TMI Blog2010 (9) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... officer to initiate reassessment proceedings and the notice issued under section 148 was within four years from the end of the assessment year involved - Decided against the assessee - ITA Nos. 293 & 361/Hyd/2006 & 105 & 106/Hyd/2007 - - - Dated:- 30-9-2010 - G.C. GUPTA, VICE-PRESIDENT J. AND AKBER BASHA, ACCOUNTANT MEMBER J. A. Tripathy for the Appellant. S. Rama Rao for the Respondent. ORDER Per Akber Basha, Accountant Member: These four appeals, three by the revenue and one by the assessee are directed against separate orders of the CIT (A)-V, Hyderabad dated 5-1-2006, 10-11-2006 and 10-11-2006 and they pertain to the assessment years 2002-03, 2003-04 and 2004-05. Since issues involved in these appeals are similar in nature, these are taken up together and disposed off by this common order for the sake of convenience. ITA No.361/Hyd/06- (Departmental Appeal): This appeal filed by the revenue is directed against the order of the CIT (A)-V, Hyderabad pertaining to the assessment year 2002-03. The main effective ground raised by the revenue is that the CIT (A) is not justified in deleting the amount of Rs.26,57,350 and allowing deduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) On perusal of the note submitted by the assessee, it is evident that the assessee has not undertaken any manufacturing activity. 2) The assessee firm 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 seed and finally as sold the seed only. 3) The assessee does only trading activity. The assessee firm purchases seeds from former and sells to the formers. 4) Whatever activity is undertaken by the assessee is for only to increase the shelf life of the seed and 5) The facts and business activity of the assessee case and facts of the case of M/s Venkateswara Hatchery Pvt. Ltd and other (237 ITR 174) found to be similar. 3. The issue before the Hon'ble Supreme Court in the above case was that whether the assessee is neither an industrial undertaking nor is it engaged in the business of producing "articles of things", consequently, the assessee is not entitled to developmental allowance under section 32A of the Act and deductions under sections 80HH and 80HHA of the Act. The Apex Court held that on a peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product i.e., article or thing cannot be called by any other name than the original name. The assessee has purchased seed and finally sold the seed only. The assessee does only trading activity. The assessee firm purchases seeds from former and sells to the formers. Whatever activity is undertaken by the assessee is for only to increase the shelf life of the seed and the facts and business activity of the assessee case and facts of the case of M/s. Venkateswara Hatchery Pvt. Ltd., reported in 237 ITR 174 are found to be similar. Hence, he prayed that order of the CIT [A] is to be cancelled and that of the assessing officer is to be restored. In support of his contentions, he relied on the following case law:- i) CIT vs. Relish Foods (237 ITR 59) (SC) ii) CIT vs. T.S. Sundaram ( 237 ITR 61) (SC) iii) DXN Herbal Mfg. (India) P. Ltd. vs. ITO (110 ITD 99 (Chennai) iv) CIT vs. Srinivasa Sea Foods Ltd. (284 ITR 348) AP v) CIT vs. Parry Agro Industries Ltd (284 ITR 353) (Ker.) vi) Kwal Pro Exports vs. ACIT (297 ITR (AT) 49 (Jodhpur) 5. On the other hand, the learned authorized representative of the assessee submitted that the assessing officer is of the view that processi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Therefore, it is not correct for the assessing officer to say that both are common. In support of his contentions, he relied on the following decisions:- a) ITAT, Ahmedabad "C" Bench in ITA No.2816/Ahd/1996 dated 29-11-1989 ( 32 ITD 703) b) Madras High Court in the case of CIT Vs. EID Perry (India) Ltd. 218 ITR 713 (Mad.) c) Supreme Court's decision in the case of Rajasthan Agricultural input Dealers Association (AIR 1996 SC 2179 SCC 479) d) Bombay High Court in the case of CIT vs. Jalna Seeds Processing and Refrigeration Co. Ltd. (246 ITR 156 (Bom) In view of the above decisions, it is contended by the learned counsel for the assessee that the decisions relied upon by the assessing officer in his order is not applicable to the facts of the present case. It is contended that in view of the decisions mentioned by the assessee, the activity carried on by the assessee represents manufacturing activity. The assessing officer relied on the decision of the Supreme Court in the CIT vs. Venkateshwara Hatcheries Pvt. Ltd and the said decision has no application to the facts of the assessee's case. In the said decision the question was whether a chick can be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le from the term manufacturing in the sense that a mere processing does not ordinarily make the thing to undergo a change losing its original identity, whereas in the manufacturing, the original articles lose its identity. The term manufacture or produce in section 80IB of the Act can be considered only when a commercially new and distinct product comes into existence after undergoing manufacturing activities. If the intension of the Legislature is to include processing also to claim exemption under section 80IB of the Act, the condition precedent for granting exemption under this section, the words manufacturing or processing would have been used instead of manufacture or produce. In the case under consideration, we find that the assessing officer in his entire order discussed this point of issue and observed that the assessee company has not undertaken any manufacturing activity. The assessee firm 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 seed and finally sold the seed only. The assessee does only trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is well settled law that process of standardization and pasteurization of milk does not amount to manufacture/production for the purpose of claiming deduction under section 80IB of the Act.( B. G. Chitale vs. Dy. CIT (2008) 115 ITD 97 (Pune) (SB). Like wise the processing of mineral water also not amounts to manufacture. The activity of the assessee firm is similar to the activity referred to in the case of B.G. Chitale (supra). Hence, the decisions relied on by the learned counsel for the assessee is distinguishable on facts. Hence, the order of the CIT [A] is reversed and that of the assessing officer is restored. Hence, the appeal of the revenue is allowed. ITA No.293/Hyd/06- (Assessee's Appeal): 7. This is an appeal filed by the assessee is directed against the order of the CIT (A)-V, Hyderabad pertaining to the assessment year 2002-03. The assessee raised the following grounds of appeal:- 1. The order of the learned CIT (A) is erroneous both on facts and in law in so far as it is prejudicial to the assessee. 2. The order passed under section 143(3) read with section 147 is invalid as the notice under section 148 was not legally valid. 3. The learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee on this issue and no interference is called for. Hence this ground of the assessee is rejected. 8. Third ground of appeal is with regard to the denial of deduction under section 80IB of the Act to the interest income received through UTI Bond Fund. Since we have already held that the assessee firm is not eligible to claim deduction under section 80 IB of the Act for the reasons given in paragraph-6 of this order, the ground raised by the assessee has become infructuous on this issue and therefore the same is dismissed as such. 9. Fourth and 5th grounds raised by the assessee in this appeal are merely consequential in nature and accordingly the same are rejected. 10. In the result, the appeal filed by the assessee stands dismissed. ITA Nos.105 106/Hyd/07- (Departmental Appeals): 11. These two appeals are filed by the revenue for assessment years 2003-04 and 2004-05. We find that the grounds raised in these two revenue's appeals are quite identical and similar to the grounds raised in ITA No.361/Hyd/2006 (revenue's appeal). We have already allowed the appeal of the revenue in ITA No.361/Hyd/06. Following the reasoning given there under in this order ment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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