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TMI Blog2013 (9) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that there is no difference between a "Flour Mill" and a "Roller Flour Mill." 3 Out of above grounds, ground No, 1 was not pressed and therefore, the same is dismissed as not pressed. 4 Grounds No. 2 & 3 - After hearing both the parties we find that the assessee is partnership concern and was engaged in the business of running a Flour Mill manufacturing Atta, Maida and Suzi etc. During the year the assessee had filed return of income declaring nil income after claiming deduction u/s 80IC amounting to Rs. 23,67,692/-. The claim of deduction u/s 80IC was rejected by the Assessing Officer. 5 On appeal before the ld. CIT(A) it was mainly submitted that the assessee was running a Roller Flour Mill which was distinct from Flour Mill. Assessee's unit was initially a Flour Mill and later on same was converted into a Roller Flour Mill. It was submitted that the Roller Flour Mill was different from Flour Mill. The ld. CIT(A) after examining the submissions did not accept the claim of the assessee vide para 6.4 to 6.9 which are as under: "6.4 I have considered the rival submissions. It is seen that the appellant commenced production on 29.5.1998 i.e. in Assessment year 1999-2000. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word "roller" and "mill" so as to understand the intention of the legislature. 6.8 As per the New Penguin English Dictionary, the word "roller" means "a revolving cylinder over or on which something is moved or which is used to press, shape or apply something". As per the same dictionary "mills" means "1. A building provided with machine for grinding grain into flour 2. A machine or apparatus for grinding grain". The w ord "roller" in "roller flour mill" is aimed to suggest only one type of flour mill which falls under the overall genre of flour mill. Obviously the legislature did not intent to grant deduction to any "flour mill" which is a much wider term than "roller flour mill". As a result, the appellant's claim fails to pass muster. Thus there is no further interpretation to be made as to what was the intention of the legislature. 6.9 Therefore, the deduction u/s 80IC is not allowable to the appellant and deduction allowed u/s 80IB @ 25% is confirmed and does not call for any interference. As a result, these grounds are dismissed." 6 Before us, the ld. counsel of the assessee moved an application for admission of additional evidence. He submitted that additional evidence w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned at S No. 8 in Part B of Schedule 13 which is in negative list for Himachal Pradesh. This observation was given on the basis of classification given in National Industries Classification and NIC 1998 which also clarified the activity in a particular industries and ultimately it was held that activity of Flour Mill and Roller Flour Mill is same. For the sake of clarity we would like to reproduce paras no. 9 to 12 of the order of the Tribunal in case of Pooja Industries (supra) which are as under: "9 We have heard the rival submissions carefully. We find that the ld. CIT(A) has discussed the issue in detail and in this regard we would like to produce para 4 to 4.4 of her order which are as under: "4 The rival submissions have been considered. Q - The entry at Sr No. 8 in Schedule XIII, Part B reads "Flour Mill/Rice Mill ". On the fact of it, the entry makes it clear that all types of flour mills and rice mills are covered by this entry. It does not elaborate the categories or types of flour mills and rice mills. The heading of the XIII schedule reads "List of Article or thing". Therefore, it is clear that what is prohibited by virtue of XIII schedule is the production/man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een held that makai poha i.e. corn boiled and flattened between rollers, is classifiable under the heading 11.01 of the Central Excise Tariff Act. 4.3 The assessee's contention that the State Government of Himachal Pradesh has accepted the distinction between flour mill and roller flour mill is of no relevant. The scheme of sales tax incentives which was in force in the State in 1994 was entirely a separate scheme notified by the State Government. That scheme has no relevance or connection with the tax holiday comprised in section 80IC, which was enacted by the Finance Act, 2003 as a part of the new industrial policy of the Central Government announced in 2003 for States like H.P. This becomes further clear by the fact that the list of ineligible industries contained in schedule XIII is almost entirely different in content from the list of units declared to be ineligible for sales tax incentives by the State Government. For the purpose of the Income-tax Act, the entry in schedule XIII has to be understood in its normal sense and not in terms of any clarifications issued by the State Government under an entirely different scheme. 4.4 A statute is the edict of the legislature. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erivatives, dyes, colours, paints and varnishes, putty, fillers and other mastics, inks 7 Marble and mineral 25.04 14106 or substances nor 14107 classified elsewhere 25.05 8 Flour mills/rice mills 11.01 15311 9 TO 20 From the above it is clear that deduction u/s 80IC is available whenever the assessee undertakes a substantial expansion. The issue relating to substantial expansion has not been disputed by the Assessing Officer. However, Sub-sec (2) further requires that deduction is available only to such undertaking which begins to manufacture or produce any article or thing which are not mentioned in schedule XIII, Part B. Thus it is clear as observed by the ld. CIT(A) the deduction is not denied on a particular type of mill but it is denied on a particular type of article or thing which is mentioned therein. It s hould be em phas ized t hat part B of Schedule XIII, item 8 talks of Flour mill under the head "activity or article or thing" but that has been further clarified in the schedule itself by way of excise classification as well as sub-clause under National Industries Classification (N.I.C) 1998. The ld. CIT(A) has further observed that Central excise tariff classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts into milling of flour and maida and suzi is only at 11. 39% which can be called as bi-product. Thus it is clear that main activity of the assessee is milling and by doing the activity listed in the negative list in Part B of Schedule XIII, deduction u/s 80IC, is not available. 12 The ld. counsel of the assessee had put up lot of stress on the clarification of legal exemption granted by the Government of Himachal Pradesh. Relevant letter is extracted below: "Ind(A)(F)6-16/94 Government of Himachal Pradesh Industries Department The D.C-cum-Secretary (Industries) to the Government of Himachal Pradesh To The Director of Industries Himachal Pradesh, Shimla-1 Dated, Shimla-2 1.7.1994 June 1994 Sub: Sales Tax Exemption to Roller Flour Mills, Clarification thereof Sir, I am directed to reply to your letter No. In/Dev., F.19-18/91-IB dated 20.4.94 in the above cited subject and to say that the matter has been examined in consultation with Law Department. According to rule 11.1 (d) of the Revised Rules Regarding grant of incentives to Industrial Units in Himachal Pradesh, all Industrial Units re eligible for sales tax incentives which are registered as appellate authority dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 as under: "There are innumerable decisions of this Court which have laid down the test or the principles to be borne in mind in construing the items or Entries in Fiscal statutes. In recent decision in Indian Cable Company Ltd. Calcutta Vs.. Collector of Central Excise, Calcutta and others (1994) 6 SCC 610 - at page 615) a three member Bench stated the law thus: "...........in construing the relevant item or entry, in fiscal statutes, if it is one of every day use, the authority concerned must normally construe it, as to however, it is understood in common parlance or in the commercial world or trade circles. It must be given its popular meaning. The meaning given in the dictionary must not prevail. No should the entry be understood in any technical or botanical or scientific sense. In the case or technical words, it may call for a different approach. The approach to be made in such cases has been stated by Lord Esher in Unwin v. Hanson thus: "If the Act is directed to deal with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. If the Act is one passed with reference to a particular trade, busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount has already been paid therefore, the decision of Special Bench in case of Merilyn Shipping Transporters V. ACIT, 136 ITD 23 should be applied. 20 On the other hand, the ld. DR for the revenue submitted the decision of Merilyn Shipping Transporters V. ACIT (supra) has already been over ruled by Hon'ble Calcutta High Court in case of CIT V. Cresent Export Syndicate, 216 Taxman 258. The decision has been further over ruled by Hon'ble Gujarat High Court in case of CIT V. Sikandarkhan N Tunwar and others, 87 DTR 137. Therefore, the decision of Special Bench in case of Merilyn Shipping Transporters V. ACIT (supra) is no more applicable. 21 In the rejoinder the ld. counsel of the assessee submitted that Hon'ble Allahabad High Court has taken a different view in case of CIT V. Vector Shipping Services, ITA No. 122 of 2013 and had upheld the decision of Special Bench in case of Merilyn Shipping Transporters V. ACIT (supra). He further submitted that the decision is in favour of the assessee and favourable decision should be adopted in view of the decision of Hon'ble Supreme Court in case of CIT V. Vegetable Products Ltd. 88 ITR 192 (S.C). 22 We have heard the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of payment to sub-contractors was disallowed by invoking the provisions of section 40(a)(ia) of the Act. 25. On appeal the ld. CIT(A) confirmed this order. 14 26 When the matter traveled to the Tribunal the appeal of the assessee was allowed by relying on the decision of Merilyn Shipping Transporters V. ACIT (supra). The Tribunal held that the word "payable" used in Section 40(a)()ia) would make provision applicable only in respect of expenditure payable on 31st March of a particular year and such provision cannot be invoked to disallow the amounts which has already been paid during the year though the tax may not have been deducted at source. Following specific question was posed before the Hon'ble High Court: "In all these appeals the Tribunal has followed the decision of the Special Bench in the case of M/s Merilyn Shipping Transporters V. ACIT (supra) and deleted the disallowance on this limited ground. As in the present case, other Merilyn Shipping Transporters V. ACIT (supra) grounds of controversy between the parties with respect to allowability or otherwise of such expenditure was not examined by the Tribunal. For the purpose of these appeals, therefore, we frame f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Tube Investments of India Ltd. and another vs. Assistant Commissioner of Income-Tax (TDS) and others reported in [2010] 325 ITR 610 (Mad). Learned Judge did notice that the High Court in such case was concerned with the vires of the statutory provision but found some of the observations made by the Court in the process useful and applicable. Learned Judge rejected the theory of narrow interpretation of term payable and observed as under: 12.4 In our considered opinion, there is no ambiguity in the section and term payable cannot be ascribed narrow interpretation as contended by assessee. Had the intentions of the legislature were to disallow only items outstanding as on 31st March, then the term payable would have been qualified by the phrase as outstanding on 31st March. However, no such qualification is there in the section and, therefore, the same cannot be read into the section as contended by the assessee. 20. On the other hand, learned Judicial Member speaking for majority adopted a stricter interpretation. Heavy reliance was placed on the Finance Bill of 2004, which included the draft of the amendment in Section 40 and the ultimate amendment which actually w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any specified manner. In the context of section 40(a)(ia), the word payable would not include paid . In other words, therefore, an amount which is already paid over ceases to be payable and conversely what is payable cannot be one that is already paid. When as rightly pointed out by Counsel Mr. Hemani, the Act uses terms paid and payable at different places in different context differently, for the purpose of Section 40(a)(ia) of the Act, term payable cannot be seen to be including the expression paid . The term paid and payable in the context of Section 40(a)(ia) are not used interchangably. In the case of Birla Cement Works and another vs. State of Rajasthan and another reported in AIR 1994(SC) 2393, the Apex Court observed that the word payable is a descriptive word, which ordinarily means that which must be paid or is due or may be paid but its correct meaning can only be determined if the context in which it is used is kept in view. The word has been frequently understood to mean that which may, can or should be paid and is held equivalent to due . 23. Despite this narrow interpretation of section 40(a)(ia), the question still survives if the Tribunal in case of M/s. Meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise be justified because in our opinion, the legislature could not have intended to bring about any such distinction nor the language used in the section brings about any such meaning. If the interpretation as advanced by the assessees is accepted, it would lead to a situation where the assessee who though was required to deduct the tax at source but no such deduction was made or more flagrantly deduction though made is not paid to the Government, would escape the consequence only because the amount was already paid over before the end of the year in contrast to another assessee who would otherwise be in similar situation but in whose case the amount remained payable till the end of the year. We simply do not see any logic why the legislature would have desired to bring about such irreconcilable and diverse consequences. We hasten to add that this is not the prime basis on which we have adopted the interpretation which we have given. If the language used by the Parliament conveyed such a meaning, we would not have hesitated in adopting such an interpretation. We only highlight that we would not readily accept that the legislature desired to bring about an incongruous and seeming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy. 28. In such context, the position prevailing prior to the amendment introduced in Section 40(a) would certainly be a relevant factor. However, the proceedings in the Parliament, its debates and even the speeches made by the proposer of a bill are ordinarily not considered as relevant or safe tools for interpretation of a statute. In the case of Aswini Kumar Ghose and another vs. Arabinda Bose and another reported in A.I.R. 1952 SC 369 in a Constitution Bench decision of (Coram: Patanjali Sastri, C.J.), observed that:- 33. &..It was urged that acceptance or rejection of amendments to a Bill in the course of Parliamentary proceedings forms part of the pre-enactment history of a statute and as such might throw valuable light on the intention of the Legislature when the language used in the statue admitted of more than one construction. We are unable to assent to this preposition. The reason why a particular amendment was proposed or accepted or rejected is often a matter of controversy, as it happened to be in this case, and without the speeches bearing upon the motion, it cannot be ascertained with any reasonable degree of certainty. And where the Legislature happens to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nscious that departure is made in two exceptional cases, namely, the debates in the Constituent Assembly and in case of Finance Minister s speech explaining the reason for introduction of a certain provision. The reason why a certain language was used in a draft bill and why the provision ultimately enacted carried a different expression cannot be gathered from mere comparison of the two sets of provisions. There may be variety of reasons why the ultimate provision may vary from the original draft. In the Parliamentary system, two Houses separately debate the legislations under consideration. It would all the more be unsafe to refer to or rely upon the drafts, amendments, debates etc for interpretation of a statutory provision when the language used is not capable of several meanings. In the present case the Tribunal in case of M/s. Merilyn Shipping & Transports vs. ACIT (supra) fell in a serious error in merely comparing the language used in the draft bill and final enactment to assign a particular meaning to the statutory provision. 32. It is, of course, true that the Courts in India have been applying the principle of deliberate or conscious omission. Such principle is applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal authority was defined to mean a municipal committee, district board, body of port commissioners or other authority legally entitled to the control or management of a municipal or local fund. The words other authority in Section 3(31) of the 1897 Act has been omitted by Parliament in the Explanation/ definition clause inserted in Section 10(20) of the 1961 Act vide Finance Act, 2002. Therefore, in our view, it would not be correct to say that the entire definition of the word local authority is bodily lifted from Section 3(31) of the 1897 Act and incorporated, by Parliament, in the said Explanation to Section 10(20) of the 1961 Act. This deliberate omission is important. 34. The Apex Court in the case of Greater Bombay CO-operative Bank Ltd. vs. M/s. United Yarn Tex.Pvt.Ltd & Ors. reported in AIR 2007 SC 1584, in the context of question whether the Cooperative Banks transacting business of banking fall within the meaning of banking company defined in the Banking Regulation Act, 1949, observed as under:- 59. The RDB Act was passed in 1993 when Parliament had before it the provisions of the BR Act as amended by Act No.23 of 1965 by addition of some more clauses in Section 56 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave assigned an artificial or extended meaning to fines for the purpose of levy of Royalty which it has chosen not to do. It is clearly suggestive of its intention not to take into consideration slimes for quantifying the amount of royalty. This deliberate omission of Parliament cannot be made good by interpretative process so as to charge royalty on slimes by reading Section 9 of the Act divorced from the provisions of the Second Schedule. Even if slimes were to be held liable to charge of royalty, the question would still have remained at what rate and on what quantity which questions cannot be answered by Section 9. 36. In the case of Gopal Sardar, vs. Karuna Sardar reported in AIR 2004 SC 3068, the Apex Court in the the context of limitation within which right of preemption must be exercised and whether in the context of the relevant provisions contained in West Bengal Land Reforms and Limitation Act, 1963 applied or not, observed as under:- 8....Prior to 15-2-1971, an application under Section 8 was required to be made to the Revenue Officer specifically empowered by the State Government in this behalf. This phrase was substituted by the phrase Munsif having territorial juri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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