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TMI Blog2024 (7) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... which is for the State of Sikkim. Clause (a) of sub-Section (2) of Section 80IC is applicable to any undertaking or enterprise established in an area notified by the Central Board of Direct Taxes to manufacture or produce any article or thing except those specified in the 13th Schedule. Part-A of the 13th Schedule is applicable for the State of Sikkim, whereby tobacco and tobacco products (including cigarettes, cigar, gutkha etc.), aerated branded beverages and pollution causing paper and paper products have been excluded. Except these items any undertaking or enterprise established in a notified area within specified dates to manufacture or produce any article or thing, is eligible for deduction under Section 80IC (3) of the Act, 1961. Entry-1 of Part-B of the 13th Schedule applicable to the State of Himachal Pradesh and State of Uttaranchal, provides the article or thing tobacco or tobacco products including cigarettes and pan masala . The word pan masala used in Entry 1 of Part B is not incorporated in Part-A of the 13th Schedule (for the state of Sikkim). Once the Legislature has not included pan masala in Part-A for the State of Sikkim, then it was not open for the ITAT to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeals and accordingly, the ITAT heard all the five appeals together and one appeal separately following its common order. All the aforesaid six appeals were filed by the Revenue before the ITAT challenging the order of the CIT(Appeals). 5. Since common questions of law and fact was involved in all these appeals, therefore, with the consent of the learned counsel for the parties, all the above-noted income tax appeals have been heard together, treating ITA/51/2019 as the leading appeal. Facts 6. Briefly stated, facts of the present case are that the appellant assessee established an undertaking in industrial area situate in Khasra No. 786/1064 notified by the Central Board of Direct Taxes by Notification No. 41 [F. NO. 142/35/2003-TPL] dated 06.02.2004 under Section 80-IC (2) (a) of the Income Tax Act, 1961 [hereinafter referred to the Act, 1961]. The unit was established by the appellant/assessee for manufacture of mouth freshener (Pan Masala) not containing any tobacco or catechu. The aforesaid unit commenced production with effect from 27.06.2006. The appellant/assessee obtained registration under the Central Excise Act, 1944, Central Sales Tax Act and also under other app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der are reproduced below:- ... We adopt the above detailed discussion mutatis mutandis to decline Revenue's first and foremost plea qua manufacturing aspect to conclude that the assessee can be safely held to have manufactured / produced its pan masala in the specified unit site in Sikkim. 10. Next come the Revenue's latter arguments based on inter-play of impugned section 80IC deduction provision vis- -vis operation of the restrictive covenant enshrined in Thirteen Schedule's negative list read with positive list of the Fourteenth Schedule (supra) relevant to the specified list of article(s) or thing(s) in issue. We find first of all that hon'ble apex court's latest constitutional bench's decision in Commissioner of Customs vs. Dilip Kumar Roy Civil Appeal No. 3327 of 2017 decided on 30.07.2018 has gone into a very elucidate discussion on the issue of basic tenets of literal or strict interpretation to be adopted with regard to a taxing statute, their interplay, purposive construction (para 25) as well as application of equitable principles to inter alia conclude that there is no room for intendment in such a fiscal statute and regard must be had to clear m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding agro-based industries, processing preservation food packaging of fruits and vegetables (excluding conventional grinding/ extraction units). We are of the view that the above Item in the positive list is meant to promote food processing including of agro based industries, processing, preservation food packaging of fruits and vegetables only. We go by ordinary grammatical meaning of food processing to be the process by which food is processed for consumption by humans or animals as per Collins English dictionary therefore. We repeat that the Assessing Officer threw sufficient light as per suitable references; sector-wise, that pan masala does not find place in National Food Processing policy as well. The assessee's section 80IC deduction claim therefore fails to satisfy the requisite test of its inclusion in positive list of specified articles or things prescribed in Item No. 7, Part-B, Fourteenth Schedule to section 80IC (2) of the Act. It therefore fails to discharge its burden to be covered under the impugned deduction provision as per hon'ble apex court's constitutional bench's ratio hereinabove. 13. It further transpires that the assessee's manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Uttaranchal, whereas Part A is relevant for the State of Sikkim where the unit of the assessee was established in a notified area. The Tribunal has committed a manifest error to read Part B in Part A of the Thirteenth Schedule which is wholly impermissible. iv) Section 80-IE was inserted by Finance Act, 2007 which is applicable to units established in North Eastern States after 01.04.2007 but before 01.04.2017. Since the assessee s unit was established and came into production much prior to 01.04.2007, therefore, Section 80-IE has no application in the case of the appellant/assessee. 13. Mr. Tilak Mitra, learned senior standing Counsel for the respondent submits as under:- i) Section 80-IC (2) (b) read with Fourteenth Schedule to the Act, 1961 shall be applicable to the case of the assessee even though the assessee established its unit in a notified area under Section 80-IC (2) (a) of the Act, 1961. On being asked for the logic behind the above noted submissions learned senior standing counsel could not answer. ii) The ITAT has correctly passed the impugned order and therefore it requires no interference. 14. No other arguments have been advanced by learned Counsels for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ril, 2012, in any Export Processing Zone or Integrated Infra-structure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in any of the North-Eastern States; (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the state of Sikkim). Once the Legislature has not included pan masala in Part-A for the State of Sikkim, then it was not open for the ITAT to read the aforesaid entry-1 of Part-B in Entry-1 of Part-A. The finding recorded by the ITAT that the item manufactured by the appellant/assessee is included in tobacco products, is totally baseless and beyond the provisions of Section 80IC (2) read with the 13th Schedule to the Act, 1961. 19. For all the reasons aforestated, the impugned orders of the Income Tax Appellate Tribunal, B Bench, Kolkata dated 31.08.2018 passed in ITA No. 1962, 1963, 1964, 1965 and 1966/Kol/2016 (Assessment Years 2007-08, 2008-09, 2009-10, 2011-12 and 2012-13) and the impugned order passed in ITA No. 48/Kol/2016 (Assessment Year 2010-11) dated 25.01.2019 by the Income Tax Appellate Tribunal, A Bench, Kolkata, in respect of mouth fresheners (pan masala) cannot be sustained and is hereby set aside. Both the substantial questions of law are answered in favour of the assessee and against the revenue. It is held that the appellant assessee is entitled for deduction under Section 80-IC (2) (a) (i) read with Section 80-IC (3) of the Act, 1961. 20. All the appeals being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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