AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 1313
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....ds its chemical composition, integral structure or its use. (ii) That the Ld. CIT(A) has erred in accepting that the process of manufacturing of poultry feeds does not amount to mere mixing together of all different ingredients, without involving any change in the chemical composition of the ingredients. (iii) That the Ld. CIT(A) has erred in accepting that the process of preparation of poultry feeds amount to production of an article within the meaning of section 80IB. (iv) That the Ld. CIT(A) has erred in allowing the entire amount of Rs. 83,06,647/- claimed as deduction U/S 80-IB. (v) That the Ld. CIT(A) has erred in directing the A.O. to net off the interest income credited in the profit and loss account of the eligible undertaking against the interest expense debited in the said profit and loss account without the appreciating the facts and circumstances of the case supported by the decision of Hon'ble Supreme Court in the case of Pandian Chemicals Limited Vs. CIT,[2003] 129 TAXMAN 539 (SC) and the decision of High Court of Jammu and Kashmir in the case of Asian Cement Industries Vs Income Tax Appellate Tribunal, [2012] 28 TAXMAN 290(Jam....
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....d only if newly set up industrial undertaking was engaged in manufacture and production of an article and if poultry feed industry was considered eligible by the Central Government for claiming deduction u/s 801B(4) then the same industry should be considered to be eligible for deduction u/s 801B(5) of the Act also on the ground at it was engaged in manufacture or production of an article. 6. The AO however was of the view that in the production process explained by the Assessee, there was no change in chemical composition of the end product and therefore there was no manufacture. However before recording such an authentic technical finding, the AO however did not refer to any scientific data or scientific experiments or technical report to support his conclusion. The AO accordingly rejected the claim of the Assessee for deduction u/s.80IB(5) of the Act. 7. On appeal by the Assessee, the CIT(A) held that the Assessee was eligible for deduction u/s.80IB(5) of the Act and in doing so relied on the decision rendered in Assessee's own case by the Tribunal referred to in the earlier part of this order. 8. Aggrieved by the order of the CIT(A), the revenue is in appeal before the....
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....mote economic and industrial growth in backward districts and states. In the case of Bajaj Tempo Ltd --Vs. CIT (196 ITR 188) the Supreme Court has Opined that a provision of taxing statute granting incentives for promoting growth and development should be construed liberally and since a provision for promoting economic growth has to be interpreted liberally the restriction thereon too has to be construed so as to advance the objective of the provision and not to frustrate it. Conditions of Sec 801B (2) (iii) should be fulfilled by every new industrial undertaking claiming deduction either/under sub sec (3) (4) or (5) of Sec 80 IB i.e. to say the undertaking must be engaged in manufacture or production of an article. If this condition is not fulfilled no deduction is permissible under any of the sub sections of Sec 801B. The industrial undertakings notified and approved by the Central Govt. and situated in North Eastern States are eligible for tax holiday for period of 10 years' as against period of 5 years available to other backwards states. In Notification No. SO 627 (E) dated 04.08.1999 the Central Government has recognised poultry and cattle feed industry, to be an eligible....
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....l changes and was converted into small pellets. The actual process involved was that the mash feed was carried through an elevator to a pellet making machine where it got mixed with steam and then forced through a press containing small holes to convert the feed into small pellets. It was held that there was no change of composition in the mash feed and the pellet feed. Hence conversion of physical shape of the feed involves only processing and not manufacture. 12. The learned DR filed before us a chart explaining the process carried out by the Assessee, which is as follows: Raw materials (corn, soya meal, rice bran, cassava, others ↓ Quality inspection (aflatcocin, moisture, energy, protein, etc. ↓ Hatch weighing (per formulation) ↓ Grinding of raw materials ↓ Mixing ↓ Pelleting ↓ Cooling ↓ Crumbling ↓ Quality Inspection ↓ Weighing and packaging ↓ Storage It was submitted by him that the raw material and end product were the same and therefore what the Assessee does is only "Processing" and not "Manufacture". For an activity to be called ....
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.... Amrit Feeds (supra). Respectfully following the decision of the Coordinate Bench of this Tribunal in assessee's own case the finding of ld. CIT(A) on this issue stands confirmed and the grounds of appeal raised by the Revenue in all the appeals on this issue are dismissed. 15. As far as ground nos. (iv) & (v) raised by the department in all the appeals are concerned it was agreed by the parties that the issue is with regard to excluding interest income from the profits of the business of manufacture of poultry feed for the purpose of allowing deduction u/s 80IB(5) of the Act and that this issue arises for consideration only in the appeal of the revenue for A.Y.2012-13. In view of the aforesaid submission ground nos. (iv) and (v) in IT(SS)A.Nos. 125 to 127/Kol/.2016 are dismissed as not arising out of the order of CIT(A). 16. As far as Gr.No.(iv) & (v) raised by the Revenue in A.Y.2012-13 are concerned the facts are that the assessee had received interest on fixed deposits of Rs. 5,19,954/-. The AO held that deduction u/s 80IB(5) of the Act is to be allowed only on "profits derived" from the eligible business which clearly indicated that there should be a direct or immedi....
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....e eligible industrial unit u/s 80IB of the Act. However, on the other hand he treated the interest income in isolation and on gross basis making it fully chargeable to tax under the Income-tax Act, 1961. The Assessee submitted that such action of the AO was grossly unjustified in facts and also in law. The Assessee placed reliance on the decision of the Hon'ble Supreme Court in the case ACG Associated Capsules (P) Ltd Vs CIT (18 taxmann.com 137). In the aforesaid decision, the question before the High Court was whether 'net' interest or 'gross interest' was to be considered for the purposes of computing deduction in respect of profits from export business under Section 80HHC of the Act. It was the Department's contention that the gross interest income was to be excluded from 'Profits of Business' for the purposes of calculating deduction u/s 80HHC. On assessee's appeal, the Supreme Court held that it was not the 'gross' amount but only the 'net' amount, if any, which was to be excluded under Explanation (baa) to Section 80HHC. The Supreme Court accepted the assessee's contention that interest expense had to be netted off against the i....