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2007 (2) TMI 267 - AT - Income TaxDeduction u/s 80-IB - Profit And Gains From Industrial Undertakings - CIT held that, the raw material used by the assessee for the manufacture as well as the finished product was alcohol and hence there is no manufacturing activity involved - HELD THAT:- We find that the revenue is basically relying upon the decision of the Special Bench of this Tribunal in Shaw Scott Distilleries (P.) Ltd.'s [2000 (9) TMI 209 - ITAT CALCUTTA] when the Tribunal, for the purposes of relief u/s 80HH was considering a related issue. In this regard it is the submission of the learned Counsel of the assessee that the Commissioner of Income-tax, while taking the view that the assessee is not eligible for relief u/s 80-IB, relied on the decision in Shaw Scott Distilleries (P) Ltd.'s case without noticing that the facts in that case are totally different. We further observe in the case of CIT v. Rampur Distilleries & Chemical Co. Ltd. [2004 (11) TMI 88 - ALLAHABAD HIGH COURT] has held that since the term 'rectified spirit' is not mentioned in the 1st item of Eleventh Schedule "beer, wine and other alcoholic spirits" the same cannot be equated therewith and assessee engaged in production of rectified spirit is entitled for deduction of investment allowance for investment in plant and machinery. From the above, it is apparent that in Hon'ble High Court's view 'rectified spirit' is quite different from Whisky, Brandy, Rum etc. being Indian made foreign liquor which are all potable. In the present case the assessee after obtaining rectified spirit which is not potable and other materials processed them to obtain IMFL. The raw material including rectified spirit are not fit for consumption by human beings but the end-product IMFL is potable and is so recognised in the trade. It is abundantly clear that the assessee is entitled to relief u/s 80-IB being a small scale industry engaged in production of IMFL from rectified spirit. The end-product IMFL is quite distinct and is a commercially different article than the major input rectified spirit, which is not fit for human consumption. That the changes made in input results in a new arid different article is recognised in the trade as such. The same also has judicial recognition, as seen from expositions of Hon'ble Apex Court and Hon'ble Allahabad High Court cited above. Section 80-IB itself envisages as such by way of reference to Eleventh Schedule in section 80-IB(iii). Hence, in our considered opinion, it has to be concluded that the assessee in this case satisfies the requirement, that it manufactures or produces an article or thing for the purposes of section 80-IB of the Act. Thus, we hold that the assessee is entitled to relief u/s 80-IB. As such, we set aside the orders of lower authorities on this issue and decide the issue in favour of the assessee. In the result, the assessee's appeal is allowed.
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