Dy.CITA, Cir-1(1),, Hyderabad v. M/s Aquamall Water Solutions Private Limited,, Hyderabad

ITA 1723/HYD/2012 | 2006-2007
Pronouncement Date: 15-07-2013 | Result: Dismissed

Appeal Details

RSA Number 172322514 RSA 2012
Assessee PAN AADCA6241M
Bench Hyderabad
Appeal Number ITA 1723/HYD/2012
Duration Of Justice 7 month(s) 15 day(s)
Appellant Dy.CITA, Cir-1(1),, Hyderabad
Respondent M/s Aquamall Water Solutions Private Limited,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 15-07-2013
Assessment Year 2006-2007
Appeal Filed On 30-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA NO. 107/HYD/2011 ASSESSMENT YEAR 2006-07 M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. HYDERABAD PAN: AADCA6241M VS. THE CIT-I HYDERABAD APPELLANT RESPONDENT ITA NO. 95/HYD/2013 A.Y. 2005-06 ITA NO. 1723/HYD/2012 A.Y. 2006-07 ITA NO. 287/HYD/2012 A.Y. 2008-09 THE DCIT CIRCLE-1(1) HYDERABAD VS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. HYDERABAD PAN: AADCA6241M APPELLANT RESPONDENT ASSESSEE BY: SRI A.V. RAGHURAM REVENUE BY: SRI D. SUDHAKAR RAO DATE OF HEARING: 25.06.2013 DATE OF PRONOUNCEMENT: 15.07.2013 O R D E R PER CHANDRA POOJARI AM: ITA NO. 107/HYD/2011 BY ASSESSEE FOR A.Y. 2006-07 IS DIRECTED AGAINST THE ORDER OF THE CIT-I HYDERAB AD DATED 30.11.2010 PASSED U/S. 263 OF INCOME-TAX ACT 1961. THE OTHER APPEALS ITA NO. 95/HYD/2013 1723 AND 287/HYD/ 2012 ARE RELATING TO A.YS. 2005-06 20 06- 2 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 07 AND 2008-09 RESPECTIVELY ARE BY THE REVENUE REGARDING DELETION OF ADDITION MADE U/S. 80IC OF TH E ACT. 2. FIRST WE WILL TAKE UP ASSESSEE'S APPEAL. THE ASSESSEE'S GRIEVANCE IN THIS APPEAL IS THAT THE CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE AC T AS THERE IS NO CASE TO HOLD THAT THE ASSESSING OFFICER 'S ORDER IS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REV ENUE. 3. THE LEARNED AR SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VID E ASSESSMENT ORDER PASSES U/S. 143(3) OF THE ACT ON 26.12.2008. HE SUBMITTED THAT BEFORE PASSING THE ASSESSMENT ORDER THE ASSESSING OFFICER CALLED FOR VARIOUS DETAILS VIDE HIS LETTER DATED 15.9.2006. IN RESPONS E TO THIS LETTER THE ASSESSEE FURNISHED VARIOUS DETAILS WITH REFERENCE TO THE SAME ISSUE RAISED BY THE CIT IN H IS ORDER U/S. 263 OF THE ACT. HE SUBMITTED THAT THE ASSESSEE ALSO FILED FULL DETAILS BEFORE THE ASSESSI NG OFFICER AND AFTER CONSIDERING THE ENTIRE ISSUE THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT. THE ORDER MAY BE SHORT AND CRYP TIC IT DOES NOT MEAN THAT THE ORDER OF THE ASSESSING OFFIC ER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. ACCORDING TO THE CIT(A) THE ASSESSING OFFICER SHOUL D HAVE MADE FURTHER ENQUIRY RATHER THAN ACCEPTING THE EXPLANATION OF THE ASSESSEE. THEREFORE IT CANNOT BE SAID THAT IT IS A CASE OF 'LACK OF ENQUIRY'. THE CIT THO UGH NOT AGREED WITH THE ENQUIRY MADE BY THE ASSESSING OFFIC ER HE HAS NOT SUGGESTED WHAT ENQUIRY THE ASSESSING OFF ICER HAS TO MAKE. HE SUBMITTED THAT THE ASSESSEE IS ENG AGED 3 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= IN MANUFACTURING OF ARTICLES OR THINGS OTHER THAN T HOSE SPECIFIED IN SCHEDULE XIII AND COMPANY IS ENTITLED TO DEDUCTION U/S. 80IC WHICH HAS BEEN RIGHTLY ALLOWED BY THE ASSESSING OFFICER. 4. ON THE OTHER HAND THE LEARNED DR SUBMITTED THAT THERE IS NO ENQUIRY BY THE ASSESSING OFFICER IN PRO PER PERSPECTIVE AND ALLOWED THE CLAIM OF THE ASSESSEE U /S 80IC AND THE CRYPTIC ORDER OF THE ASSESSING OFFICER ITSELF SHOWS THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL T O THE INTERESTS OF REVENUE. THE CLAIM OF THE ASSESSEE U/ S 80IC CANNOT BE ALLOWED WITHOUT PROPER ENQUIRY AND AS SUC H THE CIT DIRECTED THE ASSESSING OFFICER TO CAUSE NECESSA RY ENQUIRY. HE RELIED ON THE ORDER OF THE CIT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE CAREFULLY CONSIDERED TH E RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLACED B EFORE US AND ALSO GONE THROUGH ALL THE JUDGEMENTS CITED BY T HE PARTIES BEFORE US. FIRST WE TAKE UP THE LEGAL ISSU E WITH REFERENCE TO THE JURISDICTION OF INVOKING THE PROVI SIONS OF SECTION 263 OF THE ACT BY THE LEARNED CIT. THE S CHEME OF THE IT ACT IS TO LEVY AND COLLECT TAX IN ACCORDA NCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTE D TO THE REVENUE. IF DUE TO ERRONEOUS ORDER OF THE ASSESSIN G OFFICER THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON IT WILL CERTAINLY BE PREJUDICIAL TO THE INT EREST OF THE REVENUE. AS HELD IN THE CASE OF MALABAR INDUST RIES CO. LTD. VS. CIT ( 243 ITR 83 (SC) THE COMMISSIO NER CAN EXERCISE REVISION JURISDICTIONAL U/S 263 IF HE IS SATISFIED THAT THE ORDER OF THE ASSESSING OFFICER S OUGHT TO 4 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= BE REVISED IS (I)ERRONEOUS; AND ALSO (II) PREJUDICI AL TO THE INTERESTS OF THE REVENUE. THE WORD ERRONEOUS HAS NOT BEEN DEFINED IN THE INCOME TAX ACT. IT HAS BEEN HOWEVER DEFINED AT PAGE 562 IN BLACKS LAW DICTIONA RY (SEVENTH EDITION) THUS; ERRONEOUS ADJ. INVOLVING ERROR DEVIATING FROM THE LAW. THE WORD ERROR HAS BEEN DEFINED AT THE SAME PAGE IN THE SAME DICTIONARY THUS: ERROR NO. 1 : A PSYCHOLOGICAL STATE THAT DOES NOT CONFORM TO OBJECTIVE REALITY; A BRIEF THAT WHAT IS FALSE IS TRUE OR THAT WHAT IS TRUE IS FALSE. AT PAGE 649/650 IN P. RAMANATHA AIYERS LAW LEXICON REPRINT 2002 THE WORD ERROR HAS BEEN DEFINED TO MEAN- ERROR: A MISTAKEN JUDGEMENT OR DEVIATION FROM THE TRUTH IN MATTERS OF FACT AND FROM THE LAW IN MATTERS OF JUDGEMENT ERROR IS A FAULT IN JUDGEMENT OR IN THE PROCESS OR PROCEEDING TO JUDGEMENT OR IN THE EXECUTION UPON THE SAME IN A COURT OF RECORD; WHICH IN THE CIVIL LAW IS CALLED A NULLITYIE (TERMES DE LA LEY). SOMETHING INCORRECTLY DONE THROUGH IGNORANCE OR INADVERTENCE S.99 CPC AND S.215 CR.PC. ERROR FAULT ERROR RESPECTS THE ACT; FAULT RESPECT THE AGENT AN ERROR MAY LAY IN THE JUDGEMENT OR IN THE CONDUCT BUT A FAULT LIES IN THE WILL OR INTENTION. 5 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 6. AT PAGE 650 OF THE AFORESAID LAW LEXICON THE SCOPE OF ERROR MISTAKE BLUNDER AND HALLUCINATION HAS BEEN EXPLAINED THUS: AN ERROR IS ANY DEVIATION FROM THE STANDARD OR COURSE OF RIGHT TRUTH JUSTICE OR ACCURACY WHICH IS NOT INTENTIONAL. A MISTAKE IS AN ERROR COMMITTED UNDER A MISAPPREHENSION OF MISCONCEPTION OF THE NATURE OF A CASE. AN ERROR MAY BE FROM THE ABSENCE OF KNOWLEDGE A MISTAKE IS FROM INSUFFICIENT OR FALSE OBSERVATION. BLUNDER IS A PRACTICAL ERROR OF A PECULIARLY GROSS OR AWKWARD KIND COMMITTED THROUGH GLARING IGNORANCE HEEDLESSNESS OR AWKWARDNESS. AN ERROR MAY BE OVERLOOKED OR ATONED FOR A MISTAKE MAY BE RECTIFIED BUT THE SHAME OR RIDICULE WHICH IS OCCASIONED BY A BLUNDER WHO CAN COUNTERACT. STRICTLY SPEAKING HALLUCINATION IS AN ILLUSION OF THE PERCEPTION A PHANTASM OF THE IMAGINATION. THE ONE COMES OF DISORDERED VISION THE OTHER OF DISCARDED IMAGINATION. IT IS EXTENDED IN MEDICAL SCIENCE TO MATTERS OF SENSATION WHETHER THERE IS NO CORRESPONDING CAUSE TO PRODUCE IT. IN ITS ORDINARY USE IT DENOTES AN UNACCOUNTABLE ERROR IN JUDGEMENT OR FACT ESPECIALLY IN ONE REMARKABLE OTHERWISE FOR ACCURATE INFORMATION AND RIGHT DECISION. IT IS EXCEPTIONAL ERROR OR MISTAKE IN THOSE OTHERWISE NOT LIKELY TO BE DECEIVED. 7. IN ORDER TO ASCERTAIN WHETHER AN ORDER SOUGHT TO BE REVISED UNDER SECTION 263 IS ERRONEOUS IT SHOULD B E SEEN WHETHER IT SUFFERS FROM ANY OF THE AFORESAID FORMS OF ERROR. IN OUR VIEW AN ORDER SOUGHT TO BE REVISED U NDER SECTION 263 WOULD BE ERRONEOUS AND FALL IN THE AFOR ESAID CATEGORY OF 'ERRORS' IF IT IS INTER ALIA BASED ON AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLI CATION OF LAW OR NON-APPLICATION OF MIND TO SOMETHING WHIC H WAS OBVIOUS AND REQUIRED APPLICATION OF MIND OR BASED O N NO 6 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= OR INSUFFICIENT MATERIALS SO AS TO AFFECT THE MERIT S OF THE CASE AND THEREBY CAUSE PREJUDICE TO THE INTEREST OF THE REVENUE. 8. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMOVE THE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOU S ORDER PASSED BY THE ASSESSING OFFICER. IT EMPOWERS THE COMMISSIONER TO INITIATE SUO MOTO PROCEEDINGS EITHER WHERE THE ASSESSING OFFICER TAKES A WRONG DECISION WITHOUT CONSIDERING THE MATERIALS AVAILABLE ON RECO RD OR HE TAKES A DECISION WITHOUT MAKING AN ENQUIRY INTO THE MATTERS WHERE SUCH INQUIRY WAS PRIMA FACIE WARRANT ED. THE COMMISSIONER WILL BE WELL WITHIN HIS POWERS TO REGARD AN ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER SH OULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE CL AIM MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL IN GIVING A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT THE ROLE OF AN ASSESSING OFFICER UNDER THE INCOME-T AX ACT IS NOT ONLY THAT OF AN ADJUDICATOR BUT ALSO OF AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. HE MUST DISCHARGE BOTH THE ROLES EFFECTIVE LY. IN OTHER WORDS HE MUST CARRY OUT INVESTIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DECIDE THE MA TTER JUDICIOUSLY ON THE BASIS OF MATERIALS COLLECTED BY HIM AS ALSO THOSE PRODUCED BY THE ASSESSEE BEFORE HIM. THE SCHEME OF ASSESSMENT HAS UNDERGONE RADICAL CHANGES IN RECENT YEARS. IT DESERVES TO BE NOTED THAT THE PRES ENT ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE 7 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= INCOME-TAX ACT. IN OTHER WORDS THE ASSESSING OFFIC ER WAS STATUTORILY REQUIRED TO MAKE THE ASSESSMENT UND ER SECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER AS CONTEMPLATED BY SUB-SECTION (1) OF SECTIO N 143. BULK OF THE RETURNS FILED BY THE ASSESSEES ACR OSS THE COUNTRY IS ACCEPTED BY THE DEPARTMENT UNDER SECTION 143(1) WITHOUT ANY SCRUTINY. ONLY A FEW CASES ARE P ICKED UP FOR SCRUTINY. THE ASSESSING OFFICER IS THEREFORE REQUIRED TO ACT FAIRLY WHILE ACCEPTING OR REJECTING THE CLAIM OF THE ASSESSEE IN CASES OF SCRUTINY ASSESSME NTS. HE SHOULD BE FAIR NOT ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLIC EXCHEQUER. THE ASSESSING OFFICER HAS GOT TO PROTECT ON ONE HAND THE INTEREST OF THE ASSESSEE IN THE SENSE THAT HE IS NOT SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF WHAT IS LEGITIMATELY DUE FROM HIM AND ON THE OTHER HAND HE HAS A DUTY TO PROTECT THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ONE DODGED THE REVENUE A ND ESCAPED WITHOUT PAYING THE LEGITIMATE TAX. THE ASSE SSING OFFICER IS NOT EXPECTED TO PUT BLINKERS ON HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAIMS BEFORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE F ACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN TH E RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE INQUIRY. ARBITRARINESS IN EITHER ACCEPTING OR REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS BECAUSE AN ENQU IRY HAS NOT BEEN MADE OR GENUINENESS OF THE CLAIM HAS N OT BEEN EXAMINED WHERE THE INQUIRIES OUGHT TO HAVE BEE N MADE AND THE GENUINENESS OF THE CLAIM OUGHT TO HAVE BEEN EXAMINED AND NOT BECAUSE THERE IS ANYTHING WRO NG 8 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= WITH HIS ORDER IF ALL THE FACTS STATED OR CLAIM MAD E THEREIN ARE ASSUMED TO BE CORRECT. THE COMMISSIONER MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY WHEN IT CONTAINS SOME APPARENT E RROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO WHEN IT IS A STEREO-TYPED ORDER WHICH SIMPLY ACCEPT S WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAIL S TO MAKE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CL AIM WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CA SE. IN TAKING THE AFORESAID VIEW WE ARE SUPPORTED BY THE DECISIONS OF THE HON'BLE SUPREME COURT IN RAMPYARI DEVI SARAOGI V. CIT (67 ITR 84) (SC) SMT. TARA DEVI AGGARWAL V. CIT (88 ITR 323) (SC) AND MALABAR INDUSTRIAL CO. LTD'S CASE ( 243 ITR 83) (SC). 9. IN MALABAR INDUSTRIAL CO. LTD. CASE THE HON'BLE COURT HAS HELD AS UNDER: THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL THE ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. IN OUR HUMBLE VIEW ARBITRARINESS IN DECISION- MAKING WOULD ALWAYS NEED CORRECTION REGARDLESS OF WHETHER IT CAUSES PREJUDICE TO AN ASSESSEE OR TO THE STATE EXCHEQUER. THE LEGISLATURE HAS TAKEN AMPLE CARE TO PROVIDE FOR THE MECHANISM TO HAVE SUCH PREJUDICE REMOVED. WHILE AN ASSESSEE CAN HAVE IT 9 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= CORRECTED THROUGH REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 264 OR THROUGH APPEALS AND OTHER MEANS OF JUDICIAL REVIEW THE PREJUDICE CAUSED TO THE STATE EXCHEQUER CAN ALSO BE CORRECTED BY INVOKING REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 263. ARBITRARINESS IN DECISION-MAKING CAUSING PREJUDICE TO EITHER PARTY CANNOT THEREFORE BE ALLOWED TO STAND AND STARE AT THE LEGAL SYSTEM. IT IS DIFFICULT TO COUNTENANCE SUCH ARBITRARINESS IN THE ACTIONS OF THE ASSESSING OFFICER. IT IS THE DUTY OF THE ASSESSING OFFICER TO ADEQUATELY PROTECT THE INTEREST OF BOTH THE PARTIES NAMELY THE ASSESSEE AS WELL AS THE STATE. IF HE FAILS TO DISCHARGE HIS DUTIES FAIRLY HIS ARBITRARY ACTIONS CULMINATING IN ERRONEOUS ORDERS CAN ALWAYS BE CORRECTED EITHER AT THE INSTANCE OF THE ASSESSEE IF THE ASSESSEE IS PREJUDICED OR AT THE INSTANCE OF THE COMMISSIONER IF THE REVENUE IS PREJUDICED. WHILE MAKING AN ASSESSMENT THE ITO HAS A VARIED ROLE TO PLAY. HE IS THE INVESTIGATOR PROSECUTOR AS WELL AS ADJUDICATOR. AS AN ADJUDICATOR HE IS AN ARBITRATOR BETWEEN THE REVENUE AND THE TAXPAYER AND HE HAS TO BE FAIR TO BOTH. HIS DUTY TO ACT FAIRLY REQUIRES THAT WHEN HE ENQUIRES INTO A SUBSTANTIAL MATTER LIKE THE PRESENT ONE HE MUST RECORD A FINDING ON THE RELEVANT ISSUE GIVING HOWSOEVER BRIEFLY HIS REASONS THEREFOR. IN S.N. MUKHERJEE V. UNION OF INDIA AIR 1990 SC 1984 IT HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT AS FOLLOWS: REASONS WHEN RECORDED BY AN ADMINISTRATIVE AUTHORITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL FUNCTIONS WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURISDICTION BY THE APPELLATE OR SUPERVISORY AUTHORITY. BUT THE OTHER CONSIDERATIONS REFERRED TO ABOVE WHICH HAVE ALSO WEIGHED WITH THIS COURT IN HOLDING THAT AN ADMINISTRATIVE AUTHORITY MUST RECORD REASONS FOR ITS DECISION ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE RECORDING OF REASONS BY AN ADMINISTRATIVE 10 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= AUTHORITY SERVES A SALUTARY PURPOSE NAMELY IT EXCLUDES CHANCES OR ARBITRARINESS AND ENSURES A DEGREE OF FAIRNESS IN THE PROCESS OF DECISION- MAKING. THE SAID PURPOSE WOULD APPLY EQUALLY TO ALL DECISIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEAL REVISION OR JUDICIAL REVIEW. IN OUR OPINION THEREFORE THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT MAY HOWEVER BE ADDED THAT IT IS NOT REQUIRED THAT THE REASONS SHOULD BE AS ELABORATE AS IN THE DECISION OF A COURT OF LAW. THE EXTENT AND NATURE OF THE REASONS WOULD DEPEND ON PARTICULAR FACTS AND CIRCUMSTANCES. WHAT IS NECESSARY IS THAT THE REASONS ARE CLEAR AND EXPLICIT SO AS TO INDICATE THAT THE AUTHORITY HAS GIVEN DUE CONSIDERATION TO THE POINTS IN CONTROVERSY. THE NEED FOR RECORDING OF REASONS IS GREATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL STAGE. THE APPELLATE OR REVISIONAL AUTHORITY IF IT AFFIRMS SUCH AN ORDER NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONAL AUTHORITY AGREES WITH THE REASONS CONTAINED IN THE ORDER UNDER CHALLENGE. 10. SIMILAR VIEW WAS EARLIER TAKEN BY THE HON'BLE SUPREME COURT IN SIEMENS ENGG. & MFG. CO. LTD. V. U NION OF INDIA AIR 1976 SC 1785. IT IS SETTLED LAW THAT WHILE MAKING ASSESSMENT ON ASSESSEE THE ITO ACTS IN A QU ASI- JUDICIAL CAPACITY. AN ASSESSMENT ORDER IS AMENABLE TO APPEAL BY THE ASSESSEE AND TO REVISION BY THE COMMISSIONER UNDER SECTIONS 263 AND 264. THEREFORE A REASONED ORDER ON A SUBSTANTIAL ISSUE IS LEGALLY NECESSARY. THE JUDGMENTS ON WHICH RELIANCE WAS PLAC ED BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTS TO THE SAME DIRECTION. THEY HAVE HELD THAT ORDERS WHI CH ARE SUBVERSIVE OF THE ADMINISTRATION OF REVENUE MU ST BE 11 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= REGARDED AS ERRONEOUS AND PREJUDICIAL TO THE INTERE STS OF THE REVENUE. IF THE ASSESSING OFFICERS ARE ALLOWED TO MAKE ASSESSMENTS IN AN ARBITRARY MANNER AS HAS BEE N DONE IN THE CASE BEFORE US THE ADMINISTRATION OF R EVENUE IS BOUND TO SUFFER. IF WITHOUT DISCUSSING THE NATUR E OF THE TRANSACTION AND MATERIALS ON RECORD THE ASSESSING OFFICER HAD MADE CERTAIN ADDITION TO THE INCOME OF THE ASSESSEE THE SAME WOULD HAVE BEEN CONSIDERED ERRONEOUS BY ANY APPELLATE AUTHORITY AS BEING VIOLA TIVE OF THE PRINCIPLES OF NATURAL JUSTICE WHICH REQUIRE THA T THE AUTHORITY MUST INDICATE THE REASONS FOR AN ADVERSE ORDER. WE FIND NO REASON WHY THE SAME VIEW SHOULD NOT BE TAKEN WHEN AN ORDER IS AGAINST THE INTERESTS OF THE REVENUE. AS A MATTER OF FACT SUCH ORDERS ARE PREJUD ICIAL TO THE INTERESTS OF BOTH THE PARTIES BECAUSE EVEN THE ASSESSEE IS DEPRIVED OF THE BENEFIT OF A POSITIVE F INDING IN HIS FAVOUR THOUGH HE MAY HAVE SUFFICIENTLY ESTABLI SHED HIS CASE. 11. IN VIEW OF THE FOREGOING IT CAN SAFELY BE SAID THA T AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE UNDER SECTION 263 IN THE FOLLOWING CASES: (I) THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. (II) THE ORDER SOUGHT TO BE REVISED PROCEEDS ON INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. 12 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= (III) THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTYPE ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. 12. IN THE LIGHT OF THE ABOVE DISCUSSION NOW WE WILL EXAMINE THE FACTS OF THE PRESENT CASE. AS SEEN FRO M THE ORDER OF THE ASSESSING OFFICER IT IS VERY CRYPTIC. THERE IS NO DESCRIPTION WHAT ENQUIRY HE HAS CAUSED TO COME T O THE CONCLUSION THAT THE ASSESSEE IS ENTITLED FOR DEDUCT ION U/S. 80IC OF THE ACT. WE CANNOT MAKE ANY CASE REGARDING ALLOWABILITY OF DEDUCTION U/S. 80IC OF THE ACT FROM ASSESSING OFFICER'S ORDER. THE ASSESSEE PRODUCED C OPY OF LETTER DATED NOVEMBER 6 2006 ADDRESSED TO THE ASSESSING OFFICER AND ONE MORE LETTER DATED 15.12.2 008. THERE IS ONE MORE LETTER REGARDING CLAIM OF THE ASS ESSEE U/S. 80IC OF THE ACT. IT HAS TO BE NOTED THAT THES E LETTERS DO NOT BEAR ANY ACKNOWLEDGEMENT FROM THE ASSESSING OFFICER OR FROM THE INWARD SECTION OF THE DEPARTMENT. BEING SO WE ARE NOT IN A POSITION EXP RESS ANY OPINION REGARDING THE NATURE OF ENQUIRY MADE BY THE ASSESSING OFFICER. IN THESE CIRCUMSTANCES WE ARE OF THE OPINION THAT THE CIT IS JUSTIFIED IN EXERCISING HIS POWERS U/S. 263 OF THE ACT. ACCORDINGLY THE ORDER OF THE CIT(A) PASSED U/S. 263 OF THE ACT IS CONFIRMED. 13. NOW WE WILL TAKE UP REVENUE APPEALS IN ITA NO. 93/HYD/ 2013 1723/HYD/2012 AND 287/HYD/2012. IN A LL THESE APPEALS THE COMMON GROUND RAISED BY THE REVENUE IS WITH REGARD TO ALLOWABILITY OF DEDUCTION U/S. 13 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 80IC OF THE ACT IN RESPECT OF MANUFACTURE OF WATER PURIFIERS. 14. FOR CONVENIENCE WE CONSIDER THE FACTS AS NARRAT ED IN AY 2008-09. BRIEFLY THE FACTS OF THE CASE ARE TH AT AS SEEN FROM THE ASSESSMENT ORDER THE COMPANY'S PRODU CTS INCLUDE WATER PURIFIERS AND RELATED COMPONENTS. THE COMPANY IS HAVING 4 UNITS AT DIFFERENT LOCATIONS VI Z. BADDI (HIMCHAL PRADESH) BHIMTAL (UTTARAKHAND) DEHRADUN AND BOMMASANDRA (BANGALORE). BESIDES IT I S HAVING A CORPORATE OFFICE AT NEW DELHI THOUGH REGIS TERED OFFICE IS AT HYDERABAD THERE ARE NO ACTIVITIES AT HYDERABAD. WHILE THE PROFITS DERIVED FROM THE UNITS LOCATED AT BADDI & BHIMTAL IS CLAIMED AS 100% EXEMPTED U/S 80IC THE UNIT LOCATED AT BOMMASANDRA DOES NOT ENJOY ANY TAX BENEFIT. THE UNIT LOCATED AT DEHRADUN THOUGH STATED TO BE ELIGIBLE FOR DEDUCTION U/S 80IC IN THE ABSENCE OF PROFITS NO DEDUCTION WAS CLAIMED. FOR T HE TAXABLE UNIT OF BOMMASANDRA THE ASSESSEE CLAIMED A LOSS OF RS. 4 CRORES AND IN RESPECT OF UNITS LOCATE D AT BADDI AND BHIMTAL THE EXEMPTED INCOME WAS SHOWN AT RS.13.71 CRORES AND RS.6.46 CRORES RESPECTIVELY. S INCE THE TAX PAYABLE UNDER NORMAL PROVISIONS WAS LESS T HE TAX WAS PAID U/S 115JB OF THE ACT. 15. THE ASSESSING OFFICER NOTED THAT THE APPELLANT COMPANY PURCHASED SOME RAW MATERIAL AS WELL AS MANY COMPONENTS (BOTH LOCAL AND IMPORTED) WHICH WE UTILI ZED FOR GETTING THE FINAL PRODUCT AND THE COMPANY GOT S OME OF THE WORK DONE FROM OUTSIDE PARTIES I.E. JOB WOR KS. IF THE VALUE OF THE COMPONENTS AND THE JOB WORK CHARGE S 14 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= ARE EXCLUDED THE VALUE ADDITION DONE AT THE ASSESSEE OWN UNIT WOULD BE MEAGER AND THEREFORE IT WOULD BE SAID THAT THERE WAS NO MANUFACTURE OF ARTICLE OR THING A S CONTEMPLATED UNDER THE PROVISIONS OF SECTION 80IC A ND WHAT WAS BEING DONE BY THE ASSESSEE WAS ASSEMBLING OF VARIOUS COMPONENTS 'PURCHASE TESTING AND PACKING E TC. THE ASSESSING OFFICER REFERRED THE MATTER TO THE DD IT (LNV) SHIMLA AND NAINITAL FOR THE SPOT VERIFICATIO N AND NOTED THAT THE REPORT RECEIVED FROM NAINITAL DID NO T OFFER ANY SPECIFIC COMMENTS ON THE ISSUE HOWEVER THE DD IT SHIMLA HAS SUBMITTED REPORT AND EXTRACTS OF WHIT A RE AS UNDER: 'IN HIS STATEMENT MR.M. VINOD KUMAR (MANUFACTURING) STATED THAT THIS UNIT OF COMPANY DOES THE ASSEMBLING WORK TO PREPARE WATER FILTER CUM PURIFIERS. IT PURCHASES VARIOUS COMPONENTS LIKE 'CHASSIS BODY TOP COVER BACK COVER PUMPS PCB WIRE HARNESS SOME HARDWARE AND PLASTIC COMPONENTS FROM DIFFERENT VENDORS FROM ALL OVER INDIA ASSEMBLES THESE COMPONENTS TO GET A FINISHED PRODUCT. HE FURTHER STATED THAT THIS UNIT ALSO SELL SPARE PARTS/COMPONENTS LIKE PRE-FILTER POST- FILTER SEDIMENT FIL TER MEMBRANE FILTER ETC. THIS UNIT HAS 26 ON ROLL STAFF AND 13 ON ROLL OPERATORS/SUPERVISORS. APART FROM THIS NEAR ABOUT 120 WORKERS ARE EMPLOYED THROUGH LABOUR CONTRACTORS. HE FURTHER STATED THAT THIS UNIT IS DO ING PRODUCTION SINCE MAY 2005. HE ALSO STATED THAT THIS UNIT IS ALSO GETTING THE JOB WORK DONE FROM 3-4 LOCAL PARTIES E.G. GLOBAL TELETRONICS HIGH TECH COMPONENTS ZENITH ELECTRICAL ETC. AS REGARDS THE ISSUE OF THE ASSEMBLED PRODUCTS FIGURING IN SCHEDULE XIII OF THE IT ACT IT IS SUBMI TTED THAT THE SAME WAS CONFRONTED TO SHRI VIKRAM KHANNA MANAGER (ACCOUNTS) IN REPLY TO WHICH HE HAS FILED HIS SUBMISSION DATED 21-12-2010 WHICH IS ENCLOSED ..... 15 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= WHEN CONFRONTED WITH THE ISSUE THAT THE PRODUCTS BEING MADE IN THE UNIT WERE BASICALLY BEING ASSEMBLED AND NOT MANUFACTURED BOTH SH. VINOD KUMAR AND SH. VIKRAM KHANNA HAD NOTHING CONCRETE TO SUBMIT AS CAN BE SEEN FROM THEIR STATEMENTS. ON THE BASIS OF PHYSICAL INSPECTION DONE THE TYPE OF PLANT AND MACHINERY INSTALLED AND THE NATURE OF WORK BEING DONE AS SEEN THERE THE UNDERSIGNED IS OF CONSIDERED OPINION THAT THE PROCESS OR METHOD OF MAKING THE FINISHED PRODUCTS AT THE AFOREMENTIONED UNIT MAY BE CONSTRUED AS ASSEMBLING WORK OF DIFFERENT COMPONENTS [EMPHASIS SUPPLIED] 16. AFTER TAKING THE ASSESSEE'S COMMENTS ON THE REP ORT OF THE DDIT (INV) SHIMLA THE ASSESSING OFFICER HA S DISALLOWED THE CLAIM OF DEDUCTION OF RS.14 25 17 65 8/- U/S 80IC. HE RELIED ON VARIOUS JUDICIAL DECISIONS A ND HELD THAT THE DEFINITION OF MANUFACTURE INSERTED IN THE ACT WITH EFFECT FROM 1-4-2009 CANNOT BE APPLIED FOR THE ASST . YEAR 2008-09. THE ACT PROVIDES INCENTIVES TO THE MANUFACTURING UNITS LOCATED IN THE BACKWARD AREAS A ND THE TRADERS OR THE UNITS WHICH DEAL MERELY ON ASSEM BLING OF CERTAIN GOODS EVEN IF LOCATED IN THE BACKWARD AR EAS ARE NOT ENTITLED FOR THE DEDUCTION UNDER THE ACT. H E ALSO HELD THAT THE ASSESSEE DID SMALL PORTION OF MANUFAC TURING OR ASSEMBLING WHATEVER NAME IS GIVEN AND MAJOR PART OF WORK GOT DONE THROUGH OUTSIDE AGENCIES AND THE FACT THAT THE VALUE OF COMPONENTS WAS MUCH MORE THAN THE VALU E OF RAW MATERIAL PURCHASED AND SUBSTANTIAL QUANTITY OF RAW MATERIAL/COMPONENTS WERE HANDED OVER TO THE JOB WOR K MANUFACTURERS CLEARLY PROVES THAT WHAT THE ASSESSEE HAS DONE WAS ASSEMBLING TESTING AND PACKING ONLY. 16 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 17. THE ASSESSING OFFICER HAS ALSO MADE AN ALTERNAT E STAND FOR DISALLOWANCE WHICH IS AS UNDER: 'WITHOUT PREJUDICE THE ABOVE STAND THAT THE ASSESSEE COMPANY IS NOT ELIGIBLE FOR THE DEDUCTION U/S 80IC IF ANY APPELLATE AUTHORITY HOLDS THAT THE Y ARE ENTITLED FOR THE DEDUCTION THE INCOME COMPUTED BY THE ASSESSEE FOR THE EXEMPTED UNITS IS EXCESSIVE . BASICALLY THE ASSESSEE IS A SINGLE ENTITY. HOWEVER DUE TO FICTION CREATED BY THE LAW THE INCOME OF THE EXEMPTED UNITS HAS TO BE COMPUTED AS IT IS A SEPARATE COMPANY. AS THE ASSESSEE BEING MANAGED BY COMMON E-MANAGEMENT MOST OF THE ACTIVITIES OF THE COMPANY ARE BEING CARRIED ON UNDE R SINGL COMMAND. 'THOUGH EACH UNIT IS LOCATED AT DIFFERENT LOCATION MOST OF THE COMMON EXPENDITURE WAS INCURRED AT ONE LOCATION AND LATER TRANSFERRED TO OTHER UNIT. THOUGH THE ASSESSEE CLAIMS THAT COMMON EXPENDITURE WAS ALLOCATED IN PROPORTIONATE TO THE TURNOVER IT IS MERE ESTIMATED WORK ONLY. TH E UNITS LOCATED IN BACKWARD AND FAR OFF PLACES LIKE BADDI BHIMTAL WARRANTS EXTRA ALLOCATION. IT WAS AL SO FOUND SOME OF THE MATERIAL/COMPONENTS WERE TRANSFERRED FROM ONE UNIT TO OTHER. FULL DOCUMENTARY EVIDENCE FOR VALUATION AND OVERHEADS INVOLVED ARE NOT PRODUCED. FURTHERMORE THE FUNDS ARE TRANSFERRED FROM ONE UNIT TO OTHER UNIT. THE INTEREST EXPENDITURE WAS HOWEVER WAS DEBITED ON THE BASIS OF TURNOVER. FURTHER THE ASSESSEE IS NOT CORRECT IN NOT ALLOCATING THE LOSS OF CORPORATE OFF ICE TO THE EXEMPTED UNITS. WITHOUT SUPPORT OF CORPORATE OFFICE THE UNITS AT BADDR/BHIMTAL CANNOT DO THEIR BUSINESS. THE LOSS SHOWN FOR THE CORPORATE UNITS IS NOTHING BUT THE LOSS OF 4 UNITS . THEREFORE THIS LOSS HAS TO BE ALLOCATED TO THE EXEMPTED UNITS ALSO. ON ACCOUNT OF ABOVE DEFECTS THE INCOME SHOWN BY THE EXEMPTED UNITS ARE MORE. HENCE THERE IS A CASE OF APPLICATION OF PROVISIONS OF SECTION OF PROFIT OF T HE EXEMPTED UNITS IS AN ACADEMIC ISSUE ONLY. HENCE NO SEPARATE DISALLOWANCE IS MADE UNDER THIS HEAD. 18. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) RELIED UPON HON'BLE ITAT MUMBAI 'B' BENCH IN THE CASE OF P.L. PATEL VS. 17 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= INCOME TAX OFFICER IN ITS ORDER IN ITA.NO.65(MUM/20 05 DATED 25-2-2010 WHEREIN IT HAS BEEN HELD AS FOLLOWS : 'DEDUCTION UNDER S.80IB - MANUFACTURE OR PRODUCTION - PART OF RAW MATERIAL ACQUIRED OR MANUFACTURING DONE BY OUTSIDE AGENCIES - ASSESSEE IS MAKING WATER PURIFICATION SYSTEM WHICH IS USED T O MAINTAIN THE LEVEL OF FLUORIDE AND REMOVE SUSPENDED SOLID IN THE WATER - MAJOR COMPONENTS REQUIRED FOR ASSEMBLY AND PRODUCTION OF THE SYSTEM OR EQUIPMENT ARE PURCHASED FROM THE MARKET AND PRODUCTION OF THE SAME IS OUTSOURCED - IT IS NOT THE CASE OF THE AD THAT READYMADE UNITS ARE BROUGHT AND SOLD BY THE ASSESSEE - MERELY BECAUSE SOME RAW MATERIAL IS READILY PURCHASED FROM THE MARKET AND SOME RAW MATERIAL IS GOT MANUFACTURED BY OUTSOURCING IT CANNOT BE SAID THAT ASSESSEE IS NOT ENGAGED IN MANUFACTURE - ADMITTEDLY THE NEW PRODUCT IS MADE BY THE ASSESSEE - AS REGARDS NON PAYMENT OF EXCISE DUTY EXEMPTION FROM CUSTOMS DUTY EXCISE AND CENTRAL EXCISE DUTY HAS BEEN GRANTED TO WATER TREATMENT PLANTS VIDE CIRCULAR NO.659/50/2002-CX DT. 6 TH SEPT. 2002 - THUS NO ADVERSE INFERENCE CAN BE DRAWN ON THE BASIS THAT NO EXCISE DUTY IS PAID BY THE ASSESSEE - SO FAR AS THE CONDITION OF EMPLOYMENT OF MINIMUM NUMBER OF WORKERS IS CONCERNED ASSESSEE EMPLOYED TWENTY OR MORE WORKERS DURING THE MAJOR PART OF THE YEAR AND HENCE THERE IS SUBSTANTIAL COMPLIANCE OF THE CONDITION - AS REGARDS NON DEDUCTION OF PF AND ESI CONTRIBUTIONS MERELY BECAUSE THERE IS VIOLATION OF LABOUR LAW IT CANNOT BE SAID THAT. THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE EMPLOYEES - MOREOVER ASSESSEE HAS BEEN GRANTED SIMILAR DEDUCTION IN THE PRECEDING YEARS - THEREFORE 'ASSESSEE IS ENTITLED FOR DEDUCTION UNDER S.80-1B.' 19. THE CIT(A) OBSERVED THAT THE ASSESSEE IS ENGAGE D IN THE MANUFACTURE OF WATER PURIFIERS AND THE ASSES SEE IS ENTITLED FOR DEDUCTION U/S 80IC. 18 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 20. AGGRIEVED BY THE ORDER OF THE CIT(A) REVENUE IS IN APPEAL BEFORE US. 21. THE LEARNED DR SUBMITTED THAT THE ASSESSEE IS N OT ENGAGED IN THE MANUFACTURE AND IT IS ONLY ENGAGED I N THE WORK OF ASSEMBLING OF VARIOUS PARTS OF PURIFIER AND JOINING THEM SO AS TO MAKE WATER PURIFIER AN THERE IS NO VALUE ADDITION TO THIS PRODUCT. THE ASSESSEE DOES THE ASSEMBLING WORK TO PREPARE WATER FILTER CUM PURIFIE RS. IT PURCHASES VARIOUS COMPONENTS LIKE 'CHASSIS BODY TOP COVER BACK COVER PUMPS PCB WIRE HARNESS SOME HARDWARE AND PLASTIC COMPONENTS FROM DIFFERENT VENDORS FROM ALL OVER INDIA ASSEMBLES THESE COMPONENTS TO GET A FINISHED PRODUCT. ACCORDING TO THE LEARNED DR THE DEFINITION OF MANUFACTURE INSERTE D IN THE ACT WITH EFFECT FROM 01/04/2009 AND THEREFORE THE SAME CANNOT BE APPLIED FOR AY 2008-09. ACCORDI NG TO THE LEARNED DR IN THIS CASE THE ASSESSEE ONLY DID ASSEMBLING WORK. HE ALSO DREW OUR ATTENTION RECORDE D BY THE ASSESSEE AND CORRESPONDING RAW MATERIAL USED BY THE ASSESSEE WHICH IS AS FOLLOWS: (RS. IN CRORES) I) TOTAL SALES RECORDED 237.04 II) VALUE OF RAW MATERIAL 14.03 III) VALUE OF COMPONENTS (INDIGENOUS) 136.70 IV) VALUE OF IMPORTED COMPONENTS 28.37 TOTAL VALUE OF COMPONENTS 165.07 ACCORDING TO THE DR THERE IS MINOR VALUE OF ADDITI ON TO THE PRODUCT AND AT THE BEST ASSESSEE TO BE GIVEN 19 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= PROPORTIONATE DEDUCTION TO THE EXTENT OF VALUE ADDI TION MADE BY THE ASSESSEE TO THE PRODUCT. THE DR RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE O F CIT VS. R. PRATAP 310 ITR 405 WHEREIN IT WAS HELD T HAT WHEN THE ASSESSEE CLAIMED DEDUCTION U/S 80HH IT HA D TO DEMONSTRATE THAT IT WAS THE PROCESS WHICH IT HAD OUTSOURCED SOME OF ITS ACTIVITIES TO ITS SISTER CON CERN AND NATURE OF ACTIVITY UNDERTAKEN BY IT. IN THE ABSENCE OF DETAILS REGARDING PROCESS UNDERTAKEN BY THE ASSESSE E AND ITS SISTER CONCERN THE ASSESSEE IS NOT TITLED FOR DEDUCTION U/S 80 HH OF THE ACT. 22. ON THE OTHER HAND THE LEARNED AR SUBMITTED THA T THE ASSESSEE IS ENGAGED IN THE MANUFACTURING ACTIVI TY AND THE MATERIAL USED BY THE ASSESSEE UNDERGONE CHANGES THEREFORE A NEW DISTINCT ARTICLE CAME INT O EXISTENCE HAVING COMMERCIAL MARKET. THE ORIGINAL COMMODITY NO LONGER REMAINED AND THE NEW PRODUCT HA S RECOGNIZED AS DISTINCT COMMODITY. HE RELIED ON THE FOLLOWING CASE LAWS: 1. CIT VS. JACKSON ENGINEERS LTD. 231 ITR 348 (DELHI) 2. CIT VS. MAHESH CHANDRA SHARMA (P&H) 177 TAXMAN 22 (P&H) 3. N.S. BUDHIRAJA & CO. 204 ITR 412 (SC) 4. CIT VS. CHIRANJJEVI WIND ENERGY LTD. [2010] 333 ITR 192 (MAD.) 5. CIT VS. EMPTEE POLY-YARN(P) LTD. 320 ITR 665 6. ITO VS. ARIHANT TILES & MARBLES (P) LTD. 320 IT R 79 23. THE LEARNED AR ALSO RELIED ON THE DECISION IN T HE CASE OF PL PATEL VS. ITO ITAT MUMBAI B BENCH [2 011] 20 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 60 DTR 53 WHEREIN IT WAS HELD THAT MERELY BECAUSE S OME RAW MATERIAL IS READILY PURCHASED FROM THE MARKET A ND SOME RAW MATERIAL IS GOT MANUFACTURED BY OUTSOURCIN G BUT WHEN THE FINAL PRODUCT IS MADE BY THE ASSESSEE HIMSELF IT CANNOT BE SAID THAT THE ASSESSEE IS NOT ENGAGED IN THE MANUFACTURING. THE NEW PRODUCT IS MA DE BY THE ASSESSEE AND THEREFORE THE ASSESSEE IS ENT ITLED FOR DEDUCTION U/S 80IB. 24. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS CITE D. THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE IS ENGAGE D IN THE MANUFACTURING ACTIVITY AND HENCE THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IC OF THE ACT. THE CAS E OF THE DR IS THAT THE ASSESSEE IS NOT ENGAGED IN THE MANUFACTURE AND IT IS ONLY ENGAGED IN THE WORK OF ASSEMBLING OF VARIOUS PARTS OF PURIFIER AND JOINING THEM SO AS TO MAKE WATER PURIFIER AN THERE IS NO VALUE A DDITION TO THIS PRODUCT. THE AR POINTED OUT THAT THE DEFINITION OF MANUFACTURE INSERTED IN THE ACT WITH EFFECT FROM 01/04/2009 AND THEREFORE THE SAME CANNOT BE APPLIED FOR AY 2008-09. ACCORDING TO SEC 2 (29BA) OF INCOME TAX ACT 1961 MANUFACTURE WITH ITS GRAMMATI CAL VARIATIONS MEANS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING ( A ) RESULTING IN TRANSFORMATION OF THE OBJECT OR ARTI CLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME CHARACTER AND USE; OR ( B ) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OBJ ECT OR ARTICLE OR THING WITH DIFFERENT CHEMICAL COMPOSITI ON OR INTEGRAL STRUCTURE; 21 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 25. AS PER SECTION 2(F) OF THE CENTRAL EXCISE ACT 1944 MANUFACTURE INCLUDES ANY PROCESS : I) INCIDENTAL OR ANCILLARY TO THE COMPLETION OF A MANUFACTURED PRODUCT. II) WHICH IS SPECIFIED IN RELATION TO ANY GOODS IN THE SECTION OR CHAPTER NOTES OF THE FIRST SCHEDULE TO T HE CENTRAL EXCISE TARIFF ACT 1985 AS AMOUNTING TO MANUFACTURE OR III) WHICH IN RELATION TO THE GOODS SPECIFIED IN T HE THIRD SCHEDULE INVOLVES PACKING OR REPACKING OF SUCH GOO DS IN A UNIT CONTAINER OR LABELLING OR RE-LABELLING OF CO NTAINERS INCLUDING THE DECLARATION OR ALTERATION OF RETAIL S ALE PRICE ON ITS ADOPTION OF ANY OTHER TREATMENT ON THE GOODS TO RENDER THE PRODUCT MARKETABLE TO THE CONSUMER AND THE WORD MANUFACTURER SHALL BE CONSTRUED ACCORDINGLY AND SHALL INCLUDE NOT ONLY A PERSON WHO EMPLOYS HIRED L ABOUR IN THE PRODUCTION OR MANUFACTURE OF EXCISABLE GOODS BUT ALSO ANY PERSON WHO ENGAGES IN PRODUCTION OR MANUFACTURE ON HIS OWN ACCOUNT. THE PROCESSES THAT QUALIFY TO BE MANUFACTURE AS PER CLAUSE (II) AND (I II) OF SECTION 2(F) ARE TERMED AS DEEMED MANUFACTURE. 26. ASSEMBLY WOULD TANTAMOUNT TO MANUFACTURE. ASSEMBLY IS A PROCESS OF PUTTING TOGETHER A NUMBER OF ITEMS OR PARTS OF AN ITEM TO MAKE A PRODUCT OR ITEM . ASSEMBLY OF VARIOUS PARTS AND COMPONENTS MAY TANTAMOUNT TO MANUFACTURE IF NEW PRODUCT EMERGES WHICH IS MOVABLE AND MARKETABLE. IN NARNE TULAMAN MANUFACTURERS PVT. LTD. V. CCE 1988 938 E.L.T. 566 (SC) IT WAS INFERRED THAT IF THE ASSEMBLY RESULTS IN NEW 22 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= COMMERCIAL COMMODITY WITH A DISTINCT NAME CHARACTE R AND USE THEN IT WOULD AMOUNT TO MANUFACTURE. SIMIL ARLY IN BPL INDIA LTD. VS. CCE 2002 9143) ELT 3 THE SUP REME COURT HELD THAT ASSEMBLY OF IMPORTED KITS OF VTR WI TH COLOUR MONITORS IMPORTED IN DISASSEMBLED CONDITION AMOUNTED TO MANUFACTURE SINCE THE END OF PRODUCE HA D A DISTINCT CHARACTER AND USE AND THE PROCESS OF ASSEM BLY WAS DONE BY TECHNICAL EXPERTS OR SKILLED PERSONS. O N THE OTHER HAND ASSEMBLY OF PLANT AT SITE WILL NOT BE L IABLE TO DUTY. IF IMMOVABLE PROPERTY EMERGES AFTER SUCH ASSEMBLY BECAUSE EXCISE DUTY CAN BE LEVIED ON GOOG S. 27. PROCESSING AND MANUFACTURE: A PROCESS IS SERIES OF THINGS WHICH ARE CARRIED OUT IN ORDER TO ACHIEVE A PARTICULAR RESULT. PROCESSING IS DISTINCT FROM MANUFACTURING AND MERE PROCESSING DOES NOT MEAN MANUFACTURE. IN EMPIRE INDUSTRIES VS. UNION OF IN DIA 1985 20 ELT 179 (SC) IT WAS HELD THAT ANY PROCESS CREATING SOMETHING ELSE HAVING DISTINCTIVE NAME CHARACTER AND USE WOULD BE MANUFACTURE. THUS PROCESSING GRAY FABRICS BY BLEACHING DYEING PRINT ING OF FABRIC WILL AMOUNT TO MANUFACTURE. 28. VARIOUS COURTS HAVE LAID DOWN THE RATIOS IN THE FOLLOWING CASES ON WHICH RELIANCE HAS BEEN PLACED AS FOLLOWS: I) IN THE CASE OF CIT VS. CHIRANJJEEVI WIND ENERGY LTD. [2010] 333 ITR 192 (MAD.) THE COURT HELD THAT ASSEMBLING OF DIFFERENT PARTS OF WINDMILL AND ASSES SEE 23 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= ASSEMBLES DIFFERENT PARTS WHICH BEAR DISTINCTIVE NA MES THEREAFTER IT GETS TRANSFORMED INTO AN ULTIMATE PRO DUCT WHICH IS COMMERCIALLY KNOWN AS A WINDMILL AMOUNT TO MANUFACTURE AS WELL AS PRODUCTION OF A THING OR ARTICLE AS SET OUT IN SECTION 80IB(2)(II). ASSESSEE WAS TH EREFORE ENTITLED TO DEDUCTION U/S 80IB. II) IN THE CASE OF CIT VS. EMPTEE POLY-YARN (P) LTD 320 ITR 665 THE HONBLE SUPREME COURT HELD THAT TWISTI NG AND TEXTURISING OF PARTIALLY ORIENTED YARN (POY) POY IS A SEMI-FINISHED YARN AND IT CANNOT BE USED DIRECTLY T O MANUFACTURE FABRIC CRIMPS BULKINESS ETC. ARE INTRODUCED INTO POY BY A PROCESS CALLED THERMO MECHANICAL PROCESS WHICH CONVERTS IT INTO A TEXTURI SED YARN THUS TEXTURISING AND TWISTING OF YARN CONST ITUTES MANUFACTURE IN THE CONTEXT OF CONVERSION OF POY I NTO TEXTURIZED YARN WHICH IN TURN IS USED FOR THE MANUFACTURE OF FABRIC. FURTHER THE DEFINITION OF T HE WORD MANUFACTURE INTER-ALIA MEANS A CHANGE WHICH BRING S INTO EXISTENCE A NEW AND DISTINCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICAL COMPOSITION OR INTE GRAL STRUCTURE. III) IN THE CASE OF ITO VS. ARIHANT TILES & MARBLES (P) LTD 320 ITR 79 THE APEX COURT HELD THAT CONVERSION OF MARBLE BLOCKS INTO SLABS AND TILES FOR WHICH THE P ROCESS UNDERTAKEN BY THE ASSESSEE INCLUDES NOT ONLY CUTTIN G OF MARBLE BLOCKS INTO SLABS BUT ALSO THE ACTIVITY OF P OLISHING AND ULTIMATE CONVERSION OF BLOCKS INTO POLISHED SLA BS AND TILES. THE BLOCKS HAVE TO GO THROUGH VARIOUS STAGES BEFORE THEY BECOME POLISHED SLABS AND TILES AND SUC H 24 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= ACTIVITY WOULD FALL IN THE CATEGORY OF MANUFACTURE OR PRODUCTION U/S 80IA. THE WORD PRODUCTION HAS A WIDER MEANING AS COMPARED TO THE WORD MANUFACTURE. THE BLOCKS CONVERTED INTO POLISHED SLABS AND TILES CERT AINLY RESULT IN EMERGENCE OF A NEW AND DISTINCT COMMODITY . IF THE CONTENTION THAT THE ACTIVITY UNDERTAKEN BY THE ASSESSEE IS NOT MANUFACTURE IS ACCEPTED IT WOULD L EAD TO SERIOUS REVENUE CONSEQUENCES IN AS MUCH AS THEN THE ASSESSEES WOULD PLEAD THAT THEY ARE NOT LIABLE TO P AY EXCISE DUTY SALES TAX ETC. THEREFORE THE ACTIVIT Y UNDERTAKEN BY THE ASSESSEES CONSTITUTES MANUFACTURE OR PRODUCTION AND THEY ARE ENTITLED TO BENEFIT OF S. 8 0IA. 29. IN THE CASE OF NATURAL FRAGRANCES VS. DCIT IN I TA NO. 4183/DEL/2011 FOR AY 2007-08 VIDE ORDER DATED 16/03/2012 THE DELHI BENCH OF ITAT HELD AS FOLLOWS : 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. IN ORDER TO AVAIL DEDUCTION UNDER SECTION 80IC AN ASSESSEE HAS TO FULFILL THE CONDITIONS CONTEMPLATED IN THE SECTI ON. THEREFORE BEFORE CONSIDERING THE RESPECTIVE CONTENTIONS AS WELL AS THE RELEVANT MATERIAL IT IS IMPERATIVE UPON US TO TAKE NOTE OF THE RELEVANT STATUTORY PROVISIONS. THE RELEVANT PART OF SECTION 80-IC THUS READS AS UNDER: 80-IC. SPECIAL PROVISIONS IN RESPECT OF CERTAIN UNDERTAKINGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES - (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2) THERE SHALL IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE A DEDUCTION FROM SUCH PROFITS AND GAINS AS SPECIFIED IN SUB-SECTION (3). 25 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTERPRISE (A) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE OR WHICH MANUFACTURES OR PRODUCES ANY ARTICLE OR THING NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING ... (II) ON THE 7TH DAY OF JANUARY 2003 AND ENDING BEFORE THE 1ST DAY OF APRIL 2012 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 THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR ... (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 O R PRODUCES ANY ARTICLE OR THING SPECIFIED IN THE FOURTEENTH SCHEDULE OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING ... (II) ON THE 7TH DAY OF JANUARY 2003 AND ENDING BEFORE THE 1ST DAY OF APRIL 2012 IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR ... (3) THE DEDUCTION REFERRED TO IN SUB-SECTION (1) SHALL BE (I) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-CLAUSES (I) AND (III) OF CLAUSE (A) OR SUB-CLAUSES (I) AND (III) OF CLAUSE (B) OF SUB- SECTION (2) ONE HUNDRED PER CENT OF SUCH PROFITS AND GAINS FOR TEN ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR; (II) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE 26 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= REFERRED TO IN SUB-CLAUSE (II) OF CLAUSE (A) OR SUB - CLAUSE (II) OF CLAUSE (B) OF SUB-SECTION (2) ONE HUNDRED PER CENT OF SUCH PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS. 8. SUB-SECTION(2) OF SECTION 80IC OF THE ACT PROVID ES THAT PROVISIONS CONTAINED IN SUB-SECTION (5) AND SU B- SECTIONS 7 TO 12 OF SECTION 80IA SHALL SO FAR AS MAY BE APPLIED TO THE ELIGIBLE UNDERTAKING OR ENTERPRISES UNDER THIS SECTION. THUS WE DEEM IT FIT TO NOTE DOWN SUB - SECTION(5) AND SUB-SECTIONS 7 TO 12 OF SECTION 80IA ALSO. THEY READ AS UNDER: NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB- SECTION (1) APPLY SHALL FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVER Y SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. ... (7) THE DEDUCTION UNDER SUB-SECTION (1) FROM PROFIT S AND GAINS DERIVED FROM AN [UNDERTAKING] SHALL NOT BE ADMISSIBLE UNLESS THE ACCOUNTS OF THE [UNDERTAKING] FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR FOR WHICH THE DEDUCTION IS CLAIMED HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288 AND THE ASSESSEE FURNISHES ALONG WITH HIS RETURN OF INCOME THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT. (8) WHERE ANY GOODS [OR SERVICES] HELD FOR THE PURPOSES OF THE ELIGIBLE BUSINESS ARE TRANSFERRED T O ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE OR WHERE ANY GOODS [OR SERVICES] HELD FOR THE PURPOSES 27 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= OF ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE ARE TRANSFERRED TO THE ELIGIBLE BUSINESS AND IN EITHER CASE THE CONSIDERATION IF ANY FOR SUCH TRANSFER AS RECORDED IN THE ACCOUNTS OF THE ELIGIBL E BUSINESS DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS [OR SERVICES] AS ON THE DATE OF THE TRANSFER THEN FOR THE PURPOSES OF THEDEDUCTION UNDER THIS SECTION THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF THE TRANSFER IN EITHER CASE HAD BEEN MADE AT THE MARKET VALUE OF SUCH GOODS [OR SERVICES] AS ON THAT DATE : PROVIDED THAT WHERE IN THE OPINION OF THE ASSESSING OFFICER THE COMPUTATION OF THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS IN THE MANNER HEREINBEFORE SPECIFIED PRESENTS EXCEPTIONAL DIFFICULTIES THE ASSESSING OFFICER MAY COMPUTE SUC H PROFITS AND GAINS ON SUCH REASONABLE BASIS AS HE MAY DEEM FIT. [EXPLANATION. FOR THE PURPOSES OF THIS SUB- SECTION MARKET VALUE IN RELATION TO ANY GOODS O R SERVICES MEANS THE PRICE THAT SUCH GOODS OR SERVICES WOULD ORDINARILY FETCH IN THE OPEN MARKET. ] (9) WHERE ANY AMOUNT OF PROFITS AND GAINS OF AN [UNDERTAKING] OR OF AN ENTERPRISE IN THE CASE OF A N ASSESSEE IS CLAIMED AND ALLOWED UNDER THIS SECTION FOR ANY ASSESSMENT YEAR DEDUCTION TO THE EXTENT O F SUCH PROFITS AND GAINS SHALL NOT BE ALLOWED UNDER ANY OTHER PROVISIONS OF THIS CHAPTER UNDER THE HEADING C.DEDUCTIONS IN RESPECT OF CERTAIN INCOMES AND SHALL IN NO CASE EXCEED THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS OF [UNDERTAKING ] OR ENTERPRISE AS THE CASE MAY BE. (10) WHERE IT APPEARS TO THE ASSESSING OFFICER THAT OWING TO THE CLOSE CONNECTION BETWEEN THE ASSESSEE CARRYING ON THE ELIGIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHER PERSON OR FOR ANY OTHER REASON THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSINESS TRANSACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE 28 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= ORDINARY PROFITS WHICH MIGHT BE EXPECTED TO ARISE I N SUCH ELIGIBLE BUSINESS THE ASSESSING OFFICER SHALL IN COMPUTING THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION TAKE THE AMOUNT OF PROFITS AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED THEREFROM. (11) THE CENTRAL GOVERNMENT MAY AFTER MAKING SUCH INQUIRY AS IT MAY THINK FIT DIRECT BY NOTIFICATION IN THE OFFICIAL GAZETTE THAT THE EXEMPTION CONFERRED BY THIS SECTION SHALL NOT APPLY TO ANY CLASS OF INDUSTRIAL UNDERTAKING OR ENTERPRIS E WITH EFFECT FROM SUCH DATE AS IT MAY SPECIFY IN THE NOTIFICATION. (12) WHERE ANY UNDERTAKING OF AN INDIAN COMPANY WHICH IS ENTITLED TO THE DEDUCTION UNDER THIS SECTI ON IS TRANSFERRED BEFORE THE EXPIRY OF THE PERIOD SPECIFIED IN THIS SECTION TO ANOTHER INDIAN COMPAN Y IN A SCHEME OF AMALGAMATION OR DEMERGER (A ) NO DEDUCTION SHALL BE ADMISSIBLE UNDER THIS SECTION TO THE AMALGAMATING OR THE DEMERGED COMPANY FOR THE PREVIOUS YEAR IN WHICH THE AMALGAMATION OR THE DEMERGER TAKES PLACE; AND (B ) THE PROVISIONS OF THIS SECTION SHALL AS FAR A S MAY BE APPLY TO THE AMALGAMATED OR THE RESULTING COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING OR THE DEMERGED COMPANY IF THE AMALGAMATION OR DEMERGER HAD NOT TAKEN PLACE. [(12A) NOTHING CONTAINED IN SUB-SECTION (12) SHALL APPLY TO ANY ENTERPRISE OR UNDERTAKING WHICH IS TRANSFERRED IN A SCHEME OF AMALGAMATION OR DEMERGER ON OR AFTER THE 1ST DAY OF APRIL 2007.] ... 9. FROM THE BARE PERUSAL OF THE SECTION WOULD REVEA L THAT SUB-SECTION (1) OF SECTION 80IC PROVIDES A DEDUCTIO N IN RESPECT OF PROFIT AND GAINS DERIVED BY AN UNDERTAK ING OR ENTERPRISES FROM ANY BUSINESS REFERRED TO IN SUB-SE CTION (2) WHILE COMPUTING THE TOTAL INCOME OF AN ASSESSE E. SUB-SECTION (2) HAS FURTHER SUB-SECTIONS AND IN THE CASE OF ASSESSEE THE CLAUSE APPLICABLE IS 80IC 2 (A)(II ) WHICH PROVIDE THAT ASSESSEE HAS BEGUN OR BEGINS TO 29 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= MANUFACTURE ANY ARTICLE OR THING WHICH ARE NOT SPE CIFIED IN THIRTEENTH SCHEDULE. IT MEANS ASSESSEE SHOULD NO T MANUFACTURE ANY ARTICLE OR THING WHICH IS SPECIFIED IN THIRTEENTH SCHEDULE. APART FROM THIS THE ACTIVITY OF MANUFACTURE SHOULD COMMENCE BETWEEN THE PERIOD 7 TH DAY OF JAN 2003 AND ENDING ON 1 ST APRIL 2012. IT SHOULD BE AT THE PLACE NOTIFIED BY THE BOARD IN ACCORDANCE WITH THE SCHEME. THE LEARNED COUNSEL POINTED OUT THAT ASSESSEES CASE FALLS UNDER 80-IC 2(B) ALSO. THE DIFFERENCE BETWEEN BOTH THE CLAUSE IS THAT UNDER CL AUSE B THE ARTICLE SHOULD BE ONE WHICH IS PROVIDED I N FOURTEENTH SCHEDULE AND AREA I.E. INDUSTRIAL PARK INDUSTRIAL CENTRE NEED NOT BE NOTIFIED. THE ASSESSE E HAS NOT MANUFACTURED ANY ARTICLE OR THING WHICH PROVID ED IN THIRTEENTH SCHEDULE. IT IS SITUATED IN INDUSTRIAL E STATE THUS IT FALLS IN SECTION 80IC(2)(II) OF THE ACT. A S FAR AS THE OTHER PROVISIONS ARE CONCERNED THEY ARE MEANT FOR DIFFERENT GEOGRAPHICAL AREA I.E. STATE OF SIKKIM N ORTHERN EASTERN STATES. THE ASSESSEE IS SITUATED IN UTTRAKH AND THEREFORE SUB-CLAUSE (II) OF SECTION 80IC(2)(A) IS APPLICABLE. THEREAFTER SUB-SECTION (3)PROVIDES QUANTIFICATION OF DEDUCTION SUB-SECTION(4) LAID DO WN THE CONDITIONS THAT UNDERTAKING OR ENTERPRISES SHOULD NOT BE FORMED BY SPLITTING UP OR THE RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. HOWEVER THIS CONDIT ION WOULD NOT BE APPLICABLE IN RESPECT OF AN UNDERTAKIN G WHICH IS FORMED AS A RESULT OF THE REESTABLISHMENT OR RECONSTRUCTION OR REVIVAL OF THE BUSINESS OF AN ASS ESSEE AS PROVIDED IN SECTION 33B OF THE ACT. SIMILARLY I T IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINE RY OR PLANT PREVIOUSLY USED FOR ANY PURPOSES. SINCE THER E IS NO DISPUTE THAT THESE CONDITIONS ARE NOT ATTRACTED IN THE CASE OF THE ASSESSEE THEREFORE WE DO NOT DEEM IT NECESSARY TO MAKE ELABORATE DISCUSSION. AT THE TIME OF HEARING IT HAS BEEN POINTED OUT THAT THERE IS NO V IOLATION TO ANY OTHER CONDITIONS CONTAINED IN SUB-RULES 5 TO 12 OF SECTION 80IA OF THE ACT (EXTRACTED SUPRA). 10. THE PRIMARY ISSUE REQUIRED TO BE DETERMINED IS WHEN ASSESSEE CAME INTO EXISTENCE AND WHETHER GEOGRAPHIC ALLY IT IS LOCATED WITH THE NOTIFIED AREA CONTEMPLATED I N SUB- CLAUSE (II) OF SEC. 80IC(2)(A) OR (2) (B). IT EMER GES OUT FROM THE RECORD THAT ASSESSEE PARTNERSHIP FIRM CAME INTO EXISTENCE ON 1 ST OF APRIL 2006. IT IS SITUATED AT F-3 INDUSTRIAL AREA BHIMTAL (NAINITAL). ACCORDING TO T HE 30 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= ASSESSEE IT HAS STARTED THE MANUFACTURING OPERATIO N AT ITS INDUSTRIAL UNDERTAKING ON 28.8.2006 THOUGH THIS DATE HAS BEEN DISPUTED BY THE ASSESSING OFFICER AND WE W ILL DISCUSS THIS ASPECT IN THE LATER PART OF THE ORDER. FOR THE TIME BEING IT IS CONCLUDED THAT AS FAR AS GEOGRAPH ICAL LOCATION OF THE ASSESSEE IS CONCERNED IT FALLS WIT HIN THE INDUSTRIAL ESTATE SPECIFIED FOR THE PURPOSE OF ADMI SSIBILITY OF DEDUCTION UNDER SEC. 80-IC OF THE ACT. SIMILARLY IT HAS COMMENCED ITS OPERATION IN BETWEEN PERIOD OF JANUAR Y 2003 TO APRIL 2012 AS PROVIDED IN SUB-CLAUSE (2) OF SECTION 80-IC(II)(A)(B) OF THE ACT. THEREFORE TO T HIS EXTENT THERE CANNOT BE ANY DISPUTE BETWEEN THE PAR TIES. 11. THE NEXT STEP WHICH IS ESSENTIAL FOR EXAMINING THE CASE OF AN ASSESSEE ABOUT THE ADMISSIBILITY OF DEDU CTION UNDER SEC. 80-IC IS WHETHER IT MANUFACTURES OR PROD UCES ANY ARTICLE OR THINGS. ACCORDING TO THE ASSESSING O FFICER EXPRESSION MANUFACTURE HAS BEEN DEFINED IN SECTI ON 2(29)(B)(A) WHICH READ AS UNDER: (29BA) MANUFACTURE WITH ITS GRAMMATICAL VARIATIONS MEANS A CHANGE IN A NON-LIVING PHYSICAL OBJECT OR ARTICLE OR THING - (A) RESULTING IN TRANSFORMATION OF THE OBJECT OR ARTICLE OR THING INTO A NEW AND DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT NAME CHARACTE R AND USE; OR (B) BRINGING INTO EXISTENCE OF A NEW AND DISTINCT OBJECT OR ARTICLE OR THING WITH A DIFFERENT CHEMICA L COMPOSITION OR INTEGRAL STRUCTURE. HOWEVER EXPRESSION PRODUCTION HAS NOT BEEN DEFINED IN THE ACT. THE STAND OF THE REVENUE AUTHORITIES IS THAT AT THE MOST ACTIVITY CARRIED OU T BY THE ASSESSEE IS OF BLENDING ONE. IT HAS JUST MIXED THE FLORAL DISTILLATE FROM KANNOUJ AND NO NE W OR DISTINCT PRODUCT HAS EMERGED OUT. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED IN THE WRITTEN SUBMISSIONS A FLOW CHART EXHIBITING THE ACTIVITIES CARRIED OUT BY THE ASSESSEE BEFORE PRODUCING ALTOGETHER DISTINCT SALEABLE COMMODITY WHICH HAS ITS OWN IDENTIFICATION IN THE COMMERCIAL 31 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= WORLD. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT EXPRESSION MANUFACTURE AS WELL AS PRODUCTION HAVE FALLEN FOR THEIR INTERPRETATION AND CONSTRUCTION NOT ONLY AT THE LEVEL OF ITAT BUT BEFO RE THE HON'BLE SUPREME COURT ALSO AND THE HONBLE COURT HAS EXPLAINED BOTH THESE EXPRESSIONS IN DETAIL. HE MADE REFERENCE TO THE DECISION OF HON'BL E SUPREME COURT IN THE CASE OF CIT VS. M/S. ARIHANT TILES & MARBLES PVT. LTD. REPORTED IN 320 ITR 79 INDIA CINE AGENCY VS. CIT REPORTED IN 308 ITR 98 CIT VS. SESA GOA LTD. REPORTED IN 271 ITR 331. IN HIS WRITTEN SUBMISSIONS HE ALSO REFERRED A LARGE NUMBER OF OTHER DECISIONS RENDERED BY BOMBAY HIGH COURT HON'BLE GUJARAT HIGH COURT IN THE CASES OF CIT VS. NEE PHARMA (P.) LTD. 137 ITR 879/10 TAXMAN 218 (BOM.) CIT VS. ANGLO FRENCH DRUG CO. (EASTERN) LTD. [1991] 191 ITR 92/57 TAXMAN 8 (BOM.) CIT VS. PRABHUDASS KISHORE DASS TOBACCO PRODUCTS REPORTED IN 282 ITR 568 (GUJARAT). ON THE OTHER HAND LEARNED DR HAS POINTED OUT THAT IT IS JUST A BLENDING ACTIVITY AND HE REFERRED TO THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BROKEBOND INDIA VS.CIT REPORTED IN 269 ITR 232 AND THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. TARA AGENCY REPORTED IN 292 ITR 444. IN THESE CASES IT HAS BEEN HELD THAT BLENDING OF VARIOUS CATEGORIES OF TEAS AND SELLING THEM AFTE R PACKAGING WITH NEW BRAND NAME DOES NOT AMOUNT TO MANUFACTURING OR PRODUCTION OF A NEW COMMODITY. 12. AS OBSERVED EARLIER WE WOULD BE REVERTING BACK TO THE FACTS OF THE PRESENT CASE IN THE LATER PART OF THE ORDER. FIRST WE WOULD LIKE TO BRING AT HOME THE ME ANING OF EXPRESSION MANUFACTURE AND PRODUCTION AS PROPOUNDED IN THE VARIOUS AUTHORITATIVE PRONOUNCEME NTS OF THE HON'BLE SUPREME COURT AS WELL AS OF HON'BLE HIGH COURT. 13. IN THE CASE OF INDIA CINE AGENCY HON'BLE SUPRE ME COURT HAS CONSIDERED THE JUDGMENT RENDERED IN THE C ASE OF SESA GOA (SUPRA) AND ALL OTHER DECISIONS ON THE POINT WHICH CONTEMPLATE THE MEANING OF EXPRESSION MANUFACTURE AS WELL AS PRODUCTION. THE RELEVANT DISCUSSION MADE BY THE HONBLE COURT READS AS UNDER : 32 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= 2.AS NOTED ABOVE THE CORE ISSUE IS WHETHER ACTIVITY UNDERTAKEN WAS MANUFACTURE OR PRODUCTION. 3. IN BLACKS LAW DICTIONARY(5TH EDITION) THE WOR D 'MANUFACTURE HAS BEEN DEFINED AS 'THE PROCESS OR OPERATION OF MAKING GOODS OR ANY MATERIAL PRODUCED BY HAND BY MACHINERY OR BY OTHER AGENCY; BY THE HAND BY MACHINERY OR BY ART. THE PRODUCTION OF ARTICLES FOR USE FROM RAW OR PREPARED MATERIALS BY GIVING SUCH MATERIALS NEW FORMS QUALITIES PROPERTIES OR COMBINATIONS WHETHER BY HAND LABOUR OR MACHINE'. THUS BY PROCESS OF MANUFACTURE SOMETHING IS PRODUCED AND BROUGHT INTO EXISTENCE WHICH IS DIFFERENT FROM THAT OUT OF WHICH IT IS MA DE IN THE SENSE THAT THE THING PRODUCED IS BY ITSELF A COMMERCIAL COMMODITY CAPABLE OF BEING SOLD OR SUPPLIED. THE MATERIAL FROM WHICH THE THING OR PRODUCT IS MANUFACTURED MAY NECESSARILY LOSE ITS IDENTITY OR MAY BECOME TRANSFORMED INTO THE BASIC OR ESSENTIAL PROPERTIES. (SEE DY. CST (LAW) BOARD OF REVENUE (TAXES) COCO FIBRES[1992] SUPP. 1 SCC 290). 4.MANUFACTURE IMPLIES A CHANGE BUT EVERY CHANGE IS NOT MANUFACTURE YET EVERY CHANGE OF AN ARTICLE IS THE RESULT OF TREATMENT LABOUR AND MANIPULATION. NATURALLY MANUFACTURE IS THE END RESULT OF ONE OR MORE PROCESSES THROUGH WHICH THE ORIGINAL COMMODITIES ARE MADE TO PASS. THE NATURE AND EXTENT OF PROCESSING MAY VARY FROM ONE CLASS TO ANOTHER. THERE MAY BE SEVERAL STAGES OF PROCESSING A DIFFERENT KIND OF PROCESSING AT EACH STAGE. WITH EACH PROCESS SUFFERED THE ORIGINAL COMMODITY EXPERIENCES A CHANGE. WHENEVER A COMMODITY UNDERGOES A CHANGE AS A RESULT OF SOME OPERATION PERFORMED ON IT OR IN REGARD TO IT SUCH OPERATION WOULD AMOUNT TO PROCESSING OF THE COMMODITY. BUT IT IS ONLY WHEN THE CHANGE OR A SERIES OF CHANGES TAKES THE COMMODITY TO THE POINT WHERE COMMERCIALLY IT CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT INSTEAD IS RECOGNIZED AS A NEW AND DISTINCT ARTICLE THAT A MANUFACTURE CAN BE SAID TO TAKE PLACE. PROCESS IN MANUFACTURE OR IN 33 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= RELATION TO MANUFACTURE IMPLIES NOT ONLY THE PRODUCTION BUT ALSO VARIOUS STAGES THROUGH WHICH THE RAW MATERIAL IS SUBJECTED TO CHANGE BY DIFFEREN T OPERATIONS. IT IS THE CUMULATIVE EFFECT OF THE VARI OUS PROCESSES TO WHICH THE RAW MATERIAL IS SUBJECTED TO THAT THE MANUFACTURED PRODUCT EMERGES. THEREFORE EACH STEP TOWARDS SUCH PRODUCTION WOULD BE A PROCESS IN RELATION TO THE MANUFACTURE. WHERE ANY PARTICULAR PROCESS IS SO INTEGRALLY CONNECTED WITH THE ULTIMATE PRODUCTION OF GOODS THAT BUT FOR THAT PROCESS PROCESSING OF GOODS WOULD BE IMPOSSIBLE OR COMMERCIALLY INEXPEDIENT THAT PROCESS IS ONE IN RELATION TO THE MANUFACTURE. (SEE COLLECTOR OF CENTRAL EXCISE V.RAJASTHAN STATE CHEMICAL WORKS[1991] 4 SCC 473). ... 7.TO PUT IT DIFFERENTLY THE TEST TO DETERMINE WHETHER A PARTICULAR ACTIVITY AMOUNTS TO MANUFACTURE OR NOT IS: DOES A NEW AND DIFFERENT GOOD EMERGE HAVING DISTINCTIVE NAME USE AND CHARACTER. THE MOMENT THERE IS TRANSFORMATION INTO A NEW COMMODITY COMMERCIALLY KNOWN AS A DISTINCT AND SEPARATE COMMODITY HAVING ITS OWN CHARACTER USE AND NAME WHETHER BE IT THE RESULT OF ONE PROCESS OR SEVERAL PROCESSES MANUFACTURE TAKES PLACE AND LIABILITY TO DUTY IS ATTRACTED. ETYMOLOGICALLY THE WORD MANUFACTURE PROPERLY CONSTRUED WOULD DOUBTLESS COVER THE TRANSFORMATION. IT IS THE TRANSFORMATION OF A MATTE R INTO SOMETHING ELSE AND THAT SOMETHING ELSE IS A QUESTION OF DEGREE WHETHER THAT SOMETHING ELSE IS A DIFFERENT COMMERCIAL COMMODITY HAVING ITS DISTINC T CHARACTER USE AND NAME AND COMMERCIALLY KNOWN AS SUCH FROM THAT POINT OF VIEW IS A QUESTION DEPENDING UPON THE FACTS AND CIRCUMSTANCES OF THE CASE. (SEE EMPIRE INDUSTRIES LTD. V.UNION OF INDIA[1985] 3 SCC 314). ... 14. IN THIS CASE ASSESSEE WAS CARRYING ON BUSINESS OF CONVERSION OF JUMBO ROLLS OF PHOTOGRAPHIC FILMS INT O SMALL FLATS AND ROLLS IN DESIRED SIZES. IT CLAIMED DEDUCTION UNDER SEC. 80-HH AND 80-I AS WELL AS INVESTMENT ALLOWANCE UNDER SEC. 32AB. THE CONTROVERSY AROSE WHETHER CONVERSION OF JUMBO ROLLS INTO SMALL SIZES 34 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= AMOUNTS TO MANUFACTURE OR PRODUCTION ELIGIBLE FOR DEDUCTION UNDER SEC. 32AB OR DEDUCTION UNDER SECTIO NS 80-HH AND 80-I OF THE INCOME-TAX ACT 1961/ HON'BLE SUPREME COURT HAS HELD THAT THIS ACTIVITY AMOUNTS TO MANUFACTURE OR PRODUCTION. THUS WE THINK IT IS NOT NECESSARY TO RECAPITULATE AND RECITE ALL THE DECISI ON ON THE CONSTRUCTION EXPRESSION MANUFACTURE. BUT SUFF ICE TO SAY THAT CORE OF ALL THE DECISIONS OF THE HON'BLE S UPREME COURT OR HON'BLE HIGH COURT IS TO THE EFFECT THAT BROADLY MANUFACTURE IS A TRANSFORMATION OF AN ARTICLE WHIC H IS COMMERCIALLY DIFFERENT FROM THE ONE WHICH IS CONVER TED. IT IS A CHANGE OF ONE OBJECT TO ANOTHER FOR THE PU RPOSE OF MARKETABILITY. IT BRINGS SOMETHING INTO EXISTENC E WHICH IS DIFFERENT FROM THAT WHICH ORIGINALLY EXIS TED. THE NEW PRODUCT IS A DIFFERENT COMMODITY PHYSICALLY AS WELL AS COMMERCIALLY. THE HONBLE COURT ALSO EXPLAINED BROADER TEST TO DETERMINE WHETHER MANUFACTURE IS TH ERE OR NOT IT IS PROPOUNDED THAT WHEN A CHANGE OR SERI ES OF CHANGES ARE BROUGHT OUT BY APPLICATION OF PROCESSES WHICH TAKE THE COMMODITY TO THE POINT WHERE COMMERCIALLY IT CANNOT BE REGARDED AS THE ORIGINAL COMMODITY BUT IS INSTEAD RECOGNIZED AS A DISTINCT AND NEW ARTICLE THAT HAS EMERGED AS A RESULT OF THE PRO CESS. 30. IN THE CASE UNDER CONSIDERATION THE ASSESSEE COMPANY DOES THE ASSEMBLING WORK TO PREPARE WATER FILTER CUM PURIFIERS. IT PURCHASES VARIOUS COMPONEN TS LIKE 'CHASSIS BODY TOP COVER BACK COVER PUMPS PCB WIRE HARNESS SOME HARDWARE AND PLASTIC COMPONENTS FROM DIFFERENT VENDORS FROM ALL OVER INDIA ASSEMBL ES THESE COMPONENTS TO GET A FINISHED PRODUCT. ACCORDI NG TO THE AR A NEW DISTINCT ARTICLE WHICH IS CALLED WATER PURIFIER CAME INTO EXISTENCE HAVING COMMERCIAL MAR KET AND THE ORIGINAL COMMODITY NO LONGER REMAINED AND T HE NEW PRODUCT HAS RECOGNIZED AS DISTINCT COMMODITY. 31. THE RATIOS LAID DOWN IN THE AFORESAID CASE LAWS CITED SUPRA ARE IN SUPPORT OF ASSESSEES CASE. IN VIEW O F THIS 35 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= THE ASSESSEE IS ENGAGED IN THE MANUFACTURE OF WATER PURIFIERS AND THEREFORE ENTITLED FOR DEDUCTION U/S 80IC. 32. IN VIEW OF OUR DISCUSSION AS ABOVE WE DO NOT F IND ANY INFIRMITY IN THE ORDER OF THE CIT(A) THAT THE A SSESSEE IS ENTITLED FOR DEDUCTION U/S 80IC OF THE ACT IN RE SPECT OF MANUFACTURE OF WATER PURIFIERS. ACCORDINGLY THE CO MMON GROUND RAISED BY THE REVENUE ON THIS COUNT IN ITA N OS. 93/HYD/13 AND 1723 & 287/HYD/2012 IS DISMISSED. 33. IN THE RESULT THE REVENUE APPEALS UNDER CONSIDERATION ARE DISMISSED. 34. TO SUM UP ITA NO. 107/HYD/2011 BY THE ASSESSEE IS DISMISSED AND THE APPEALS OF THE REVENUE BEING I TA NO. 95/HYD/13 1723/HYD/12 AND 287/HYD/12 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY 2013. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SS SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD DATED 15 TH JULY 2013 TPRAO/KV 36 ITA NO. 107/HYD/2011 & ORS. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. ================================= COPY FORWARDED TO: 1. M/S. AQUAMALL WATER SOLUTIONS PVT. LTD. FLAT NO. 20 1 ST FLOOR SONY BUSINESS COMPLEX PRASHANTI NAGAR KUKATPALLY HYDERABAD. 2. THE COMMISSIONER OF INCOME-TAX-1 HYDERABAD. 3. THE DCIT CIRCLE-1(1) 4 TH FLOOR AAYAKAR BHAVAN BASHEERBAGH HYDERABAD. 4. THE CIT(A)-II HYDERABAD. 5. THE CIT-I HYDERABAD. 6. THE DR 'A' BENCH ITAT HYDERABAD S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER