2012 (2) TMI 692

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....enue rather both the parties fairly agreed that the facts of the instant case are exactly similar to the facts discussed by Tribunal in its order dated 2.3.2011 (supra). 3. We have considered the rival submissions of both the parties and perused the material available on record. In view of the above assertion/admission, we are reproducing hereunder the relevant portion of the order of the Tribunal dated 2.3.2011 (supra): " This is an appeal by the assessee against the order of the learned CIT(A) dated 2.3.2009 on the ground that the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 32,01,235/- made by the Assessing Officer on account of disallowance of deduction u/s 80IB(3)(ii). 2. During hearing of this, we have heard Shri Pradeep Kumar Mitra, learned Senior Departmental Representative and Shri M.C. Mehta along with Shri Hitesh Chimnani. The crux of arguments on behalf of the revenue is that the no manufacturing is involved as the assessee is merely purchasing whole pulses seeds which are merely broken into pieces with the aid of machinery , therefore, the claim of deduction u/s 80IB(3)(ii) of the Act was rightly denied by ....

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....activities done by the assessee and the process of manufacturing :- (i) As regards industrial activities of the appellant it is submitted that they manufacture Pulses which are either article or things in its manufacturing unit from whole grams or Moong or Urad or Masoor etc. in a huge power operated plant and machinery and in an industrial building. This is definitely an industrial activity. This activity (Pulses manufacturing) involves following manufacturing processes : (1) Mixing (Pala) & weighing - Mixing is making a batch of a particular quantity of whole seeds of various produce purchased from various suppliers. (2) Grading and Sorting- This is done with the help of a specially made machine. This process is de-stoning process. In this process Clay, Stones pieces and other foreign materials etc are recovered from seeds. (3) Watering & Oiling - In this process cleaned raw materials is made wet with water and oil. This process needs skill and knowledge. Wrong quantity of water & oil may spoil entire batch. This process is performed by skilled and experienced workers and also is supervised by senior experienced staff. (4) Drying - In this proc....

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....ture. If we go to the seller and ask for Dal, he will not give us whole grams. The use of whole gram and end product (Dal) is different. The word 'industry' has a wide import. Where there is a systematic and organized activity with the cooperation between the employer and employee (the direct and substantial element is commercial) for the production/or distribution of services and goods calculated to satisfy human wants and wishes (not spiritual and religious but inclusive of material things or services geared to celestial bliss i.e. easy making on a large scale Prasad or food) prima facie, there is an "industry" in that enterprise. The true focus is functional and the decisive test is the nature of activity with special emphasis on the employee employer relations. A provision in the taxing statute granting incentive for promoting and development should be construed liberally. Manufacture and processing are not clearly demarketing fields. The test of manufacture lies in the answer to the question whether what is processed or produced as the end product is commercial known as a different product from the materials out of which it is so produced. Therefore, if the product has....

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....d tiles and polishing it was held that it amounts to manufacture or production within the meaning of section 80IA(2)(iii) of the Act. It is pertinent to mention here that while coming to this conclusion, the Hon'ble Apex Court applied the decision pronounced in CIT v. Ses Goa Limited; 271 ITR 331 (SC) and CIT v. N.C. Budhiraja & Company; 204 ITR 412 (SC) and distinguished the decision in Rajasthan State Electricity Board v. Associated Stone Industries (2000) AIR 2000 SC 2382 and Aman Marble Industries Private Limited Vs. Collector of Central Excise (20030 157 ELT 393 (SC) and affirmed the decision from Hon'ble Rajasthan High Court in Arihant Tiles & Marbles Private Limited vs. ITO; 295 ITR 148. The decision in CIT v. Best Chem & Lime Stone Industries Private Limited; 210 ITR 883 (Raj) and CIT v. Mysore Minerals Limited; 250 ITR 725 (Karn) along with others were considered. In another case the Hon'ble Apex Court in CIT v. Oracle Software India Limited (2010) 320 ITR 546 held that duplication of blank CD with master media amounts to manufacture, therefore, the deduction u/s 80IA of the Act is available to the assessee. While coming to this conclusion, the Hon&#39....

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.... Corporation Vs. CIT (175 Taxman 77) held that ship breaking activity result into production of a distinct and different article and thus entitled to deduction u/s 80HH and 80I of the Act. The Hon'ble Bombay High Court in Ship Scrap Traders vs. CIT (251 ITR 806) applied the yardsticks adopted by Hon'ble Apex Court in the case of CIT vs. N.C. Buddhiraja & Co. (204 ITR 412) clearly held that the assessee is entitled to deduction u/s 80HH & 80I. The Hon'ble Madras High Court in CIT vs. Premier Tobacco Packers P. Ltd. (284 ITR 222) held that even tobacco curing is commercially different commodity. The Hon'ble Gujarat High Court in CIT vs. Prabhudas Kishordas Tobacco Products (154 Taxman 404) (Guj) held that bidi manufacturing amounts to manufacturing. The Hon'ble Allahabad High Court in CIT vs. Shiv Oil & Dal Mill (153 Taxman 27) (All) held that refining of oil amounts to manufacturing. The processing of film and printing photographs from negatives was held to be manufacturing activity by Hon'ble High Court of Madras in CIT vs. Jamal Photo Industries (I) (P) Ltd. (203 CTR 256). In another case in CIT vs. Vinbros & Co. (2009) (177 Taxman 217) (Mad) held that blen....