9911796707
TMI Blog2016 (5) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... owing Grounds of appeal :- "1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the assessee's claim of deduction u/s. 35AD of the Act without appreciating that the assessee has incurred expenditure of setting up of SILO for captive purposes in contravention of the provisions of S 35AD which provides for deduction in respect of "Specified Business?" 2. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the AO be restored." 3. Substantively speaking, the solitary dispute in this appeal arises from the decision of the CIT(A) in holding that assessee's claim for deduction of Rs. 2,89,54,750/- u/s. 35AD of the Act is justified in the context of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... captive purposes would not lead to disentitlement of the deduction u/s. 35AD of the Act. As the assessment order reveals, the Assessing Officer rejected the claim of the assessee on two grounds, viz., that the assessee had set up a SILO and not a warehouse to store agricultural produce within the meaning of Sec. 35AD of the Act; and, that the assessee company was not in the business of setting up of warehousing facility. Accordingly, the claim of the assessee for deduction u/s. 35AD of the Act amounting to Rs. 2,89,54,750/- was disallowed. The aforestated disallowance was carried in appeal before the CIT(A) on various points of law and facts. The CIT(A) considered the submissions put forth by the assessee and disagreed with the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified business". Quite clearly, the other objection raised by the Assessing Officer in the assessment order to the effect that setting up a SILO was not to be regarded as a warehousing facility within the meaning of Sec. 35AD of the Act is not manifested in the Grounds of appeal raised by the Revenue. Be that as it may, we have heard the rival counsels in the context of the Grounds of appeal raised by the Revenue. 6. The learned Departmental Representative (in short 'the DR') contended that the SILO set up by the assessee was used only for captive purposes instead of renting out to outsiders and, therefore, it could not be said that such activity was a "specified business" referred to in Sec. 35AD of the Act. 7. On the other hand, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression "specified business" to include "setting up and operating a warehousing facility for storage of agricultural produce". The case of the assessee is that it has incurred capital expenditure of Rs. 2,89,54,750/- in constructing a warehousing facility for storage of agricultural produce by constructing a SILO (warehouse). Factually speaking, the respondent-assessee is engaged in the activity of manufacturing and export of castor oils by using castor seeds as its raw materials. Apart from the said activity, assessee also performs crushing operations (i.e. crushing of castor seeds) on job work basis for which it receives job work charges. In case of job work contracts, the assessee company receives castor seeds from the clients, stores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is used for storage of agricultural produce, therefore, to deny deduction on the ground that the appellant is not in the business of setting up and operating warehouse facility is not proper. The factum of the assessee having used its warehouse facility for storage of agricultural produce in the course of its business is not in question. The moot point is would the objection of the Revenue be met if the assessee was to earn rental by giving out its warehouse facility for storage of agricultural produce and instead incur costs for hiring facility for storage of its own castor seeds. In fact, the CIT(A) noted that it is not in dispute that the manner in which assessee has used its warehousing facility has enabled savings on storage cos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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