TaxTMI 
TaxTMI 
2013 (9) TMI 295
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....ounting to Rs. 1,12,94,962/- u/s 80IC of the Act. Earlier the assessee was claiming deduction u/s 80IB of the Act and in the present year it was claimed that the assessee had made substantial expansion and therefore, was entitled to deduction u/s 80IC of the Act. During the assessment proceedings the Assessing Officer noticed that the assessee has claimed deduction u/s 80IC on the basis of expansion in Flour Mill. He further noticed that deduction u/s 80IC is not available in view of sub-section (8) of section 80IC which prescribed that deduction is not available under this provision on manufacture of article or thing specified in Schedule XIII, Part B. Since part B of Schedule XIII specifically mentioned Floor Mill at Item 8, the deduction was not available. The assessee was confronted with this situation by way of show cause notice vide order sheet dated 26.11.2010 and following points were raised: (i) "Being 6th year of production deduction u/s 80IB is allowable 25% instead of 100% claimed by you. (ii) As per thirteenth schedule, deduction u/s 80IC is not allowable to flour mills. (iii) In nutshe....
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....flour mill machinery is very simple and a small single floor building is required to install the same whereas in case of Roller flour mill five storey building is required along with sophisticated machinery. Thirdly the Government of Himachal Pradesh has clarified vide letter dated 1.7.1994 (copy placed at page 55 of paper book) written by D.C-cum-Secretary to Industries to the Director of Industries that Roller Mill are not covered under Sr No. 1 of Annexure III. That since Roller Flour Mill are different from Flour Mill and therefore, same is eligible for sales tax exemption. Thus it is clear that Flour Mill is different from Roller Flour Mill. He submitted that the Assessing Officer has not disputed that the assessee has carried out substantial expansion during the year and deduction stands denied u/s 80IC mainly on the basis that Flour Mill finds mention in schedule XIII, Part B containing list of article or things which are not entitled for deduction. Since Roller Flour Mill does not find mention in schedule XIII, Part B and item 8 by the schedule only refers to the Flour Mill / Rice Mills which are different from the Roller Flour Mill, the assessee is eligible for deduction u....
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....ur/rice through flour mill/rice mill which is barred from entitlement u/s 80IC of the Income-tax Act, 1961 by virtue of Schedule XIII. Thus the prohibition is in respect of the production of flour, and it is immaterial whether the flour mill producing the flour is an ordinary chakki or a roller flour mill. In fact, logically speaking, the provisions of section 80IC read with schedule XIII would hardly be relevant in the case of an ordinary chakki which does not involve so much of investment, what to talk of substantial expansion and such other things. Further flour mills can be of various types, such as stone mill, hammer mill, plate mill, pin mill, roller mill etc. The equipment used in these mills can be powered by hand, water, animals, electricity or diesel engine. The only difference between various milling processes is that of technique and speed. Flour is a common product in all kinds of milling processes. Therefore, it can not be said that what is intended by entry No.8 in part B of schedule XIII is only a stone mill and not a hammer mill or a plate mill or a pin mill or a Roller Flour Mill. Putting such an interpretation would reduce the entry to a farce. &nb....
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....the legislature. The language employed in a statute is the determinative factor of the legislative intent. The first and primary rule of construction is that one must go by the intention of the legislation itself as held in Padmasundra Rao v. State of TN 255 ITR 147 (SC); CGT v. Laxmi Devi 220 ITR 50, CIT v. Deep Chand , 2547 ITR 756. It was also held by Hon'ble Supreme Court in the case of Vikrant Tyres v. First ITO , 247 ITR 821 (SC) that unless there is an intention to the contrary, the words in a statute should be given their ordinary grammatical or natural meaning (Emphasis supplied)." The relevant portion of Section 80IC reads as under: "80-IC. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section (3). (2) This section applies to any undertaking or enterprise,- (a) which ....
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....further clarified in the schedule itself by way of excise classification as well as sub-clause under National Industries Classification (N.I.C) 1998. The ld. CIT(A) has further observed that Central excise tariff classification code 11.01 of Central excise Act makes it clear that it is a broad heading which covers various products of the milling industry. Further N.I.C. 1998 gives various categories of products under various heads known as "Divisions". Division 15 reads as under: DIVISION 15 "Manufacture of food products of brewages 15311 Flour Milling" This classification under various NIC standards has been issued by Ministry of Statistics and Programme Implementation, Government of India. Code 15311 has been mentioned in Part B of Schedule XIII at Col. 8. Since this Division pertain to Food and Brewages and only one item in respect of Flour Milling is there, it becomes clear that the Parliament was clear in its intention that activity of Flour Milling would not be entitled to deduction u/s 80IC and that is why the same has been placed in Schedule XIII along with Excise classification Code 11.01 as well as National Industries classification under Division....