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TMI Blog1990 (9) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... is mainly on the fact that, hatching of eggs though done artificially with the help of machines, but the birth of a chicken from out of the eggs is a natural phenomena and the various machines which are used in the artificial hatching of eggs are providing for temperature and humidity control and therefore, the machines cannot be said to produce any article or thing. Further objection of the revenue rests on the fact that, chicken are living beings and no living being are capable of being produced artificially, i.e., with the help of machines. 3. The assessee's counsel Sh. Chadha supported the order of CIT(A) and submitted that the assessee's case is identical on all force with the one decided by the Tribunal, Madras Bench ' B ', in the case of Sri Venkateshwara Hatcheries (P.) Ltd. v. ITO [1982] 1 ITD 1077 and he pleaded that the said decision should be followed. The bench put it to him that the hatchery machines preserve life of the embryo from the eggs by maintaining a particular heated temperature and also control the humidity which are normally received by the eggs from the mother hen and likewise, the cold storage also preserve the items stored from getting decay, and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e female birds are debecked during their period of growth to prevent their natural habit of pecking at each other and at the eggs. These chicks grow their adult-hood and are ready to lay eggs. At this point these birds are transferred to the egg laying quarters and are confined there. At this point changes are made in their nutrition, health, husbandry and medication. Trained workmen provide water, feed, medication etc. The required ward combination is predecided and on that basis male and female birds are selected and placed together to permit their mating. At times instead of following the usual mating method, the female birds are kept separately and are artificially inseminated. The female birds are trained to lay eggs in the special nest holes. Eggs are collected periodically by workmen who clean them and also fumigate them. The eggs are then placed in a closed storage to arrest natural embryo development or damage to it. The eggs are then graded by a grading machine to check the size and quality for incubation. The graded eggs are then set in trays in a machine called ' incubators '. It is in this machine that the hatching of the eggs takes place through electro-mechanical mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fahrenheit. The humidity during the incubation of the eggs also need to be controlled. For proper hatching of the eggs they require proper supply of oxygen, exhaust carbon dioxide and moisture. After 21 days of incubation period the eggs are hatched and the chicks are born. 4.4 The claim of the assessee is that by means of these machines, careful operations carried out by its technicians, the chicks are manufactured or produced and therefore it is an industrial undertaking entitled to investment allowance and the relief under section 80J of the Act. It is an undisputed fact that the chicks are living beings and when the eggs are laid it contains the living embryo. It is also accepted by the assessee that the operations which are carried out by it are only to provide the environment of a mother hen and under no circumstances it could speed up the process of hatching or the end result of hatching of eggs to chick. The incubators are machines which maintain the temperature, humidity and air for the proper growth of the living embryo within the egg shell. In hospitals too incubators are used to enable growth of babies bom prematurely and the purpose is to provide the babies almost th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the machines do no more than to provide identical mother hen environment and by that process, the machines cannot be said to be the mother of the chick. If this argument of the assessee is to be accepted then it would mean that, hospitals where prematurely bom children are placed in incubators would also become manufacturers of human beings. Unless and until we are able to distinguish the natural phenomena of birth of living beings be it an animal, a bird or human being from the manufacture or production of an article or a thing which all relate to inanimate things, for which the statute has provided for certain concessions and reliefs, we would be stretching the statute too far which would have one and the only effect of defeat of the statute itself. It is too well known that, the legislature provide certain tax concessions and reliefs with the sole intention of helping that enterprise from the point of view of economic growth of the country as a whole. When the legislature is confronted with various areas of income growing and development of the country from various sectors, it decides the relief under specified categories. This is why it has separate provisions for industries wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not automatically lead to any production or manufacture of an article or thing more so in the light of what we had observed above. For example when it is said that a certain university has produced 500 graduates in an year, it does not mean that the university has become a machinery but the term produced is related to the fact the university has turned out or yielded 500 graduates. Merely because there is some end result which is always related as produced, it would not make the process such as teaching, passing out of students etc., as, production or manufacturing. The production or manufacture of an article or thing is and has been always related with the yielding process of any inanimate object or product but never in relation to a living being. Is this a bland statement or is a matter of fact is a question which stares on the face of it. Different fields of activity which involves something added to it like production in a factory, birth of animals such as horses, cows and buffaloes etc., are never said that production of steel is done is a farm but it is always stated that steel is produced in a factory, while when it comes to horses, it is always stated as having been b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular warm temperature to preserve life, a cold storage functions at sub-zero temperature to preserve the goods. The purpose of both being preservation of an existing life in an egg or in an item, it could be concluded nothing new is brought out or there is no production or manufacturing activity at all. When there is neither any production nor any manufacturing involved, then the obvious conclusion has to be that the assessee is not an industrial undertaking and thus not eligible for deduction of any investment allowance and the relief u/s 80J of the Act. 4.7 The Tribunal decision relied upon the assessee did consider the aspect of manufacture of chicks both from the point of view of relief under 80J of the Act, the special relief provided for poultry farming u/s 80JJ but not from the point of grant of investment allowance, as it stood granted in that case. The comparison with that of a cold storage was never advanced and therefore they had no occasion from that angle. The Members proceeded from the point of the meaning of production and realizing the fact that, chicks are living beings, since the hatching takes place artificially, i.e., a process is involved it was held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny article or thing is devoid of any merit and the CIT(A) having failed to appreciate the real intention behind the enactments and the appreciation of the fact that no machine can produce any living form, the allowing of investment allowance and relief under sec. 80J are patently against law and are hereby struck down. The order of the assessing officer is restored on both counts. 5. The other common issue in these appeals relate to the allowing of extra shift allowance on the airconditioning machinery. The assessee claimed the extra shift allowance on its airconditioning machinery on the basis that they have to be run uninterrupted throughout the day in its hatchery. The revenue had negatived the claim on the basis that it is an airconditioning machinery which is not entitled to any extra shift allowance. The undisputed fact is that the hatchery functions on a controlled temperature basis without which, its business becomes inoperable. The I.T. Rules 1962 no doubt specifically provides that airconditioning machinery is not eligible for any extra shift allowance but considering the fact that the entire operation is built around temperature control airconditioning being part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority u/s 35 was not properly made. The only course that is open to the assessee is to request the prescribed authority for reconsideration of its decision. For the asst. year 1982-83 the action of the assessing officer had been rightly upheld. This is so in view of the provision contained in the section that the assessee shall file the certificate from the prescribed authority who alone can decide the claim of the assessee as a scientific research unit and also the quantum thereof. The revenue had been rather fair and recognizing the fact that the assessee had already moved the prescribed authority for such a certificate, had observed that it shall rectify the asst. order as and when the certificate is received. 7. The other common issue relates to the claim of deduction u/s 80JJ of the Act. For the asst. year 1982-83 even before allowing of depreciation for the current year, the resultant figure being in the negative or there being no income, the ground relating to sec. 80JJ relief has been wrongly taken by the revenue and is therefore infructuous. For the asst. year 1977-78 the objection of the revenue relates to the working of the relief u/s 80JJ with reference to the gr ..... 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