TMI Blog2014 (1) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... into the same position - Its utility gets changed - The prime raw materials such as, maize, soya oil, rice bran, etc. can no more be regarded to be the rice bran, soya oil, maize - Decided against Revenue. - ITA No.1311/Kol/2012 - - - Dated:- 17-12-2013 - Sri Shamim Yahya, AM And Sri George Mathan, JM,JJ. For the Appellant: Shri P. Dam Kanunjna, JCIT, Sr.DR For the Respondent: Shri D. S. Damle, CA ORDER Per Shri George Mathan, JM This is an appeal filed by the Revenue against the order of ld. C.I.T.(A)- I, Kolkata in Appeal No.666/CIT(A)-I/C-2/11-12 dated 18.06.2012 for Assessment year 2009-10.. 2. Shri P.Dam Kanunjna, JCIT,CIT(DR) represented on behalf of the Revenue and Shri D.S.Damle, CA represented on behalf of the assessee. 3. In this appeal the Revenue has raised the following grounds :- "1. That on facts and circumstances of the case, the ld.CIT(A)-I erred in deleting the disallowance of claim of assessee u/s 80IB without considering the facts that no new product of a different chemical composition or different integral structure having distinctive objects is produced from the component products. 2. That the appellant craves leave to amend, mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 31 materials were consumed. The process of producing poultry feed involved mechanical, chemical electrical processes for which the appellant used sophisticated Plant Machinery. In the course of production of poultry feed raw- materials which exceeded 30 in numbers, lost individual identity and the emerging product was distinct and separate in shape, character and end-use. The raw- materials consumed in production of poultry feed could be individually used for different purposes, but the end product at the end of integrated production process was known to trade by its distinct commercial name as 'poultry feed'. It could only be consumed by only one class of consumer i.e. poultry none else. The Tribunal held that even as per criteria's laid down by the Supreme Court in the decisions relied upon by the Revenue it could still be held that the appellant was engaged in manufacture or production of an article or thing because the product poultry feed was known to the trade, commerce and industry as separate and distinct from various materials consumed in the process of its production. The Tribunal also noted that poultry feed manufacturing industry was notified by the Central Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toxic" whereas as per BIS Specifications Iodine up to 1.5 mg per Kg in poultry feed was considered optimum. In assessee's case iodine content was 1.5mg per Kg of poultry feed. Potassium Chloride was also used in feed and feed supplement because use of this chemical allowed the Chicks to gain weight. The scientific paper published by the Scientists in Japan supported appellant's claim that the ideal temperature for production process of feed manufacturing was around 83 C which compares favourably with the appellant's production process which was carried on in steam heating conditions varying in 800 to 85 C. From the assessment records, I also find that before recording such authoritative finding no opportunity of hearing or rebutting his presumptions was granted by the AO and these findings were recorded without disclosing scientific or technical expertise with reference to which the finding was recorded by the Assessing Officers. Having regard to the totality of the facts therefore I do not find substance in the AO's conclusion that the use of Potassium Iodate or Potassium Chloride turned the poultry feed poisonous. From the facts on record it appears that there was no scientific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated plant and machinery acquired at a substantial cost. Poultry feed is recognised not only by trade and commerce but also by the statutory authorities under Central Excise, Sales Tax etc as independent products Applying the ratio laid down in judicial decisions discussed in the order of CTT(A) we have no hesitation in holding that the assessee is engaged in manufacture or production of an article, contemplated in Sec 801B (2) (iii) . 16. We also find on the identical facts the Bangalore Bench of ITAT in the case of Komrala Feeds --Vs- DCIT 74 ITD 65 held that activity of producing poultry feed amounts to manufacture and therefore eligible for deduction u/s 80 I. Sec 80I and Sec 80IB are parameteria because conditions for part of deduction are same and therefore the said decision is equally applicable in the present case. 17. Section 80IB is an incentive provision of the Income Tax Act enacted, by the Legislature to promote economic and industrial growth in backward districts and states. In the case of Bajaj Tempo Ltd --Vs. CIT (196 ITR 188) the Supreme Court has Opined that a provision of taxing statute granting incentives for promoting growth and development should be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y feeds and that the assessee is engaged in the manufacture or production of an article. No contrary decision of the Coordinate Bench or the Jurisdictional High Court or that Hon'ble Supreme Court was brought to our knowledge which may have taken a contrary view. The ld. DR, even though relied on the decision of the Hyderabad Bench "A" of the Tribunal in the case of Venkateswara Feeds Feeds -vs- ACIT 22 Taxmann.com 234 (Hyd.) but we noted that the undertaking for which the assessee has claimed the deduction under section 80IB was merely engaged in converting the poultry mash feed into pellet feed and therefore that Bench has held that there was no change in the basic component or new or different article came into existence. As such, conversion was processing activity not manufacturing. The case of the assessee is entirely different. The assessee's eligible undertaking itself was independently carrying out the complete activity i.e. from mixing, grinding till the pelletisation. The raw materials once consumed cannot be reconverted into the same position. Its utility gets changed. The prime raw materials such as, maize, soya oil, rice bran, etc. can no more be regarded to be the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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