TMI Blog2019 (8) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... Per Dr. Arjun Lal Saini, AM: The captioned appeal filed by the assessee, pertaining to Assessment Year 2011- 12, is directed against an order passed by the Commissioner of Income Tax(Appeals)-10, Kolkata which in turn arises out of an order passed by the Assessing Officer u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), dated 10. 03. 2014. 2. This is a recalled order by MA. No. 97/Kol/2018, dated 29. 08. 2018, for limited purpose to adjudicate the issue which relates to disallowance of deduction claimed by the assessee, under section 80-IC (2) (b) of the Act in respect of profit of ₹ 34, 73, 556/-, derived by the assessee on sale of black tea manufactured from green leaf purchased. This order is recalled for limited purpose which is given in para No. 3 of MA . No. 97/Kol/2018, dated 29. 08. 2018, the same is reproduced below for ready reference: 3. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that dispute is in respect of claim for deduction under section 80IC (2) (b) (iii) of the Act. The assessee under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I. T. Act, 1922, an assessee claiming benefit of carry forward and set of earlier year's business loss against current year's business profit had to show that the business in which loss was suffered was carried on during the subsequent years as well. If the assessee carries on two or more businesses, suffers loss in one and closes the same, is the assessee entitled to claim benefit of carry forward loss of such closed business in subsequent years? In the case of B. R. Ltd. -vs. - V. P. Gupta, C. I. T. , Bombay, Supreme Court by its judgment dated 31. 5. 1978 reported in 113 ITR 647 held that, test of same business is in unity of control and nature of lines of business. Where there is common management and common control of businesses, this benefit of carry forward loss is available. What is understood by common management and common control? It means that the businesses should have common management and control, there should be utilization of common funds and the control or management should be common. Reliance is placed on the decision of the Calcutta High Court in the case of CIT -vs. - Singla Tea Agriculture Industries Ltd. , reported in 250 ITR, page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity was therefore totally dove-tailed. The same could not be seen separately. In the circumstances, the profit earned by the appellant from the sale of black tea manufactured from purchased green leaf along with its own leaf has to be considered as part and parcel of the same business, i. e. cultivation and manufacture of tea. Exempted claim of the assessee in respect of such profit U/s 801C of the Act also have been allowed by the authority below. 4. Before us, ld DR for the Revenue furnished written submissions which is reproduced below: At the time of hearing of the case on 28. 01. 2019 the Bench asked to furnish a written submission on the issue of deduction uls 80 IC ₹ 34, 73, 556/-in this case. Your honour is requested to kindly consider the following submission while deciding that issue. During the year under consideration, assessee company earned the profit from raising of tea leaf in their own plantation and processing of the same, and also from processing of purchased tea-leaf from outside and claimed deduction u/s 80 IC against the profit earned from both the activities. Issue is , whether both the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such context it needs to be considered, whether raising of tea-leaf along can also be considered for deduction u/s 801C (2)(b) also. That is unlikely. If that is not allowable, how only processing activity alone can be entitled for such benefit. There is nothing special in processing of tea for allowance of this benefit. The processing of tea can be done by any person from anywhere in India. It is apparent, this benefit has been intended for the tea planters who after' raising tea-leaf also process it, and thus, created a self-contained activity, and the legislation wanted to incentivise those persons. On this issue, I rely on the judgement the Hon'ble ITAT , Kolkata bench in its order in the case of DCIT Circle-4 Kolkata Vs. Sewujpur Tea Co. (P. ) Ltd [2013] 34 taxmann. com 124 (Kolkata- Trib), where assessee was only in the activity of processing of tea and claimed deduction u/s 80-IC on the ground that processing and raising of plantation of tea are separate activities, and as the assessee is engaged in processing activities they are entitled for deduction u/s 80-1C. In the case in para 5 , Ld. ITAT observed as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er decision is binding. In para no. 5. 1 of the order it is further observe that :- We are of the view that there is no ambiguity in the provision as stipulated under the said schedule 14 and this is a settled law in view of the decision of the Hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. Dy CIT [2004]266 ITR 521/135 Taxman 594 that when there is no ambiguity in the provisions of the statute, the provisions cannot be interpreted to confer benefit on the assessee. Even Mumbai High Court in the case of Indian Rayon Corporation Ltd. v. CIT [1998] 231 ITR 26/97 Taxman 501 (Bom) has categorically held that principles of beneficial interpretation would apply only in a case where the Court is in doubt about the true scope and ambit of the provisions or finds two equally reasonable interpretations where the words of the statute are plain, precise and unambiguous. In view of our aforesaid discussions, we are of the firm view that until and unless complied with the conditions of engaging in processing and raising of the plantation of tea, the assessee cannot be allowed deduction under section 80IC(2)(b). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) The assessee in core has two sources of lncome, one income is arising from cultivation, manufacturing and sale of tea [source one (1)] and second is income arising from Bought leaf manufacture [source two (2)]. Although the eligibility of the source one (1) is apparently valid on record by law, it is the source two (2), whose eligibility for deduction under the Section 80-IC of the Act is ascertainable in fact and questionable in law. The assessee maintains two channels of business and distinguish the income arising from two different sources (1 2). It implies that assessee on one side engaged in processing and raising plantation crops, also additionally involves only in processing of plantation crops (Tea) [in a separate and independent mode], by purchasing Bought leaf from nearby garden. The key word is separate and independent . The assessee also maintains the sale proceeds of the both thesources in a separate book of accounts and brings both the income under one roof and claims deduction under 80-lC of the Act In view of above, during the assessment proceedings, the assessee was asked to explain the validity of the claiming deduction for thesource Sl. no 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be accorded to the activity. Also Legislature has carefully exercised theword or in the place wherever choice/alternatives has to be provided or warranted. For example item no. 9[cattle or poultry or fishery], item 10. [Edible oil processing or vanaspati industry]. Similarly in item no. 2, manufacturing or producing meat and poultry industries. It is explicit from the above that if there should be an eligibility consideration for processingof plantation crops independent of raising, legislature would have enacted as processing orraising of plantation crops. It clearly denotes that both the conditions i. e. processing andraising of plantation crops must be specified by, an assesse eligible for deduction under section 80-IC(2)(b) of the Act. Here, the clear aim and object of the legislature is to provide tax benefit to the assessee who are engaged both in cultivation and processing. 7. We note that, it is the settled law that a fiscal statue shall have to be interpreted on the basis of the language used therein and not dehors the same. We note that there is no ambiguity in the provision as stipulated under the said schedule l4 and this is asettled law in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltry production; ( iii) Egg Powder Plant. 3. Cereal based Product industries manufacturing or producing- ( i) Maize Milling including starch and its derivatives; ( ii) Bread, Biscuits, Breakfast cereal. 4. Food and Beverage Industries manufacturing or producing - ( i) Snacks; ( ii) Non-alcoholic beverages; ( iii) Confectionery including chocolate; ( iv) Pasta Products; ( v) Processed spices, etc. ; ( vi) Processed pulses; ( vii) Tapioca products. 5. Milk and milk based product industries manufacturing or producing- ( i) Milk powder; ( ii) Cheese; ( iii) Butter/ ghee; ( iv) Infant Food; ( v) Weaning food; ( vi) Malted milk food. 6. Food packaging industry. 7. Paper products industry. 8. Jute and mesta products indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns the benefits are to be given when the taxpayer maybe manufacturing or producing , such as those listed at serial numbers 1, 2, 3, 4 and 5. Here OR appears to qualify the activity , and may mean that the eligibility would be conferred if either there is manufacture' or production . In certain other situations the word OR seems to point out that the eligibility would be covered if anyone or more of the products are being made, whether manufacturing or processed or both has not been mentioned. These are more easily discernible for items at serial numbers 9, 10 and 11. 9. We note that if the item appearing at serial No. 12 of the Fourteenth Schedule, which is mentioned above as, 12. Processing and raising of plantation crops, tea, rubber, coffee, coconuts etc. is examined, it appears that processing and raising would be a composite and conjoint activity, and ought to be treated as such while interpreting the possible benefits to the taxpayer. The AO's observation that for this particular point of activity at serial No. 12 of the schedule, the activity has been mentioned first, and then the article or thing follows appears to be entirely log ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teral construction, it is very clear that both the activities are to be pursued to be eligible for the exemption. It is a well settled rule of construction that, in the first instance, the grammatical sense of the word is to be adhered to. If such adherence appears to be contrary to or inconsistent with the expressed intention, or declared purpose of the statute, or if it would involve any absurdity, repugnancy or inconsistency, then only the grammatical sense may need to be modified, extended or abridged, so far as to avoid such inconvenience, but no further. The elementary rule is that words used in a section must be given their plain grammatical meaning. In saying so strength is drawn from the following judgments: a. CIT Vs Gautam Sarabhai Trust ( Guj) 173 ITR 216 b. CBDT Vs Cochin Goods Transport association (Ker) 236 ITR 993 c. M. P. Poddar (HUF( Anr. Vs Appropriate Authority Anr ( Del) 240ITR 372 As the reasonable, unequivocal and unambiguous conclusion is that the assessee must carry out both the activities, there cannot be any other alternate possibility. This is settled position of lawin view of the case of IPCA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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