLY. THER E IS NO CONDITION SPECIFIED U/S 80IB(11A) STATING THAT THE BUSINESS O F PROCESSING, PRESERVATION AND PACKAGING OF DAIRY PRODUCTS HAS TO BE CARRIED OUT BY THE ASSESSEE WHO CLAIMS THE DEDUCTION. WHEN WE T URN TO THE FACTS OF THE CASE, THERE IS AN AGREEMENT BETWEEN TH E APPELLANT AND UDL DATED 04.07.2008 FOR MANUFACTURING, PROCESSING AND PACKAGING ACTIVITIES OF LIQUID MILK, AS PER THE SPECIFICATION PROVIDED BY IT AND UNDER ITS SUPERVISION. THE MOTHER DAIRY GUIDELINES FOR PACKING MADE BY VENDORS AND THE GUIDELINES FOR STORING MILK, TES TING ETC. ARE ALSO SET OUT. THE AGREEMENT SIGNED BETWEEN INITIALLY BET WEEN MOTHER DAIRY AND PANCHMAHAL PROPERTIES LTD. DATED 15.10.20 07 (AMENDED VIDE AGREEMENT DATED 23.12.2008) STANDS ASSIGNED TO THE APPELLANT WITH THE CONSENT OF MOTHER DAIRY DATED 24.12.2008 A ND THE ASSIGNMENT AGREEMENT DATED 29.12.2008 BETWEEN PANCH MAHAL PROPERTIES LTD. AND THE APPELLANT MEANT THAT THE AP PELLANT STEPPED INTO THE SHOES OF PANCHMAHAL PROPERTIES LTD. AS CAN BE SEEN FROM THE AGREEMENT BETWEEN THE APPELLANT AND UDL DATED 0 4.07.2008, THE FACTORY BUILDING WAS TO BE BUILT ON LAND OWNED BY UDL AND WITH THE FUNDS OF THE APPELLANT. THE BUILDING WAS TO BE TRANSFERRED BACK TO THE APPELLANT AT COST AFTER THE COMPLETION OF CO NSTRUCTION AND WITH THE PRIOR APPROVAL OF THE BIFR, BUT THE OWNERSHIP O F THE LAND WOULD ALWAYS REMAINED WITH UDL. THE FUNDS AND THEREBY THE OWNERSHIP OVER THE REQUISITE PLANT AND EQUIPMENT INSTALLED IN THE FACTORY BUILDING CONTINUED TO REMAIN WITH THE APPELLANT. IT IS ALSO CLEAR THAT THE BENEFICIAL OWNERSHIP OF THE BUILDING IS AVAILAB LE WITH THE APPELLANT. EVEN OTHERWISE, AS HELD BY THE PUNE ITAT IN THE CASE OF ANURAG RADHESHAM ATTAL (ITA NOS. 8 TO 9 AND 863/PN/ 2012) THE OWNERSHIP OF THE FACILITIES AND MANPOWER ON PAY ROL L IS NOT A SINE QUA NON FOR CLAIMING DEDUCTION U/S 80IB(11A). 3.6 THE OTHER OBJECTION OF THE AO IS THAT THE CLAIM OF BENEFIT U/S 80IB (11A) IS A COLOURABLE DEVICE TO EVADE TAX AS THE EN TITY, WHICH IS ACTUALLY ENGAGED IN THE BUSINESS OF PROCESSING OF D AIRY PRODUCTS, I.E. UMANG DAIRY LTD., IS AN ERSTWHILE SICK COMPANY WHIC H HAS BEEN REHABILITATED VIDE BIFR ORDER DATED 03.08.2009, AND WOULD BE HAVING HEAVY BROUGHT FORWARD LOSSES AND THEREBY WOU LD BE UNABLE TO CLAIM THE DEDUCTION. IN THIS REGARD, THE APPELLA NT HAS FILED AS 9 ITA NO.937/DEL/2017 REQUESTED, THE ITR AS WELL AS ANNUAL ACCOUNTS OF UM ANG DAIRY W.E.F A.Y. 2009-10 TO 2013-14, WHICH REVEALS THE FOLLOWIN G PICTURE: A.Y. 2009-10 : RS. (-) 4,54,00,952 A.Y. 2010-11 : RS. (-) 4,23,41,887 A.Y. 2011-12 : RS.NIL (AFTER SET OFF OF UNABSORBED BUSINESS LOSS RS. 3,77,01,783) A.Y. 2012-13 : RS.NIL (AFTER SET OFF OF UNABSORBED BUSINESS LOSS RS. 14,67,37,286) A.Y.2013-14 : RS. 5,58,14,476 (AFTER SET OFF OF UNA BSORBED BUSINESS LOSS RS. 10,16,01,267) 3.6.1. THUS FOR THE YEAR UNDER CONSIDERATION IT IS SEEN THAT UMANG DAIRIES LTD. IS A PROFITABLE ENTITY AND THE SUSPICI ONS OF THE AO ARE PROVEN INCORRECT. KEEPING IN VIEW THE DISCUSSION IN THE AFORESAID PRECEDING PARAGRAPHS, THE OBJECTIONS RAISED BY THE AO TO DENY THE CLAIM U/S 80IB1(11A) ARE SEEN TO BE INVALID. GROUND NO. 1 IS ALLOWED. 5.2 BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF T HE ASSESSING OFFICER AND SUBMITTED THAT IT IS NOT THE CASE WHERE A PART OF THE JOB HAS BEEN OUTSOURCED, BUT IN THE CAS E ENTIRE MANUFACTURING ACTIVITY HAS BEEN OUTSOURCED AND, THE REFORE, NO MANUFACTURING ACTIVITY HAS BEEN CARRIED OUT BY THE ASSESSEE AND THUS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80IB( 11A) OF THE ACT. 5.3 ON THE CONTRARY, THE LEARNED COUNSEL FOR THE ASSES SEE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT R EVENUE HAS NOT CHALLENGED THE DISALLOWANCE OF THE DEPRECIATION ON PLANT AND MACHINERY IN THE PRESENT APPEAL FILED, WHICH SHOWS THAT CLAIM OF DEPRECIATION ON MACHINERY FOR PUT TO USE OF MANUFAC TURING HAS BEEN ACCEPTED BY THE REVENUE. ACCORDING TO THE LEAR NED COUNSEL, WHEN THE REVENUE ITSELF HAS ACCEPTED THE CLAIM OF T HE 10 ITA NO.937/DEL/2017 DEPRECIATION, WHICH IS ALLOWED FOR PUTTING THE MACH INERY TO USE OF MANUFACTURING, THE ARGUMENT IN SUPPORT OF THE GROUN D OF DELETION OF 80IB DEDUCTION THAT NO MANUFACTURING HAS BEEN CA RRIED OUT ARE SELF-CONTRADICTORY. THE LEARNED COUNSEL SUBMITT ED THAT REVENUE CANNOT ARGUE CONTRARY ONCE THEY HAVE ACCEPT ED THE CLAIM OF THE DEPRECIATION OF THE ASSESSEE. 5.4 IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL RELIED ON FOLLOWING DECISIONS: (I) DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS JYOTI PLASTIC WORKS P. LTD. REPORTED IN 399 I TR 491 (II) DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DELHI PRESS PATRA PRAKASHAN LTD REPORTED IN 355 ITR 14 (III) DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE O F CIT VS ELGI ULTRA INDUSTRIES LTD REPORTED IN 210 TAXMAN (204) . 5.5 THE LEARNED COUNSEL ALSO SUBMITTED THAT ASSESSING OFFICER HIMSELF IN ASSESSMENT YEAR 2018-19 HAS ALLOWED THE CLAIM OF DEDUCTION OF THE ASSESSEE AND, THEREFORE, CONTESTIN G THE SAME CLAIM FOR EARLIER YEAR BEFORE THE TRIBUNAL BY THE A SSESSING OFFICER IS NOT JUSTIFIED. 5.6 IN THE REJOINDER, THE LEARNED DR SUBMITTED THAT IN THE CASE OF JYOTI PLASTIC WORKS PRIVATE LIMITED (SUPRA) ONLY PART OF JOB WORK WAS OUTSOURCED AND, THEREFORE, FACTS OF SAID CASE A RE DISTINGUISHABLE. 11 ITA NO.937/DEL/2017 5.7 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT METAL ON RECORD . THE ISSUE IN DISPUTE REGARDING THE DISALLOWANCE OF DEDUCTION UND ER SECTION 80IB(11A) IS MAINLY RELATED TO MANUFACTURING. ACCOR DING TO THE ASSESSING OFFICER THE ASSESSEE HAS OUTSOURCED ITS E NTIRE MANUFACTURING AND, THEREFORE, THE ASSESSEE IS NOT E NTITLED FOR BENEFIT OF DEDUCTION. HOWEVER, ON PERUSAL OF THE FA CTS ON RECORD, WE FIND THAT THE ASSESSEE IS OWNER OF PLANT AND MAC HINERY WHICH HAVE BEEN ENGAGED FOR THE PURPOSE OF MANUFACTURING. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEPRECIAT ION ON SUCH PLANT AND MACHINERY, HOWEVER, LD. CIT(A) DELETED SU CH DISALLOWANCE AND THE REVENUE HAS NOT CHALLENGED SAI D FINDING OF THE LEARNED CIT(A). THIS MEANS, THE REVENUE HAS ACC EPTED THE PLANT AND MACHINERY ON WHICH DEPRECIATION HAS BEEN CLAIMED, WAS PUT TO USE FOR MANUFACTURING PROCESS BY THE ASS ESSEE. ONCE THE CLAIM OF THE DEPRECIATION ON MACHINERY ENGAGED FOR MANUFACTURING HAS BEEN ACCEPTED BY THE REVENUE, CON TESTING THAT NO MANUFACTURING HAS BEEN CARRIED OUT BY THE ASSESS EE IS SELF- CONTRADICTORY AND NOT JUSTIFIED. FURTHER, THE CONTE NTION OF THE ASSESSEE THAT ASSESSEE WAS ENGAGED IN COLOURABLE DE VICE OF EVASION OF TAXES HAS NOT BEEN FOUND TO BE CORRECT. THE ALLEGATION OF THE ASSESSING OFFICER THAT THERE WERE LARGE AMOU NT OF CARRY- FORWARD LOSSES IN THE CASE OF UMANG AND THEREFORE DEDUCTION HAS BEEN CLAIMED IN THE CASE OF ASSESSEE. THIS CLAIM OF THE ASSESSING OFFICER HAS BEEN NOT FOUND TO BE CORRECT AS LD. CIT (A) HAS POINTED OUT THAT THERE WAS PROFIT IN THE CASE OF THE UMANG DURING THE YEAR UNDER CONSIDERATION. 12 ITA NO.937/DEL/2017 5.8 FURTHER, ON PERUSAL OF THE ASSESSMENT ORDER FOR AS SESSMENT YEAR 2018-19, AVAILABLE ON PAGE 118 TO 119 OF THE P APER-BOOK OF ASSESSEE, WE FIND THAT CASE WAS SELECTED UNDER SCRU TINY MAINLY FOR VERIFICATION OF CLAIM OF THE DEDUCTION OF THE A SSESSEE. THE ASSESSING OFFICER IN THE SCRUTINY ASSESSMENT COMPLE TED ON 21/02/2021 HAS ACCEPTED THE CLAIM OF THE ASSESSEE F OR DEDUCTION UNDER SECTION 80IB OF THE ACT. IN OUR OPINION, WHEN THE SAME CLAIM HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2008-19, THE ASSESSING OFFICER IS NOT JUSTIFIE D IN CONTESTING THE SAME ISSUE FOR EARLIER YEAR. 5.9 IN OUR CONSIDERED OPINION, THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY ERROR IN THE SAME. ACCORDINGLY, WE UPHOLD THE SAME. THE G ROUNDS NO. 2 & 3 OF THE APPEAL OF THE REVENUE ARE ACCORDINGLY DI SMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2021 SD/- SD/- (K.N. CHARY) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH SEPTEMBER, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI