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TMI Blog2017 (4) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A) has erred in accepting that the process of preparation of poultry feeds amount to production of an article within the meaning of section 80IB. (iv) That the Ld. CIT(A) has erred in allowing the entire amount of Rs. 73,44,900/- claimed as deduction U/S 80-IB. (v) That the Ld. CIT(A) has erred in directing the A.O. to net off the interest income credited in the profit and loss account of the eligible undertaking against the interest expense debited in the said profit and loss account without the appreciating the facts and circumstances of the case supported by the decision of Hon'ble Supreme Court in the case of Pandian Chemicals Limited Vs. CIT,[2003] 129 TAXMAN 539 (SC) and the decision of High Court of Jammu and Kashmir in the case of Asian Cement Industries Vs Income Tax Appellate Tribunal, [2012] 28 TAXMAN 290(Jammu & Kashmir) (vi) That the Ld. CIT(A) has erred in directing the A.O. to recompute the income of the eligible undertaking and re-compute the deduction u/s 80IB after netting off the interest income credited in the profit and loss account of the eligible undertaking against the interest expense debited in the said profit and loss account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act where the undertaking was located in any of the North Eastern States. It was the plea of the Assessee that deduction both u/s 801B (4) & (5) could be allowed only if newly set up industrial undertaking was engaged in manufacture and production of an article and if poultry feed industry was considered eligible by the Central Government for claiming deduction u/s 801B(4) then the same industry should be considered to be eligible for deduction u/s 801B(5) of the Act also on the ground at it was engaged in manufacture or production of an article. 6. The AO however was of the view that in the production process explained by the Assessee, there was no change in chemical composition of the end product and therefore there was no manufacture. However before recording such an authentic technical finding, the AO however did not refer to any scientific data or scientific experiments or technical report to support his conclusion. The AO accordingly rejected the claim of the Assessee for deduction u/s.80IB(5) of the Act. 7. On appeal by the Assessee, the CIT(A) held that the Assessee was eligible for deduction u/s.80IB(5) of the Act and in doing so relied on the decision rendered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case. 17. Section 80IB is an incentive provision of the Income Tax Act enacted, by the Legislature to promote economic and industrial growth in backward districts and states. In the case of Bajaj Tempo Ltd --Vs. CIT (196 ITR 188) the Supreme Court has Opined that a provision of taxing statute granting incentives for promoting growth and development should be construed liberally and since a provision for promoting economic growth has to be interpreted liberally the restriction thereon too has to be construed so as to advance the objective of the provision and not to frustrate it. Conditions of Sec 801B (2) (iii) should be fulfilled by every new industrial undertaking claiming deduction either/under sub sec (3) (4) or (5) of Sec 80 IB i.e. to say the undertaking must be engaged in manufacture or production of an article. If this condition is not fulfilled no deduction is permissible under any of the sub sections of Sec 801B. The industrial undertakings notified and approved by the Central Govt. and situated in North Eastern States are eligible for tax holiday for period of 10 years' as against period of 5 years available to other backwards states. In Notification No. SO 627 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a course powdered material which was called mash feed. Such feed underwent a certain kind of physical changes and was converted into small pellets. The actual process involved was that the mash feed was carried through an elevator to a pellet making machine where it got mixed with steam and then forced through a press containing small holes to convert the feed into small pellets. It was held that there was no change of composition in the mash feed and the pellet feed. Hence conversion of physical shape of the feed involves only processing and not manufacture. 12 . The learned DR filed before us a chart explaining the process carried out by the Assessee, which is as follows: Raw materials (corn, soya meal, rice bran, cassava, others ↓ Quality inspection (aflatcocin, moisture, energy, protein, etc. ↓ Hatch weighing (per formulation) ↓ Grinding of raw materials ↓ Mixing ↓ Pelleting ↓ Cooling ↓ Crumbling ↓ Quality Inspection ↓ Weighing and packaging ↓ Storage It was submitted by him that the raw material and end product were the same and therefore what the Assessee does is only "Processing" and not "Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision rendered in the case of Amrit Feeds (supra). Respectfully following the decision of the Coordinate Bench of this Tribunal in assessee's own case the finding of ld. CIT(A) on this issue stands confirmed and the grounds of appeal raised by the Revenue in all the appeals on this issue are dismissed. 15. As far as ground nos. (iv) to (vii) raised by the revenue are concerned it has been projected in the grounds of appeal that the issue for consideration is whether interest income earned by the assessee on FDRs should be considered as income derived from eligible business for the purpose of allowing deduction u/s 80IB(5) of the Act. The ground projected by the revenue is erroneous. A perusal of the order of AO and the submissions made by the assessee before CIT(A) shows that the assessee claimed deduction u/s 80IB(5) of the Act in respect of a sum of Rs. 99,291/- which comprised of a sum of Rs. 91,490/- which was sundry balance returned back which had nexus with the business of manufacture and sale of poultry feed and another sum of Rs. 7801/- which was miscellaneous receipts which also had direct nexus with the business of manufacture and sale of poultry feed. These s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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