TMI Blog2021 (9) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses. The submission of the assessee with regard to movement of goods from one place to other places is a normal activity within the cold storage area for keeping seeds at an appropriate place inside the cold storage - no substance in the submission of the ld. AR that expenditure towards transportation has been incurred. In the financial statements there is no expenditure is shown under the head petrol, diesel, oil and lubrications, maintenance, or vehicle hire charges, etc., which shows that the assessee has not incurred an expenditure towards petrol, diesel etc. for transportation of food grains. On perusal of tax audit report, the nature of the business activity of the assessee has been shown as cold storage services and in financial statements also as well as as per the orders of lower authorities, Form 10CCB also does not reflect that the assessee is carrying or engaged in the business of handling, storage and transportation of food grains and also not taking of any business of processing and packaging of goods or vegetables vide sl. Nos. 24(b) and 24(c) respectively. No doubt, the assessee is operating cold storage, but, other ingredients for eligibility of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of processing, preservation and packaging of fruits or vegetables and the assessee received agricultural produce. The same is preserved and the are packed into the cold storage plant. 5. After considering the submissions of the assessee and referring the provisions of section 80IB(11A), the CIT(A) confirmed the order of AO by holding as under: 5.1 Nature of business of the assessee: the assessee has claimed deduction u/s 80IB(11A) amounting to ₹ 70,14,288/- on business of cold storage. Regarding business activities undertaken by the assessee and the allowability of deduction, the assessee vide letter dated 22/01 12015 addressed to the AO, has mentioned the nature of activities as below: The partnership firm has constructed the cold storage unit at Sy No. 255, kandlakoi village, Medchal mandal R.R dt for the purpose of storage of agricultural product, undertakings engaged in the business of processing, preservation of agricultural products and receiving rental charges on the above. Thus, the assessee is letting out its cold storage facility to farmers/ other persons and is charging rent for the services rendered. It is pertinent to mention here th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the 'integrated' business of handling, storage and transportation of food grains. The vital word used in the section is 'integrated'. The word integrated used in the section connotes, that the business of handling, storage and transportation of food grains should be carried out in a combined manner. [ITA No. 829jPNj2012 Assessment Year: 2008-09 Anurag Radhesham Attal followed). Thus, going by the above provisions, deduction u/s 80IB(11A) is allowable only to an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or meat products or marine or dairy products or from the integrated business of handling storage and transportation of food grains. 5.3 In the present case it is a fact that the assessee is neither having vehicles for the transportation but the assessee is having cold storage facilities of its own. However, the assessee's nature of business activity is only collecting rent for the storage of food grains. But, the assessee argued that this is not a rental income but cold storage charges for maintaining the agricultural products. The assessee entered the agreement with the various part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Financial Bill by which Sec. 80lB(11A) was amended show the Legislative intent is as under: Tax holiday for undertakings engaged in the integrated handling, storage and transportation of food grains. Under the existing provisions of se cion 80IB of the Income-tax Act, a deduction is allowed, in computing the taxable income, in respect of profits derived from a new industrial undertaking or ship or the business of a hotel. To address the country s basic concerns relating to enhanced food security and agricultural development, upgradation and modernization of infrastructure for storage, handling and transportation of food grains is a central concern in which introduction of modern technology would bring greater efficiency in the grain management system and minimize post harvest food grain losses. The Bill proposes to encourage building of storage capacities, by providing that any undertaking engaged in integrated bulk handling, storage and transportation would be allowed hundred per cent deduction for the first five years and thirty per cent deduction for the next five years. The entire scheme covered by Sec. 80-IB(11A) relates to services in connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept an expenditure of ₹ 6,32,239/- towards salaries. Apart from this head of expenditure, no other expenditure worth mentioning was debited towards the activities of handling and transportation. From above details and discussion, it is observed that the assessee was involved in running a cold storage for rent purpose and did not carry out the integrated activities of handling, storage and transportation of goods to make its profit eligible for deduction u/s 80IB(11A) (ITA No. 829/PN/2012 Anurag Radhesham Attal followed]. 5.9. But, during the appellate proceedings, the assessee changed its contention and has claimed deduction u/s 80IB(11A) on the ground that the assessee was also deriving profit from the business of processing, preserving and packing of fruits and vegetables. And it was claimed that it is entitled to deduction u/s 80IB(11A) of the Act which was denied by the AO on the ground that the assessee has only deriving income from cold storage activities. It was argued that the assessee received the agricultural produce, the same is preserved. And they are packed into the cold storage plant. 5.10 The AR completely misinterpreted the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y indicates that the goods stored are seeds . The process involved in accepting the goods for storage, their preservation in cold store is explained hereunder: a) The goods are received at the gate through transport vehicles .and from there they are brought inside the premises, b) The Hamali labours manually unload the goods on the platform. . The goods are kept for some time on the said platform to bring down goods to normal temperature. It also enables any. other ingredients to be removed. c) The goods are segregated quality-wise and item-wise on the platform itself. At that stage the goods are re-packed so as to keep the goods in the cold store in the appropriate floor. d) The goods are loaded to trolleys by machines and' are carried to the respective floor of the Cold store with the help of Lift. e) The goods are taken to each of the floor and is stored based on the variety and quality. f) The goods are preserved in cold, store. For this purpose, the appellant deploys 2 Nos. KC2 compressors running throughout with 50 HP motors alongwith condenser units which are run by Ammonia gas. The machinery provides the required temper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (copies of the above said two decisions are part of the paper book filed by the assessee for theAY 2012-13 in ITA No.1618jHydj2016 at pages No.15 to 24) iii) 'Order of High Court of Judicature for Rajasthan in the case of CIT Vs Mefco Enterprises Pvt. Ltd, iv) Order of the Hon'ble ITAT, Hyderabad Bench-A in ITA No.57 jHydj2011 in the case ofT. Devender Reddy. v) The order of the Hon'ble ITAT, Hyderabad in the case of A.P. State Warehousing Corporation reported in 150 lTD 485). (copies of the above said three decisions are part of the paper book filed by the assesse for the decisions relied upon in ITA No.1618jHydj2016 340jHydj2018 at pages No.1 to 20) In view of the above, the assessee requests the Hon ble ITAT to kindly allow the appeals as prayed for. 8. The ld. DR, on the other hand, relied on the orders of authorities below and submitted that the assessee is operating merely cold storage plant and it is clear from the findings of the lower authorities as well as from financial statements, no hamali and transportation charges were incurred by the assessee. He submitted that the assessee is carrying on the business of stora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting the taxable income, in respect of profits derived from a new industrial undertaking or a ship or the or the business of a hotel. To address the country's basic concerns relating to enhanced food security and agricultural development, upgradation and modernization of infrastructure for storage, handling and transportation of food grains is a central concern in which introduction of modern technology would bring greater efficiency in the grain management system and minimize post harvest food grain losses. The Bill proposes to encourage building of storage capacities, by providing that any undertaking engaged in integrated bulk handling, storage and transportation would be allowed hundred per cent deduction for the first five years and thirty per cent deduction for the next five years. 9.3 On perusal of the written submissions and entire documents available before us as well as from the financial statements, we do not find any entry towards transportation expenses debited by the assessee in the P L Account. If the assessee has paid to third parties towards transportation expenses, it must have been reflected in its books of account, but, there is no such expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. counsel for the assessee in his written submissions quoted supra, are not applicable to the facts of the case of the assessee as they are distinguishable on facts. 9.5 In view of the above observations, we do not find any infirmity in the order of the CIT(A) wherein he held that the assessee is not entitled for deduction u/s 80IB (11A) by observing as under: 5.10 The AR completely misinterpreted the provision. Section 80-IB (11A) targets for relief for the business of processing preservation and packaging of fruits and vegetables as newly added from A.Y. 2005-06, while the relief has been available w.e.f. 1.4.2002 for all undertakings, which have begun to operate on or after 1st April, 2001 for any income from the integrated business of handling, storage and transportation of food grains using the very language of the policy. The relief is for processing preservation and packaging of fruits and vegetables. The appellant admittedly is not involved in processing of agricultural produce. It was stated that it only receives the agricultural produce. It is also not dealing with fruits and vegetables. In the provision activity of processing, preservation and packagi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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