TaxTMI 
TaxTMI 
2011 (8) TMI 1358
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.... record are that the assessing officer has disallowed the deduction claimed u/s 80IB holding that (a) the assessee was not a small scale industrial unit since the value of its plant and machinery as on 31.3.2005 exceeded Rs. 1 crore (b) the assessee was engaged in processing and trading of milk and milk products and has not manufactured or produced any article or thing. Relying upon various judgements of the apex court and other courts, the A.O. has concluded that the assessee was not engaged in manufacture or production of any article or thing since the assessee merely makes the milk procured by it marketable by enhancing its self life but the output remains the same as the input does not undergo any significant change in its characteristics. 3. The assessee preferred an appeal before the CIT(A) with the submission that the assessee had been subjected to scrutiny assessment from the assessment year 1999-2000 onwards and the issue had been considered in depth by the department, including through directions issued by the Additional CIT u/s 144A of the Act before being allowed. It was further contended that as per the provisions of the Act, the deduction to an eligible industry wa....
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....an appeal against the order of the CIT(A) with the submission that the assessee was allowed deduction u/s 80IB in the initial years after making a detailed examination by the assessing officer. Therefore, once the deduction is allowed in initial years, it cannot be disallowed in subsequent years. In support of this proposition, the assessee has placed a reliance upon the following judgements: 1. CIT Vs. Paul Brothers (1995) 216 ITR 548 (NAG) 2. Micro Instruments Co. Vs. ITO (2008) 12 DTR (Chd) (Trib) 501 3. ITO Vs. Essential Motto (2009) 17 DTR (Chd) (Trib) 281 4. M.M. Patel & Sons Pvt. Ltd. Vs. ITO (1982) 1 ITD 82 5. Janak Dehydration Pvt. Ltd. Vs. ACIT 134 TTJ 1 (Ahd) 6. Saurashtra Cement & Chemical Industries Ltd. Vs. CIT 123 ITR 669 8. With regard to the production of pasteurized milk, the Ld. Counsel for the assessee has submitted that the assessee has procured the milk from different places and in order to make it more hygienic with different percentage of fat contents, it has to undergo different process of boiling and cooling and therefore the final product is entirely different product other than the milk procured fr....
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....ration was never withdrawn by the concerned authorities. Therefore, it cannot be said that assessee was not a small scale industry. 10. The Ld. D.R. on the other hand besides placing a heavy reliance upon the order of the CIT(A) has submitted that every assessment year is an independent assessment year and rule of res judicata would not apply to the income tax proceedings. Therefore, in each assessment year the issues are to be examined independently in the light of relevant legal provisions. When it has been held by the appellate authorities that pasteurization of milk does not amount to a manufacture or production of articles or things, the assessing officer has rightly disallowed the deduction claimed u/s 80IB of the Act. The Ld. D.R. further contended that for the assessment year 2002-03, the assessment originally framed allowing the claim of deduction was reopened and deduction u/s 80IB was disallowed by the A.O. The Ld. D.R. further contended if in any of the assessment year error is committed and claim is wrongly allowed, the assessing officer is within his jurisdiction to rectify the error and disallow the claim. Pasteurisation of milk is simply purification of milk....
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....essment year and also thereafter, the claim for such deduction cannot be denied for subsequent years without any justification. The relevant observations of the Tribunal are extracted hereunder: "The assessee initially claimed deduction under s. 80IB for the impugned unit in the asst. yr. 2001-02 and the same was allowed. In this assessment year, i.e. 2003-04 the claim of the assessee was in continuation of the claims made in the earlier assessment years for the impugned assessment year falls within the number of assessment years as specified in the section in which the claim is eligible. It is also a pertinent fact position that the claim allowed to the assessee in the initial assessment year of 2001-02 and thereafter in the asst. yr. 2002-03 has not been withdrawn. There is no contravention from the Revenue either at the stage of the proceedings before the lower authorities or even before the Tribunal. Thus, factually speaking the claim of the assessee for deduction under s. 80IB stands admitted in the initial assessment year and also thereafter upto the assessment year prior to the year under consideration. On this factual matrix, there is no justification for the ....
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....e relief granted in the initial year the ITO cannot examine the question again and decide to withhold or withdraw the relief which has been already once granted. The Tribunal was right in law in holding that there was no case for the Revenue to withdraw the assessee's claim under s. 80J for the year under reference, when such claim had been accepted in the earlier assessment year, which assessment had not been disturbed." 15. The similar view was taken by the Tribunal in the case of ITO Vs. Essential Moto (supra) in which the Tribunal has held that deduction u/s 80IA having been allowed in initial assessment year i.e. 1997-98 in assessment u/s 143(3) with a specific finding that assessee fulfilled all the conditions of section 80IA which stands undisturbed, A.O. could not have reopened the assessment for the assessment year 1998-99 and subsequent years for withdrawing said deduction. Further, A.O. having allowed identical claims in section 80IA in assessment u/s 143(3) for earlier year and also subsequent assessment year could not have reason to believe in the absence of any fresh facts or change of law that income escaped assessment on account of relief u/s 80IA, hence, reopeni....
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.... pasteurization of milk is only processing of milk and milk remains the milk even after processing though a little more clean and more fit for consumption and therefore, does not amount to manufacture or production for the purpose of grant of deduction u/s 80HHA and 80I. But after this judgement, the word manufacture and production was further interpreted by the apex court and various High Courts. 17. In the case of India Cine Agencies Vs. CIT (supra), their Lordship of the apex court have held that conversion of jumbo rolls of photographic films into small rolls in desired size amounts to a manufacture or production eligible for deduction u/s 80HH and 80I of the Act. While dealing with the issue, their Lordship have defined the word manufacture by holding that manufacture implies a change but every change is not manufacture yet every change of an article is the result of a treatment, labour and manipulation. Naturally manufacture is an end result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one class to another. There may be a several stages of processing, a different account of processing at....
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....n this subject and in case of India Cine Agencies, the honorable apex court vide its judgement dated 12.11.2008 has clarified the expression 'production' and 'manufacture' and held that packing, labeling, re-labelling containers repacking from bulk package to retail package and the adoption of other method to render the product marketable are also a part of productions. The deduction u/s 80IB is to be allowed when the assessee is engaged in the activities of manufacture or production. Admittedly, the assessee is engaged in processing and trading of milk and milk products. The bulk of milk is being procured from different places and after its pasteurization, it was packed in small packets for its marketing and the packing from bulk material to retail package amounts to a production as per the judgement of the Hon'ble Supreme Court in the case of India Cine Agencies (supra). Therefore, once the revenue in the initial year has accepted the claim of the assessee and allowed deduction u/s 80IB which has to be allowed consecutively for 10 succeeding years, the revenue should not have taken a view contrary to the earlier view in succeeding year to disallow the claim of the assessees. Admi....
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....t, the assessee is required to file the audit report along with the return of income to claim additional depreciation. But in case it is not filed along with the return and filed subsequently, the claim of the depreciation should not be denied only for the technical default. Since the audit report was filed subsequently, the claim of the additional depreciation should have been examined by the A.O. in accordance with law. We, therefore, set aside the order of the CIT(A) in this regard and direct the A.O. to re-examine the claim of additional depreciation as per provisions of law. 25. So far as the issue of industrial undertaking is concerned, we find that assessee was registered as a SSI with the concerned authorities and certificate to this effect is also placed on record. Nothing is placed on record by the revenue that the registration granted to the assessees as a SSI was ever withdrawn by the concerned authorities. Moreover, it is also noticed that at the time of grant of registration as a SSI, the requisite conditions were also fulfilled. We therefore of the view that until and unless the registration granted as a SSI by the concerned authorities is not withdrawn, the asses....