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TMI Blog2013 (9) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that in the trade parlance "Flour Mill" is distinct from "Roller Flour Mill". - CIT(A) has correctly brushed aside this clarification because it deals with the sales tax etc. which is a State subject and this clarification can not negates the intention of the Parliament given in Part B of Schedule XIII which is a negative list for deduction u/s 80IC. - Decided against the assessee. - IT Appeal No. 11 (Chd.) of 2012 - - - Dated:- 14-1-2013 - T.R. SOOD AND Ms. SUSHMA CHOWL A , JJ. For the Appellant : Surinder Babbar. For the Respondent : N.K. Saini. ORDER:- PER : T.R. Sood This appeal is directed against the order passed by the ld. CIT(A), Shimla dated 31.10.2011. 2. In this appeal the assessee has raised the following grounds: "1 On the facts and circumstances of the case, the ld. CIT(A) has grossly erred in concurring with the ITO in rejecting the valid claim of the assessee u/s 80IC of the Act. 2. On the facts and circumstances of the case, the ld. CIT(A) has grossly erred in upholding the rejection of claim of Rs. 1,12,94,962/- in concurrence with the ITO by holding that there is no distinction between a "Flour Mill" and a "Roller Flour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the deduction u/s 80IB (4) @ 25%. 4. On appeal before the ld. CIT(A) the submissions made before the Assessing Officer were reiterated. It was again emphasized that the Roller Flour Mill is different from Flour Mill and in this regard reference was also made to the Registration Certificate issued by the Department of Industries. It was further submitted that in a Flour Mill only atta and chokkar are the end products whereas in Roller Flour Mill in addition to atta and chokkar, maida and suzi are also produced. The Flour Mill is practically a "Chakki" made out of stone wheels whereas Roller Flour Mill is made of Roll Bodies which is entirely different from a flour mill. The clarification given by the Government of Himachal Pradesh regarding exemption in sales-tax was also reiterated. 5. The ld. CIT(A) after considering the submissions did not find force in the same and rejected the claim of the assessee. 6. Before us, the ld. counsel of the assessee reiterated the submissions made before the lower authorities and emphasized that Flour Mill is different from Roller Flour Mill. Firstly the Flour Mill can produce only flour and choker whereas Roller Flour mill also produces i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r i.e. after three years. 8. In the rejoinder the ld. counsel of the assessee submitted that distinction between Flour Mill and Roller Flour Mill was brought to the knowledge of the Assessing Officer only when the issue raised by the Assessing Officer for denial of deduction u/s 80IC. Further merely because the assessee was manufacturing maida and suzi earlier also only proves that the assessee was running a Roller Flour Mill right from the beginning. 9. We have heard the rival submissions carefully. We find that the ld. CIT(A) has discussed the issue in detail and in this regard we would like to produce para 4 to 4.4 of her order which are as under: "4 The rival submissions have been considered. The entry at Sr No. 8 in Schedule XIII, Part B reads "Flour Mill/Rice Mill". On the fact of it, the entry makes it clear that all types of flour mills and rice mills are covered by this entry. It does not elaborate the categories or types of flour mills and rice mills. The heading of the XIII schedule reads "List of Article or thing". Therefore, it is clear that what is prohibited by virtue of XIII schedule is the production/manufacturing of the specified articles or things. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led and flattened between rollers, is classifiable under the heading 11.01 of the Central Excise Tariff Act. 4.3 The assessee's contention that the State Government of Himachal Pradesh has accepted the distinction between flour mill and roller flour mill is of no relevant. The scheme of sales tax incentives which was in force in the State in 1994 was entirely a separate scheme notified by the State Government. That scheme has no relevance or connection with the tax holiday comprised in section 80IC, which was enacted by the Finance Act, 2003 as a part of the new industrial policy of the Central Government announced in 2003 for States like H.P. This becomes further clear by the fact that the list of ineligible industries contained in schedule XIII is almost entirely different in content from the list of units declared to be ineligible for sales tax incentives by the State Government. For the purpose of the Income-tax Act, the entry in schedule XIII has to be understood in its normal sense and not in terms of any clarifications issued by the State Government under an entirely different scheme. 4.4 A statute is the edict of the legislature. The language employed in a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 29 24117 6 Tanningand dyeing extracts, tannins and their derivatives, dyes, colours, paints and varnishes, putty, fillers and other mastics, inks Chapter 32 24113 or 24114 7 Marble and mineral substances nor classified elsewhere 25.04 25.05 14106 or 4107 8 Flour mills/r ice mills 11.01 15311 9 TO 20 " From the above it is clear that deduction u/s 80IC is available whenever the assessee undertakes a substantial expansion. The issue relating to substantial expansion has not been disputed by the Assessing Officer. However, Sub-sec (2) further requires that deduction is available only to such undertaking which begins to manufacture or produce any article or thing which are not mentioned in schedule XIII, Part B. Thus it is clear as observed by the ld. CIT(A) the deduction is not denied on a particular type of mill but it is denied on a particular type of article or thing which is mentioned therein. It should be emphasized that part B of Schedule XIII, item 8 talks of Flour mill under the head "activity or article or thing" but that has been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales during the previous year Nil Closing stock 5591.54 Yield of finished products Flour 118746 Maida/ Suzi 16984.45 Choker 16586.46 %age of yield 79.64% 11.39% 11.12% Shortage/excess, if any Process Gain(Qtls) = (3214.29) 2.15% From the above it is clear that principle activities remain milling of flour and 79.64% wheat crushed results into milling of flour and maida and suzi is only at 11.39% which can be called as bi-product. Thus it is clear that main activity of the assessee is milling and by doing the activity listed in the negative list in Part B of Schedule XIII, deduction u/s 80IC, is not available. 12. The ld. counsel of the assessee had put up lot of stress on the clarification of legal exemption granted by the Government of Himachal Pradesh. Relevant letter is extracted below: "Ind(A)(F)6-16/94 Government of Himachal Pradesh Industries Department The D.C-cum-Secretary (Industries) to the Government of Himachal Pradesh To The Director of Industries Himachal Pradesh, Shimla-1 Dated, Shi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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