TMI Blog2013 (12) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on account of allowance of deduction under section 80-IA - The objection taken by the assessee has not been dealt with by the Commissioner of Income-tax (Appeals) in its proper perspective - The revisionary proceedings for the assessment year 2003-04 under section 263 has been initiated by the CIT on November 15, 2006 - The notice under section 148 in the instant assessment year was issued on March 30, 2006. Therefore, the CIT(Appeals) was wrong in his belief that the revisionary proceedings under section 263 by the Commissioner for the assessment year 2003-04 would constitute "information" for the AO in the instant assessment year – The issue was restored for fresh decision. - - - - - Dated:- 31-10-2012 - Order The captioned proceedings relate to the same assessee and involve certain common issues and therefore, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. I.T.A. No. 130/PN/2008 pertaining to the assessment year 1999-00, arising out of order of the Commissioner of Income-tax (Appeals), Kolhapur dated October 16, 2007, which in turn arises out of the order dated December 27, 2006 passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oring the fact that the assessee, not being engaged in the activity of "manufacturing" or "producing" any article or thing, was not eligible in terms of section 80-IA(2)(iii) of the Act, and he misdirected himself in allowing the claim of the assessee for deduction under section 80-IA for the assessment year 1999-00 merely on the ground that it was an industrial undertaking as per section 80-IA(12)(b) read with Explanation to section 33B of the Act. On the other hand, the learned representative for the respondent-assessee at the outset pointed out that section 80-IA(1), as it stood in the initial year, i.e., the assessment year 1999-00, provided for deduction of profits and gains derived from any business of an industrial undertaking. Learned counsel for the assessee pointed out that in terms of section 80-IA(12)(b) of the Act the meaning of expression "industrial undertaking" as given in the Explanation to section 33B has to be adopted. In terms of the said definition, an industrial undertaking involved in processing of goods is expressly included and in this manner, the assessee's undertaking falls within the scope of section 80-IA(1) of the Act. It was therefore, contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer but as per the Commissioner of Incometax (Appeals) the activity carried out by the assessee amounts to "processing" and impliedly accepted the stand of the Assessing Officer that the activity does not amount to "manufacture" or "production". On this aspect, in our considered opinion, the plea of the Revenue that the activity undertaken by the assessee does not amount to manufacturing or production, is justified, having regard to the judgment of the hon'ble Supreme Court in the case of Tara Agencies [2007] 292 ITR 444 (SC). The process undertaken by the assessee in its industrial undertaking is similar to what was considered by the hon'ble Supreme Court in the case of Tara Agencies wherein it has been held that such activity does not fall within the ambit of "production" or "manufacture". The respondent-assessee has referred to the decision of the Special Bench of the Tribunal in the case of Madhu Jayanti International Ltd. [2012] 18 ITR (Trib) 1 (Kol) wherein it has been held that the business of blending and packaging of tea and export thereof amounts to "manufacturer" or "production" of the tea. The reliance placed by the assessee on the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, blending, packaging, etc. In view of the above and respectfully following the decision of the hon'ble Kerala High Court in the case of Girnar Industries and Tata Tea Ltd. [2011] 338 ITR 285 (Ker), we hold that the assessee is entitled for exemption under section 10B of the Act on account of blending of tea. Similarly, in our view, the industrial units engaged in the very same activity, i.e., blending, packing and export of tea in the free-trade zone shall also be entitled to enjoy tax exemption under section 10A of the Act." brings out the clarity. Quite clearly, the pronouncement in the case of Madhu Jayanti International Ltd. [2012] 18 ITR (Trib) 1 (Kol) based on the judgment of the Kerala High Court in the case of Girnar Industries [2011] 338 ITR 277 (Ker)) and Tata Tea Ltd. [2011] 338 ITR 285 (Ker), is applicable only in the context of sections 10A, 10AA and 10B of the Act for the reasons stated therein. In fact, the Special Bench itself noted that the same does not change the meaning of the terms 'manufacture' or 'production' in the context of impugned processing of blending of tea, in the common parlance. In the present case, the issue is not in the context of sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6)." Sub-section (1) of section 80-IA is the main provision which prescribes for deduction of profits and gains derived by the assessee from any business of an industrial undertaking as defined in section 80-IA(12)(b) of the Act. Section 80-IA(12)(b) prescribes that for the purposes of section 80-IA, the expression "industrial undertaking" shall have the meaning assigned to it in the Explanation to section 33B of the Act. The said Explanation reads as under : "Explanation.-In this section, 'industrial undertaking' means any undertaking which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining." Now, the case set up by the assessee is that it being an undertaking involved in "processing" of goods it is an industrial undertaking as understood for the purpose of sub-section (1) of section 80-IA read with clause (b) of sub-section (12) of section 8-IA of the Act. Therefore, according to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would have been provided in sub-section (1) of section 80-IA itself. We have carefully pondered over the plea set up by the assessee. In our considered opinion, sub-section (2) of section 80-IA lays down the conditions which are to be fulfilled by an industrial undertaking so as to claim the benefit of deduction envisaged in section 80-IA. Clauses (i) to (v) thereof contain conditions, viz. that it is not formed by splitting up or reconstruction ; that it is not formed by the transfer of plant and machinery previously used ; that it manufactures or produces any article or thing not being an article specified in the Eleventh Schedule unless it is a small scale industrial undertaking, etc. The point to be noted is that such conditions are necessarily to be complied with by an "industrial undertaking" so as to take the benefit of section 80-IA of the Act. In the present case, the assessee's claim is violative of clause (iii) of section 80-IA(2) of the Act. The plea of the assessee is that it qualifies to be an "industrial undertaking" as referred to in section 80-IA(1) of the Act and therefore, sub-section (2) of section 80-IA of the Act cannot impose a further condition so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Appeals) and restore that of the Assessing Officer, denying the deduction under section 80-IB of the Act to the assessee. Now, we may take C.O. No. 12/PN/2009 preferred by the assessee in relation to the order of the Commissioner of Income-tax (Appeals) dated October 16, 2007 pertaining to the assessment year 1999-00. In its crossobjection the only plea raised by the assessee is with regard to the validity of reopening of assessment by the Assessing Officer by invoking section 147/148 of the Act. On this aspect, the assessee had contended before the Commissioner of Income-tax (Appeals) that the Assessing Officer was not justified in reopening the assessment by invoking section 147/148 of the Act on the ground that the assessment for the assessment year 2003-04 was completed by the Assessing Officer after fully satisfying himself about the assessee's eligibility for deduction under section 80-IA/80-IB of the Act and based on the same facts and circumstances and without any different material coming to his possession, the Assessing Officer was not justified in invoking section 147/148 of the Act for the year under consideration. The plea of the assessee was that under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liged to follow his own decision taken for an earlier year. There is no such obligation since each year has to be viewed separately. It is also found that the assessment made under section 143(3) for the assessment year 2003-04 was taken up for revision under section 263 by the learned Commissioner of Income-tax-II Kolhapur. This could constitute information for the Assessing Officer to re-examine the claim made by the appellant in the earlier years." Not being satisfied with the order of the Commissioner of Income-tax (Appeals) learned counsel for the assessee submitted before us that there were no fresh facts and details which came to the notice of the Assessing Officer so as to justify the invoking of section 147 of the Act in the instant year. It was pointed out that prior to issuance of notice under section 148 of the Act for the impugned assessment year, the claim of the assessee for deduction under section 80-IA/80-IB of the Act was subject-matter of consideration in the assessment year 2003-04 and under these circumstances, invoking of section 147 of the Act in the instant year amounted to "change of opinion". As per learned counsel there was no justifiable material or ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 147. In our considered opinion, the objection taken by the assessee has not been dealt with by the Commissioner of Income-tax (Appeals) in its proper perspective. Ostensibly, the revisionary proceedings for the assessment year 200304 under section 263 has been initiated by the Commissioner of Incometax-II Kolhapur on November 15, 2006 whereas the notice under section 148 of the Act in the instant assessment year was issued on March 30, 2006. Therefore, the Commissioner of Income-tax (Appeals) misdirected himself in observing that the revisionary proceedings under section 263 of the Act by the Commissioner for the assessment year 2003-04 would constitute "information" for the Assessing Officer in the instant assessment year. If the test of whether there existed any tangible material with the Assessing Officer on the date of recording of reasons under section 147 of the Act, is to be examined, it would be in the fitness of things that due reference be made to the reasons so recorded and other contemporaneous record available with the Assessing Officer. Clearly such an approach is conspicuous by absence in the order of the Commissioner of Income-tax (Appeals). Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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