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2016 (8) TMI 1518 - AT - Income TaxValidity of reopening of assessment - claim u/s.10B was disallowed - main contention of the ld.A.R that the reopening is invalid cannot be accepted because there was no scrutiny assessment earlier for this assessment year and also there is no failure on the part of the assessee to disclose the material facts - A.R pleaded that the re-opening of assessment is without jurisdiction and that fresh application of mind by the AO on similar facts would tantamount to review of own decision and that the amended section u/s.147 does not authorize it - HELD THAT:- AO had jurisdiction to issue notice u/s.148 for bringing to tax income escaping assessment in an intimation under sec.143(1)(a) on the ground that the claim of deduction by the assessee was not acceptable as the conditions for allowance not fulfilled. Failure to take steps u/s.143(3) of the Act will not render the AO powerless to initiate reassessment proceedings when intimation u/s.143(1) has been issued. Being so, we do not find any infirmity in the reopening of assessment for the A.Y. 2006-07. This ground of appeal of the assessee is dismissed. Deduction u/s.10B - manufacturing activities under section 2(29BA) - as assessee has not discharged the onus of proving that the undertaking was set up without transferring any machinery used for any other purpose earlier Revenue has denied the deduction claimed u/s.10B - HELD THAT:- Assessee-company has not undertaken any manufacturing activity. The assessee has not manufactured any new article or thing distinct from the original raw material. The final product i.e., article or thing cannot be called by any other name than the original name. The assessee has purchased live crab and finally sold the crab in the form of meat. The assessee does only processing activity for the purpose of preservation and marketing the same. The assessee purchased crab from fishermen and sells to the public/customers. Whatever activity is undertaken by the assessee is for only to preserve the product. Whereas the contention of the ld.A.R is that at the time of purchase from the fishermen/agents, it was live crab and it was undergone various manufacturing activities before selling it for human consumption. After purchase of the live crab it is processed by various treatments which are cleaning, grading, separating, laboratory testing, preserving treatment and packing and labeling. After these treatments, the crab becomes a consumable crab for human consumption. There is no change in the biological component of the crab. It is to be noted that the live crab would have been used in the same manner as the crab meat is used for human consumption. There is no change in the substance using in live crab or using it as by extracting it as meat from the same live crab. The crab meat is crab meat only - live crab would be used for human consumption as crab meat used for human consumption. In other words, input and output is same, which is crab only. It is well settled law that process of standardization, preservation, grading cannot be treated as manufacture activity or production. No merit in the argument of the ld.A.R that in earlier assessment year deduction u/s.10B was granted, even in the assessment year under consideration, the same view must be adopted - assessee can be allowed deduction, but the satisfaction of the conditions envisaged in the law could not be said that it was fulfilled merely because it was erroneously allowed deduction in the earlier years. It is a settled position that res judicata is not applicable in the administration of tax laws. No vested right can be held to be created in favour of the assessee merely because of allowance or deduction in the earlier years which is not legally entitled to. In view of the above, we upheld the order of Ld.CIT(A) on denying the deduction u/s.10B Similarly, alternate claim u/s.80IB(11A) of the Act has no merit.- Decided against assessee.
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