9911796707
TMI Blog2016 (10) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in manufacturing of bidis and also is registered as a small scale industrial undertaking ['SSI' for short]. For the assessment year 1994-95, the assessee had claimed deduction under section 80HH and 80I of the Act. Such deduction the assessee has been claiming right from the assessment year 1989-90. Year after year the Assessing Officer would disallow such deduction upon which, the assessee would carry the matter in appeal. In some cases, the issue also reached the High Court. All along, the final decisions were in favour of the assessee. When once again therefore, the issue came up for consideration in the assessment year 1994-95 in connection with the assessee's claim of deduction under sections 80HH, 80I and 80IA, the Assessing Officer rejected the same on the ground that the assessee was not engaged in manufacturing activity. He was of the opinion that the only activity done at the assessee's premises is sikai and packing and the rest of the processing was done by the contractors. The assessee does not have land, factory, machinery which would show that the assessee was not engaged in the manufacturing activity. The assessee was thus providing tendu leaves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee's claim of deduction u/s. 80HH and 80I may be decided afresh, after verifying the following two requirements:- (i) Whether the Unit under reference is/was an "Industrial Undertaking". (ii) Whether the Unit, if "Industrial Undertaking" is registered with the Registrar. (iii) Then to satisfy the other requirements of law. The Assessing Officer will, thereafter take the final decision." 4. Thus, the Tribunal directed the Assessing Officer to clarify three things: (i) Whether the Unit was an industrial undertaking; (ii) Whether it was registered; and, (iii) Whether it satisfied other requirements of the deduction provision. 5. The Assessing Officer undertook the exercise as directed by the Tribunal and issued a notice to the assessee to satisfy him about such requirements. In response to such a notice, the assessee replied under a letter dated 29.12.2008 and raised three contentions: (I) That by virtue of the earlier judgements of the Tribunal and the High Courts, such an inquiry was not permissible; (ii) That the question of activity amounting to manufacturing and the unit engaged in such an activity would be treated as an industrial undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the law for such deduction. 8. It is this order the Commissioner desires to take in revision for which, he issued the impugned notice. To prima facie believe that the order of assessment was erroneous and prejudicial to the interest of the Revenue, he recorded his following tentative reasons: "The Hon'ble ITAT vide Order No. ITA 500/Ahd/1998 at Para 15.1 has questioned the cognizance of this certificate and its admissibility as an evidence/proof. The Hon'ble ITAT unambiguously mentioned that this certificate cannot be taken as an evidence to comply with the requirement of Income tax law under reference and therefore, seems to be of no use to the assessee. Under the circumstances, A.O. should not have relied on this certificate and allowed the deduction u/s. 80HH & 80I of the Act. Further, the AO has not mentioned in the assessment order as to whether the unit is registered with Registrar as demanded by the Hon'ble ITAT. Hence deduction u/s. 80HH & 80I are wrongly allowed by the AO. 5. In view of the above facts, it is proposed to set aside the assessment made by the A.O. u/s. 263 of the I.T. Act with the direction to the A.O to adjudicate afresh on the allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in case of Prabhudas Kishordas Tobacco Products P. Ltd.(supra). (iv) The Assessing Officer accepted the representation of the assessee and held that all three requirements were fulfilled. (v) In order to take such order in revision, the Commissioner has recorded tentative reasons suggesting that in his opinion, the Assessing Officer did not verify whether the registration certificate itself would prove satisfaction of the requirements under the Income Tax law and whether the unit was registered with the Registrar as required by the Tribunal 11.For multiple reasons the notice for revision cannot be sustained. As noted, the issue in the past had travelled through various stages and ultimately, before the High Court also the question in case of this assessee came to be settled. Such issue was examined by the High Court in Tax Appeal No. 597 of 2005 concerning earlier assessment year. The question considered by the High Court was whether the Tribunal was right in holding that the assessee which was engaged in the business of bidi was entitled to deduction under Section 80HH and 80I of the Act. By dismissing Revenue's appeal and confirming the decision of the Tribunal by a j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was duly registered but commented that one of the clauses of the registration provided that such certificate would not confer any right on the applicant to be treated as proof of fulfillment of any statutory requirement of condition which may exist in any law for the time being in force. In fact, by referring to this note, the Tribunal discarded assessee's contention that having been registered as small scale industrial unit, the assessee fulfilled the requirement of being an industrial undertaking. Having done that, we find it somewhat incongruent whether the Tribunal directed the Assessing Officer to examine whether the unit was an industrial undertaking and also to examine whether it was registered. In plain terms, therefore, the second requirement imposed by the Tribunal was not germane. The third condition of the unit satisfying other requirements has been duly recorded by the Assessing Officer in the order of assessment. Even the Commissioner in the impugned notice has not objected to non-fulfillment of this requirement. This leaves us with the first requirement cast by the Tribunal viz. of the unit being an industrial undertaking. We have proceeded on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l stages of processing, and perhaps a different kind of process at every stage. That with every process the commodity would experience a change, but ultimately, it is only when the change, or a series of changes, bring about a result so as to produce a new and distinct article, can it be said that the commodity used as raw material has been consumed in the manufacture or the end product. To put it differently, the final product does not reta in the identity of the raw material after it has undergone the process or processes of manufacture." 15. It can thus be seen that the decision of the Assessing Officer upon remand by the Tribunal was based on materials on record and the law laid down by the High Court in similar cases. Counsel for the Revenue, however, sought to make a further finer distinction suggesting that in case of Prabhudas Kishordas Tobacco Products P. Ltd.(supra), the assessee was carrying on manufacturing activity through contract labourer. In the present case, the assessee was carrying on such activity through contractors. We have reproduced the Revenue's stand in case of Prabhudas Kishordas Tobacco Products P. Ltd. (supra) from which no such distinction can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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