TMI Blog2016 (10) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ered 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 that in the process, the Tribunal desired that the Assessing Officer should verify whether the assessee itself is carrying on manufacturing activity. In this context, the Assessing Officer referred to the materials on record including the decision of the High Court in case of Prabhudas Kishordas Tobacco Products P. Ltd. (2006 (1) TMI 68 - GUJARAT High Court ) in which, under similar circumstances, the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 ['the Act' for short] and to take the order of assessment passed by the Assessing Officer on 30.12.2008 under revision for the tentative reasons stated therein. 2. The petitioner claims to be engaged 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 proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the issue having not been dealt with by any of the Appellate Authority, we, in the interest of justice, restore the issue back to the file of Assessing Officer for both the assessment years with the directions 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 jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tobacco Products P. Ltd. (supra) and came to the conclusion that the industrial undertakings of the assessee were eligible for deduction under Sections 80HH and 80I of the Act. He also verified that the assessee fulfilled other conditions required 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' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand proceedings and presented before the Assessing Officer, materials in support of its contention that all three requirements set out by the Tribunal were satisfied. The assessee referred to the litigation in earlier years as well as the judgement of the High Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he requirement of registration is not an essential condition for deduction in either of the two deduction provisions. If the Tribunal was referring to the registration of the industry as an SSI, whether required or not, the Tribunal in the remand order itself had noted that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n identity of its own, an independent maket after the commodity is subjected to the process of manufacture. The nature and extent of the process would vary from case to case, and in a given case, there may be only one stage of processing, while in another case, there may be several 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 carryin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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