Smt. Uma Saini, Ludhiana V. ITO, W-7(2), Ludhiana

ITA 965/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0814 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 09-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N.D.GUPTA
• Keywords: Opportunity of being heard

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH SMC CHANDIGARH , ! BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 965/CHD/2018 !' # $# / ASSESSMENT YEAR : 2015-16 SMT. UMA SAINI, N-8, SOUTH CITY, LUDHIANA. VS THE ITO, WARD 7(2), RISHI NAGAR, LUDHIANA. ./ PAN NO: BEFPS8393G / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI ASHWANI KUMAR,CA / REVENUE BY : SHRI N.D.GUPTA, JCIT / DATE OF HEARING : 22.05.2019 !'#$%& / DATE OF PRONOUNCEMENT : 03.06.2019 %&/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 29.05.2018 OF CIT(A) -3, LUDHIANA PERTAINING TO 2015-16 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. CIT(A)-3 LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN DENYING THE CLAIM OF DEDUCTION U/S 80JJA OF THE INCOME TAX ACT ,1961 AMOUNTING TO RS. 12,49,363/- O N THE GROUND THAT THE APPELLANT DID NOT SATISFY THE STIPULATED CONDITIONS. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE WHO HAD BEEN CLAIMING DEDUCTION U/S 80JJA SINCE 2009-10 ASSESSME NT YEAR, IN THE YEAR UNDER CONSIDERATION PUT UP A CLAIM THAT IT HAS SET UP A NEW BUSINESS CLAIMING DEDUCTION U/S 80JJA FOR PRODUCING BIO FERTILIZERS. NOTING THE FACT THAT THE ASSESSEE TILL 2014-15 ASSESSMENT YEAR CLAIMED TO HA VE ENGAGED IN THE PRODUCTION AND SALE OF BIO PESTICIDES ON ACCOUNT OF WHICH TAX EXEMPTION U/S 80JJA HAD BEEN SOUGHT AND HAD BEEN GRANTED THE CLAI M FOR PRODUCING BIO FERTILIZERS AFTER SETTING UP A NEW UNIT WAS QUESTIO NED. THE ASSESSEE RELIED UPON CERTIFICATE OF MINISTRY OF AGRICULTURE DATED 3 0.05.2014 TO STATE THAT THE ITA 965/CHD/2018 A.Y. 2015-16 PAGE 2 OF 4 ASSESSEE IS MANUFACTURING ORGANIC FERTILIZERS UNDER THE BRAND NAME SOIL FOOD. REFERRING TO THE FACT THAT THERE IS AN EARLI ER CERTIFICATE DATED 29.05.2008 CLAIMING THAT THE ASSESSEE WAS MANUFACTURING FERTIL IZERS THE AO AND THE CIT(A) QUESTIONED THE EVIDENCE RELIED UPON BY THE ASSESSEE ON THE GROUND THAT SAID CERTIFICATE DATED 30.05.2014 DOES NOT DECLARE THE S PECIFIC PERIOD I.E. FOR HOW MANY YEARS THE ASSESSEE IS STATED TO BE ENGAGED IN THE SPECIFIC BUSINESS. THE ASSESSEE ALSO PUT UP AN ALTERNATE PLEA THAT HE WAS ENGAGED IN THE AGRICULTURE ACTIVITY WHICH WAS ALSO REJECTED. 3. BOTH THE PARTIES HAVE BEEN HEARD. THE RELEVANT PROVISION INVOKED BY THE ASSESSEE FOR CLAIM OF DEDUCTION IS EXTRACTED HEREUN DER : 80JJA - 'DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM BU SINESS OF COLLECTING AND PROCESSING OF BIO-DEGRADABLE WASTE ' 'WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUD ES ANY PROFITS AND GAINS DERIVED FROM THE BUSINESS OF COLLECTING AND PROCESSING OR TREATI NG OF BIO-DEGRADABLE WASTE FOR GENERATING POWER [OR PRODUCING BIO-FERTILIZERS, BIO-PESTICIDES OR OTHER BIOLOGICAL AGENTS OR FOR PRODUCING BIO-GAS OR] FOR MAKING PELLETS OR BRIQUET TES FOR FUEL OR ORGANIC MANURE, THERE SHALL BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, [A DEDUCTION OF AN AMOUNT EQUAL TO THE WHOLE OF SUCH PROFITS AND GAINS FOR A PERIOD OF FIVE CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH SUCH BUSINESS COMMENCES]. 3.1 IT IS SEEN THAT ADMITTEDLY THE LAW REQUIRES THE FULFILLMENT OF THE CERTAIN CONDITIONS BEFORE THE DEDUCTION IS TO BE ALLOWED. THE DEDUCTION UNDER THE SECTION IS AVAILABLE TO AN ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF : (I )COLLECTING OF BIO-DEGRADABLE WASTE (II) EITHER PROCESSING OR TREATING OF BIO-DEGRADABL E WASTE (III)THE PURPOSE OF COLLECTION ANDPROCESSING/ TREA TING OF BIO-DEGRADABLE WASTE COULD BE ONE OF THE FOLLOWINGS: GENERATION OF POWER. PRODUCTION OF BIO-FERTILIZERS, PRODUCTION OF BIO-PESTICIDES PRODUCTION OF OTHER BIOLOGICAL AGENTS PRODUCTION OF BIO-GAS PRODUCTION OF PELLETS/ BRIQUETTES FOR FUEL PRODUCTION OF ORGANIC MANURE. THE PROFITS OF SUCH BUSINESS ARE DEDUCTIBLE FROM THE GROSS TOTA L INCOME OF THE ASSESSEE. SUCH DEDUCTION IS AVAILABLE FOR A PERIOD OF FIVE C ONSECUTIVE YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WH ICH SUCH BUSINESS HAS COMMENCED. 3.2. IN THE FACTS OF THE PRESENT CASE, ADMITTEDLY A TAX HOLIDAY U/S 80JJA FROM 2009-10 TO 2013-14 ASSESSMENT YEAR HAD BEEN SOUGHT AND HAS BEEN GRANTED ITA 965/CHD/2018 A.Y. 2015-16 PAGE 3 OF 4 TO THE ASSESSEE FOR PRODUCING BIO PESTICIDES. CERT IFICATE DATED 30.05.2014 ADMITTEDLY DOES NOT REFER TO THE FACT WHETHER THE A CTIVITY OF PRODUCING ORGANIC MANURE OR BIO-FERTILIZER HAS BEEN STARTED SIMULTANE OUSLY WITH BIO-PESTICIDES AS A NEW PRODUCT. THE REPLY OF THE ASSESSEE EXTRACTED IN PARA 6.2.2 OF THE ASSESSMENT ORDER SHOWS THAT SOME BIO-DEGRADABLE WAS TE WAS COLLECTED FROM VARIOUS INDUSTRIES. THE SAME IS EXTRACTED HEREUNDER : 6.2.2 AS FAR AS THE CONTENTION OF THE ASSESSEE RAISED VID E REPLY DATED 04.12.2017 SENT THROUGH EMAIL IS CONCERNED, IT IS OBSERVED THAT NON E OF THE CONDITIONS AS LAID DOWN IN SECTION 2(1 A) OF THE ACT APPLIES TO THE CASE OF ASSESSEE, AS THE PURPOSE FOR WHICH THE LAND IS BEING'' USED IS NOT FOR AGRICULTURAL PURPOSES, RATHER IT IS BEING USED FOR PROCESSING THE BIODEGRADABLE WASTE LIKE INDUSTRIAL WASTE, CROP WASTE, COW DUNG E TC TO PRODUCE MANURE OR FERTILIZERS WHICH ARE USED TO HELP AGRICULTURE. MOREOVER, NO AGRICULT URAL ACTIVITY IN TERMS OF CULTIVATION, IRRIGATION, SOWING ETC IS BEING CARRIED OUT IN THE CASE OF THE ASSESSEE. SECONDLY, THE RAW MATERIAL BEING USED BY THE ASSESSEE IS BIO-DEGRADABLE WASTE COLLECTED FROM VAR IOUS INDUSTRIES LIKE MAGGI, CHOCOLATES, MILK POWDER, SUGAR, ETC. TH E ASSESSEE IS ALSO USING AGRICULTURAL WASTE LIKE WHEAT STRAW, RICE STRAW, KITCHEN WASTE ETC IN THE PRODUCTION PROCESS . THERE IS NEITHER ANY CULTIVATION OF CROPS NOR ANY CROP OR LIVESTOCK PROD UCTS BEING PRODUCED: NOR IS ANY ANIMAL HUSBANDRY & DAIRY SCIENCE INVOLVED. MOREOVER, DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE IN HER REPLIES FILED FROM TIME TO TIME HAS TAKEN A PLEA THAT THE ASSESSEE IS DOING BUSINESS AND THUS IS ELIGIBLE FOR DEDUCTION UNDER S ECTION 80JJA. (EMPHASIS SUPPLIED) 3.3. ACCORDINGLY, IN THE FACTS OF THE PRESENT CASE, FOR WANT OF RELEVANT DISCUSSION THE ISSUE CANNOT BE DECIDED ON THE BASIS OF BALD PLEAS AND A NON- SPEAKING GENERAL CERTIFICATE. THE ASSESSEE AS PER I TS CLAIM HAS STATED THAT ORGANIC FERTILIZERS ARE BEING PRODUCED. IT IS SEEN THAT THE RAW MATERIAL UTILIZED AS PER RECORD IS WASTE COLLECTED FROM VARIOUS INDUSTRIES LIKE MAGGI, CHOCOLATES, MILK POWDER, SUGAR, ETC. THE ASSESSEE IS ALSO USING AGRICULTURAL WASTE LIKE WHEAT STRAW, RICE STRAW, KITCHEN WASTE ETC. SOME O F THESE NECESSARILY WOULD HAVE CHEMICALS FOR PRESERVATION, TASTE ETC . WHETHER THE PRODUCT MANUFACTURED WITH THESE CONSTITUENTS WOULD BE LABLED ORGANIC FER TILIZER IS AN AREA WHICH IS REQUIRED TO BE ADDRESSED. IT IS NECESSARY FOR THE ASSESSEE TO ALSO CLARIFY WHETHER ALONG WITH THE ORIGINAL PRODUCTION OF BIO- PESTICIDES HAS THE ASSESSEE SUPPLEMENTED IT WITH AN ADDITIONAL PRODUCTION OF OR GANIC MANURE OR BIO- FERTILIZERS OR IS THE ASSESSEE CARRYING ON THE VERY SAME ACTIVITY WHICH IS NOW BEING SHOWN AS BIO-FERTILIZERS. THE REPORT OF A CHE MICAL EXPERT CERTIFYING THE CONTENTS OF THE TWO SEPARATE AND DISTINCT PRODUCTS NAMELY BIO-PESTICIDES AND BIO-FERTILIZERS OR ORGANIC MANURE NEEDS TO BE B ROUGHT ON RECORD. ACCORDINGLY, IN ORDER TO CARRY OUT RELEVANT ENQUIRY ON FACTS AND CONSIDER THE ITA 965/CHD/2018 A.Y. 2015-16 PAGE 4 OF 4 EVIDENCES OF REPORTS OR ORDERS OF EXPERTS/APPROPR IATE REGULATORY AUTHORITIES ETC., IF ANY ON THE ISSUE, THE MATTER IS REMANDED T O THE AO WITH THE DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSE E IN ITS OWN INTERESTS IS ADVISED TO PARTICIPATE FULLY AND FAIRLY BY PLACING RELEVANT FACTS AND EVIDENCES IN SUPPORT OF ITS CLAIM AS FAILING WHICH IT IS MADE CL EAR THAT THE AO WOULD BE AT LIBERTY TO PASS AN ORDER ON THE BASIS OF MATERIAL A VAILABLE ON RECORD. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEA RING ITSELF. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2019. SD/- ( ) (DIVA SINGH) ! / JUDICIAL MEMBER