TaxTMI 
TaxTMI 
2019 (8) TMI 398
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....o. 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 consideration is engaged in both activities, that is, growing/cultivation of tea as well as manufacturing of tea. However, while adjudicating the claims of the assessee in respect of deduction u/s 80IC of the Act, we have taken a view that this issue involved is squarely covered in favour of the Revenue by the judgment of the Coordinate Bench in ITA No. 740 & 741/Kol/2010, order dated 21. 03. 2013 in the case of M/s. Sewajpur Tea Co. Pvt. Ltd. However, through this M. A. , it was brought to our notice that in the case of M/s. Sewajpur Tea Co. Pvt. Ltd. it was only engaged in manufacturing of the tea and there was no dispute of the fact that it is a standalone manufacturing tea company and that company does not do the cultivation of tea and therefore, it did not had with it Garden Registration certificate which is issued by the Tea Board of Ind....
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....he 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 274, wherein income earned by the assessee by way of Services charges in Tea business was allowed to be set off against loss suffered in business of cultivation and manufacture of tea. Therefore, it is further submitted that where there is common management and control of a business, loss of earlier years has been allowed to be set off against the income from business of current assessment years. It was further held that since the management was common in running tea gardens, rendering services to other tea gardens, could be treated as the same business for the purpose of section 72. In the case of C. I. T. -vs. - Margarette Hope Tea Co. Ltd. , reported in 201 ITR page 747, the Hon'ble Calcutta High Court has held that since assessee's main activity was cultivation, manufacture and sale of tea, the Tribunal was justified in holding that the amount of cash credit ma....
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....d 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 activities are to be done simultaneously to claim such benefit. It is an admitted fact that assessee had not maintained any separate set of account for such activity to ascertain actual profit derived from two separate sources. Section 80-IC(2)(b) read with item 12 of Schedule 14 shows that for claiming deduction under this section assessee needs to be engaged in "Processing and raising of plantation crops - tea" The AO observed that, only if the assessee is engaged in carrying on both the activities together i. e. processing and raising of plantation crop of tea, then only they are entitled for such benefit. For sing only one activity being raising or just processing of tea is not enough for claiming such benefit. In the submission assessee argued 'that word "and" between "processing" and "raising" should be read as "or". It means that word "and" be interpreted here only as "or" , and not as "and" , which actua....
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.... 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 ;- "An article and things has been mentioned subsequently to that. If we see the activities in item no. 1 between the activities, the word "or" has been used as is apparent in the case of "fruit" and "vegetable", "processing industries, manufacturing or producing". Similarly in item no. 2 also, between the activities, the word "or" has been used, manufacturing or producing. Similarly, in item no. 4 also, the word "or" has been used between the activities, while in item no. 12, the word "and" has been used between activities. It clearly denotes that both the conditions, i. e. , processing and raising of plantation crops must be specified by an undertaking eligible for deduction under section 80IC(2)(b). This is the settled law that a fiscal statute shall have to be interpreted on the basis of the language used therein and not de hors the same. No words ought to be added and only the language to be used or considered so as to ascertain the proper meaning and intent of the legislation. ....
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....f engaging in processing and raising of the plantation of tea, the assessee cannot be allowed deduction under section 80IC(2)(b). " In this case this is to be considered whether assessee is entitled for benefit of section 80- IC(2)(b) in respect to the tea proceed out of the tea leaves purchased from the market. The assesee has not made any separate account to ascertain the actual profit derived out of the tea leaves grown and processed by it, and out of the tea leaves purchased and processed by it, and so, it is not possible to determine the actual profit derived from two separate activities, and therefore, no deduction is allowable under this section. " 5. We have heard both the parties and perused the material available on record, we note that it is an undisputed fact that assessee's business premise is situated in the state of Assam, hence as per the section 80-IC(2)(b) of the Act, which provides tax deduction for the income arising from manufacture or produce any ofthat article or thing vide the item no: 12 in the fourteenth schedule of Act, for the activity ofprocessing and raising of plantation crops in the north-eastern states. The assessee has claimed the d....
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....rsection 80-1C. Since all the above incomes were generated by their garden, and should be treated as Business income. The assessing officer observed that response by the assessee was considered in view of Operational requirement, Business dynamics and Commercial necessity. However, the question of law in this matter was of scope and ambit of the item no. 12 of the fourteen schedule of the Act that allow deduction for the income arising from the activity of Processing and raising of the plantation crops. The AO noted that fundamental question here was whether, in order to claim the tax deduction under section 80-IC(2) (b): i) Is assessee required to carry on both activities i. e. processing as well as raising of plantation crop- tea to claim deduction under section 80-IC (2)(B)? or carry on either one of the activity i. e. processing or raising and ii) Is processing and raising an integrated scope or independent entities? From the response of the assesse , it was understood that assessee has taken view that word"and" between "processing" and "raising" should be read as "or". The deduction is available to any person engaged either in processing or raising of t....
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....In view of above, the AO noted that unless conditions of engaging in processing and raising of plantation crops is met or complied, deduction under section 80-IC(2)(b) of the Act cannot be allowed to the assessee. Therefore, the Income of Rs. 34, 73, 556/- arising from bought Leaf manufacturedwas not considered as eligible business income and excluded from the benefit of deduction under section 80-IC of the Act. 8. We note that a portion of the Tea Leafwas purchased directly and not raised in the assessee's own garden(s), the profits emanating from that component would not be eligible for thebenef it under section 80-IC of the Act. On examination of the Fourteenth Schedule, Part A, relevant for the North-Eastern States, it was observed that the Schedule had been inserted by the Finance Act, 2003 w. e. f. 01. 04. 2004, and covers the list of Articles or Things or Operations, the pursuit of which would render the incomes so derived to be eligible for the benefits spelt out in Section 80-lC of the Income Tax Act, 1961. At this juncture, it may be worthwhile to reproduce the entire schedule, as follows: [THE FOURTEENTH SCHEDULE] See SECTION 80-IC(2) List of articles or ....
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....ntermediate Products Industry manufacturing or producing - (i) Gas exploration and production; (ii) Gas distribution and bottling; (iii) Power generation (iv) Plastics; (v) Yarn raw materials; (vi) Fertilizers; (vii) Methanol; (viii) Formaldehyde and FR resin melamine and MF Resin; (ix) Methylamine, Hexamethylene tetramine, Ammonium bi-carbonate; (x) Nitric Acid and ammonium Nitrate; (xi) Carbon Black; (xii) Polymer chips. 14. Agro forestry based industry. 15. Horticulture Industry. 16. Mineral based industry. 17. Floriculture Industry. 18. Agro based industry. ** "Or" and "and" have been highlighted in the Fourteenth Schedule for effect only. It is apparent from the above Fourteenth Schedule that the "activities" or "operations"covering the Articles to be "manufactured" or "processed" have been clearly spelt out, and is highly exhaustive. In certain situations 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 q....
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....f taxation, it is clear that the section itself is a beneficial section to the taxpayer. Therefore, it needs a stricter interpretation, so that non-due benefits are conferred. Any hardship that may arise out of a strict interpretation cannot come in the way of the "correct" interpretation. We note that it is of a certain implied importance that for item No. 12, the activity (Processing and raising of plantation crops) has been mentioned first, and then it has been qualified by the nomenclature of the article or things, namely tea coffee, rubber, coconuts and similar articles. In short the item covers plantation crops, without being exhaustive about the types of crops. However, it is specific that the plantation crops are to be processed and raised by the person claiming the deduction. As both the conditions have been stipulated, non-observance of anyone condition would, render the taxpayer ineligible. In construction of the meaning of the Schedule and in conformity of a literal 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....