Tribunal Grants Deduction for Liquid Milk Sales, Upholds Computation Method

The Tribunal partially allowed the appeal, granting deduction under section 80IB for the sale of liquid milk and upholding the deduction computation method considering unabsorbed depreciation. The Tribunal rejected the appellant's claims regarding the reopening of assessment under section 147 of the Act, as it was not based on a change of opinion. The decision reversed the lower authorities' denial of deduction for the sale of liquid milk and affirmed that deductions under section 80IB should be computed after adjusting unabsorbed depreciation, following relevant case law.

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Issues:
1. Reopening of assessment u/s 147 of the Act
2. Eligibility of deduction u/s 80IB for sale of liquid milk
3. Quantification of deduction u/s 80IB on gross total income reduced by unabsorbed depreciation

Issue 1: Reopening of assessment u/s 147 of the Act
The appellant contested the initiation and confirmation of proceedings u/s 147, arguing it was a mere change of opinion. The AO passed the original assessment under section 143(1) without forming an opinion on the claims made in the return. The Tribunal found that as no opinion was formed during the original assessment, the reopening was not based on a change of opinion. Consequently, Ground no.1 was rejected.

Issue 2: Eligibility of deduction u/s 80IB for sale of liquid milk
The appellant claimed deduction u/s 80IB for the sale of liquid milk, contending that processing milk into pasteurized milk constitutes an industrial activity. The lower authorities disagreed, stating liquid milk is not a product of an industrial undertaking. The Tribunal disagreed, emphasizing that processing altered the milk's characteristics, making it consumable. Citing the 'Ahmedabad Manufacturing & Colico (P) Ltd. vs. CIT' case, the Tribunal allowed the deduction u/s 80IB for the sale of liquid milk, reversing the impugned order.

Issue 3: Quantification of deduction u/s 80IB on gross total income reduced by unabsorbed depreciation
The appellant challenged the deduction calculation based on gross total income reduced by unabsorbed depreciation. The authorities relied on section 80AB, stating deduction computation should consider unabsorbed depreciation. Referring to 'Plastiblends India Ltd. vs. Addl. Commissioner of Income Tax', the Tribunal upheld that deductions under section 80IB must be computed after adjusting unabsorbed depreciation. The Tribunal rejected the appellant's claim, following the Supreme Court's decision and dismissed Ground no.3.

In conclusion, the Tribunal partially allowed the appeal, granting deduction u/s 80IB for the sale of liquid milk and upholding the deduction computation method considering unabsorbed depreciation.

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