DCIT, Kanpur v. M/s. Prakash Cold Storage, Kanpur

ITA 475/LKW/2010 | 2004-2005
Pronouncement Date: 08-07-2011 | Result: Dismissed

Appeal Details

RSA Number 47523714 RSA 2010
Assessee PAN AAGFP6142G
Bench Lucknow
Appeal Number ITA 475/LKW/2010
Duration Of Justice 1 year(s) 1 day(s)
Appellant DCIT, Kanpur
Respondent M/s. Prakash Cold Storage, Kanpur
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-07-2011
Date Of Final Hearing 30-03-2011
Next Hearing Date 30-03-2011
Assessment Year 2004-2005
Appeal Filed On 07-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B - BENCH LUCKNOW. BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI ACCOUNTANT MEMBER I.T.A.NOS.475 & 476(LKW.)/2010 A.YS. : 2004-05 & 2005-06 THE DY.CIT-I VS. M/S. PRAKASH COLD STORAGE KANPUR. 17/3 HOTEL MEGHDOOT THE MALL KANPUR. PAN AAGFP6142G (APPELLANT) (RESPONDENT) C.O.NOS.38 & 39(LKW.)/2010 (IN I.T.A.NOS.475 & 476(LKW.)/2010) A.YS. : 2004-05 & 2005-06 M/S.PRAKASH COLD STORAGE VS. THE DY.CIT-I KANPUR. KANPUR. PAN AAGFP6142G (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI P.K.BAJAJ SR. D.R. ASSESSEE BY : SHRI RAKESH GARG ADVOCATE O R D E R PER H.L.KARWA VICE PRESIDENT THESE TWO APPEALS BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE LD.CIT(A)-II. KANPUR EACH DATED 22.4.2010 RELATING TO THE ASSESSMENT YEARS 2004-05 & 2005-06. FIRSTLY WE WILL DECIDE I.T.A.NO.675(LKW.)/2010 RELATING TO THE ASSESSMENT YEAR 2004-05. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS : 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.16 72 8397- ON ACCOUNT OF CLAIM U/S 80IB OF INCOME TAX ACT 1961 IGNORING THE FACT THAT THE COLD STORAGE IS SITUATED AT G.T. ROAD DANDAURA BUJURG MANIMAU KANNAUJ OF UTTAR PRADESH WHICH WAS NEITHER A BACKWARD STATE AS PER EIGHTH SCHEDULE NOR THE KANNAUJ DISTRICT WAS NOTIFIED AS BACKWARD DISTRICT OF CATEGORY A OR B. 2. IN DOING SO LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN HOLDING THAT PROVISION OF SECTION 80IB(11) ARE APPLICABLE AND THE ASSESSEE'IS PROVIDING A COLD CHAIN FACILITY. LD. CIT(A)-II KANPUR HAS IGNORED THE FACT THAT THE ASSESSEE ITSELF IN ITS REPLY DATED 25.09.2006 STATED THAT 'THE ASSESSEE IS A PARTNERSHIP FIRM AND THE BUSINESS OF THE ASSESSEEE IS TO RUN A COLD STORAGE IN WHICH MOSTLY POTATOES ARE KEPT ON SEASONAL BASIS'. A COLD STORAGE USED FOR STORING POTATOES CANNOT BE CONSIDERED TO BE A COLD CHAIN FACILITY 3. THE COMMISSIONER OF INCOME TAX (APPEALS)-II KANPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE CONCLUSION OF THE ASSESSING OFFICER IS INCORRECT. AS SUCH HIS ORDER IS BAD IN LAW. THEREFORE THE ORDER OF THE LD. CIT(A)-II KANPUR DATED 22.04.2010 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 07.12.2009 TO BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING A COLD STORAGE AT MANIMAU DISTRICT KANNAUJ. REUTRN FOR THE YEAR UNDER APPEAL WAS FILED AT NIL INCOME AND ASSESSMENT UNDER SECTION 143(3) OF THE INCOME- TAX ACT 1961 ( IN SHORT THE ACT) WAS ALSO COMPLETED AT NIL INCOME VIDE ORDER DATED 30.11.2006. THE CLAIM OF DEDUCTION UNDER SECTION 80-IB OF THE ACT AMOUNTING TO RS.17 91 997 WAS MADE BY THE ASSESSEE AND THE SAME WAS 3 ALLOWED BY THE AO. SUBSEQUENTLY A NOTICE UNDER SECTION 148 OF THE ACT DATED 1.5.2008 WAS ISSUED TO THE ASSESSEE. REASONS RECORDED FOR THE ISSUE OF NOTICE UNDER SECTION 148 BY THE AO ARE AS UNDER : ' THE ASSESSES M/S. PRAKASH COLD STORAGE HAS WRONGL Y CLAIMED AND ALSO ALLOWED DEDUCTION U/S 80-IB AS THE COLD STORAGE IS SITUATED IN G.T.ROAD DANDAURA BUJURG MANIMAU KANNAUJ OF UTTAR PRADESH WHICH IS NEITHER A BACKWARD STATE AS PER EIGHT SCHEDULE NOR THE KANNAUJ DISTRICT IS NOTIFIED AS BACKWARD DISTRICT OF CATEGORY 'A' OR 'B. 2.1 DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT ITS CLAIM IS COVERED BY THE PROVISIONS OF SECTION 80IB(11) OF THE ACT BECAUSE THE ASSESSEE IS DERIVING PROFIT FROM THE BUSINESS OF SETTING UP AND OPERATING A COLD CHAIN FACILITY FOR AGRICULTURAL PRODUCE. THE ASSESSING OFFICER DID NOT ACCEPT THE PLEA OF ASSESSEE AND COMPLETED ASSESSMENT AT AN INCOME OF RS.9 70 530/-. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE MAIN ISSUE BEFORE THE LD. CIT(A) WAS THAT WHETHER THE ASSESSEE SHOULD BE TREATED AS AN INDUSTRIAL UNIT WHICH IS OPERATING A COLD STORAGE PLANT ( WHICH IS ENTITLED TO DEDUCTION U/S 80-IB(5) ) OR SHOULD IT BE TREATED AS AN INDUSTRIAL UNIT WHICH IS OPERATING A COLD CHAIN FACILITY FOR AGRICULTURAL PRODUCE. 3.1 THE CONTENTION OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS THAT IT IS OPERATING A COLD CHAIN FACILITY FOR AGRICULTURAL PRODUCE. THE ARGUMENTS PUT FORTH BY THE ASSESSEE BEFORE THE LD.CIT(A) IN THIS REGARD WERE AS UNDER : 4 '1 NATURE OF FACILITIES PROVIDED BY THE ASSESSEE UNDER THE COLD CHAIN FACILITY FOR STORAGE OF AGRICULTURAL PRODUCE ARE AS UNDER :- I) ASSESSEE IS HAVING FACILITIES OF MULTI CHAMBER COLD STORAGE CAPABLE TO PRESERVE THE AGRICULTURAL PRODUCE IN REQUIRED DIFFERENT REFRIGERATION CONDITIONS; II) IT HAS BEEN SET UP AND IS OPERATING IN AN AGRICULTURAL BELT HIGHLY RICH FOR POTATOES; III) IT HAS FACILITY OF EASY APPROACH BEING SITUATED NEAR HIGHWAY ON G.T.ROAD THUS IT IS WELL CONNECTED FOR MOVEMENT OF THE 'POTATOES' WHICH IS MOSTLY BROUGHT IN THROUGH ' TRACTOR- TROLLEYS BY THE FARMERS; IV) IT HAS FACILITY OF AMPLE PARKING SPACE INSIDE AND OUTSIDE FOR MOVEMENT OF TRACTOR-TROLLEYS CARRYING POTATOES WHICH FURTHER FACILITATES IN MANAGING THE UNLOADING OF THE POTATOES AT THE TIME OF PEAK SEASON ; V) IT PROVIDES THE FACILITY OF POTATOES BEING PUT TO PROCESS OF PRESERVATION WITH THE LEAST GESTATION AND TRANSITIONAL PERIOD HELPING IN MINIMIZING THE LOSS IN QUALITY OF POTATOES; VI) IT HAS A FACILITY OF PROPER UNLOADING PLATFORMS AND 'VERANDAS' APPROPRIATELY DESIGNED FOR EFFICIENT UNLOADING MATCHING THE HEIGHT OF THE TRACTOR- TROLLEYS. VII) IT HAS FURTHER FACILITIES OF SUFFICIENTLY COVERED VENTILATED PRE COOLING AND DRYING SPACE FOR POTATOES WHICH IS ESSENTIALLY PRE REQUIRED FOR EFFICIENT STORAGE OF POTATOES IN REFRIGERATED CONDITIONS TO NORMALIZE THE FIELD HEAT OF POTATOES AND TO SAVE THE POTATOES FROM THE 'COOL SHOCK'' BY PUTTING DIRECTLY IN THE REFRIGERATION AND ALSO WHICH IS NECESSARY FOR NORMALIZING THE COOLED POTATOES AT THE TIME OF 'NIKASI' AFTER PRESERVATION TO AVOID THE 'HEAT SHOCK'. VIII) IT IS HAVING / PROVIDING FACILITY BY SAMPLE TESTING/ CHECKING THE CONDITION OF POTATOES FROM TIME TO TIME UNDER PRESERVATION; 5 IX) IT IS FURTHER FACILITY OF MULTI FLOORS IN EACH COLD CHAMBER FOR IDEALLY STACKING THE POTATOES FOR EFFICIENT AIR CIRCULATION SO AS TO KEEP THE POTATOES WELL IN COOLING TOUCH FROM ALL THE SIDES ; X) IT HAS FACILITY IN EACH STORAGE COLD CHAMBER HAVING ENCLOSED AND EXTENDED SURFACE COOLING COILS FOR ADEQUATE AIR QUANTITY AND ALSO RESULTING IN SUBSTANTIAL ENERGY SAVING ; XI) IT HAS FACILITY OF AMMONIA REFRIGERATION COMPRESSORS AND EVAPORATIVE CONDENSER STANDS ADEQUATE FOR EFFICIENT PRESERVATION OF THE POTATOES BY MAINTAINING THE DESIRED TEMPERATURE AND RELATIVE HUMIDITY ; XII) IT HAS A FACILITY OF MONITORING TEMPERATURE CONTROL WHICH PROVIDES FURTHER FACILITY DURING PRESERVATION IN COLD CHAMBERS TO MAINTAIN SUCH TEMPERATURE FOR INITIAL PERIOD OF STORAGE OF POTATOES AS REQUIRED WHICH IS BEING GRADUALLY MONITORED AND SUFFICIENTLY BROUGHT DOWN TO ABOUT 1 TO 3 DEGREE CENTIGRADE FOR EFFICIENT PRESERVATION OF POTATOES ; XIII) IT HAS FURTHER FACILITY OF PROVIDING UNIFORMITY OF TEMPERATURE IN THE PRESERVATION OF POTATOES IN COLD CHAMBERS WHICH GIVES THE EFFICIENT MINIMUM WEIGHT LOSS DURING THE PRESERVATION OF POTATOES. THIS ALSO ENHANCES THE STORAGE LIFE OF POTATOES AND HELP IN ENSURING THE SMOOTH AND UNIFORM DISTRIBUTION OF POTATOES. XIV) IT IS HAVING FACILITY OF ADEQUATE ELECTRIC CONNECTION AS WELL AS FACILITY OF STANDBY GENERATOR OF ADEQUATE CAPACITY TO RUN THE UNIT SMOOTHLY AND INTERRUPTED. THE ABOVE MENTIONED FACILITIES ARE SCIENTIFICALLY CONTROLLED AND REGULATED AND WORK IN SEQUENCE TO EACH OTHER. ONCE AGRICULTURAL PRODUCE IS BROUGHT FROM THE FIELD IT HAS IN BUILT HEAT AND IT ALSO ABSORBS HEAT FROM THE ATMOSPHERE AND CANNOT BE KEPT DIRECTLY INTO A ZERO OR SUB-ZERO TEMPERATURE. THE TEMPERATURE OF THE AGRICULTURAL PRODUCED HAS TO BE BROUGHT DOWN TO ROOM TEMPERATURE BY KEEPING IT TO THE AIR CIRCULATION THROUGH FANS. THUS ONCE THE PRODUCE IS COOLED DOWN TO THE ROOM TEMPERATURE IT IS THEN SHIFTED TO THE CHAMBER HAVING 6 MODERATELY LOW TEMPERATURE OF 10 DEGREE CENTIGRADE AND THEN FURTHER SHIFTED TO A DESIRED TEMPERATURE OF 1-2 DEGREE CENTIGRADE. THE AGRICULTURAL PRODUCE IS REGULARLY SHIFTED TURNED AROUND SO AS TO PREVENT ITS DETERIORATION FROM VARYING TEMPERATURE IN THE LOT AND HUMIDITY AND TEMPERATURE ARE SCIENTIFICALLY CONTROLLED TO PRESERVE THE PRODUCE. THERE ARE MULTIPLE CHAMBERS TO STORE DIFFERENT TYPES OF PRODUCE AT DIFFERENT TEMPERATURE AND HUMIDITY. WHEN A PRODUCE IS TAKEN OUT THE TEMPERATURE IS NORMALIZED TO ROOM TEMPERATURE BY PROPERLY FANNING THE PRODUCE. THUS THERE ARE CHAIN OF FACILITIES FOR STORAGE. CLAIM U/S 80IB(11) HAS BEEN MADE BY THE ASSESSEE ON THE GROUND THAT COLD STORAGE PLANT IS A CHAIN OF FACILITIES FOR STORAGE OF AGRICULTURAL PRODUCE. DEFINITION OF COLD CHAIN FACILITIES IS GIVEN IN SEC 80-IB (14) OF THE ACT AS UNDER- COLD CHAIN FACILITIES MEANS A CHAIN OF FACILITIES FOR STORAGE OR TRANSPORTATION OF AGRICULTURAL PRODUCE UNDER SCIENTIFICALLY CONTROLLED CONDITIONS INCLUDING REFRIGERATION AND OTHER FACILITIES NECESSARY FOR THE PRESERVATION OF SUCH PRODUCE' 3.2 THE LD.CIT(A) HELD THAT THE ASSESSEE FULFILLED THE CONDITIONS OF OPERATING A COLD CHAIN FACILITY IN TERMS OF SECTION 80IB(11) OF THE I.T. ACT AND IS THUS ENTITLED TO DEDUCTION AT THE RATE OF 100% UNDER SECTION 80IB(11) OF THE I.T. ACT. WHILE HOLDING SO THE LD.CIT(A) HAS FOLLOWED A DECISION OF THE OF THE LD.CIT(A)-II KANPUR IN THE CASE OF M/S.SHARWAN SHEETALAYA (APPEAL NO.CIT(A)-II/885/DCIT-II/207- 08/147) DATED 21.11.2008 WHEREIN THE LD.CIT(A) HAS HELD AS UNDER : 'FURTHER FROM THE PERUSAL OF THE DECISION DATED 25.4.2008 OF THE HON'BLE ITAT AGRA BANCH AS REFERRED BY THE A.R. OF THE APPELLANT IT IS SEEN THAT THE AFORESAID ORDER IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT FIRM . IT HAS BEEN HELD BY THE HON'BLE ITAT THE INTEGRATED ACTIVITY BOTH OF 'STORAGE' AND 'TRANSPORTATION WAS NOT MANDATORY FOR ELIGIBILITY OF DEDUCTION U/S 80IB (11) AND FURTHER THE 7 APPELLANT COULD CLAIM DEDUCTION U/S 8016(11) FOR COLD STORAGE BUSINESS WHEN THE DEDUCTION WHEN THE DEDUCTION FOR COLD STORAGE HAD BEEN PROVIDED FOR IN SUB- SECTION (3) (4) AND (5) OF SECTION 80IB AS SPECIAL PROVISIONS IN SUB-SECTION (11) WOULD PREVAIL OVER GENERAL PROVISION IN SUBSECTION (3) (4) AND (5) OF SECTION 80-IB. FT WAS ALSO HELD THAT THE FACILITIES PROVIDED FOR STORAGE OR ACTIVITIES CARRIED OUT BY THE ASSESSEE WERE SEQUENTIAL TO EACH OTHER .THE DIFFERENT ACTIVITIES IN THE PROCESS OF STORAGE ITSELF CONSTITUTED A 'CHAIN'. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE THE LD.CIT(A)-II KANPUR HAS FOLLOWED HIS PREDECESSORS DECISION RENDERED IN THE CASE OF M/S.SHARWAN SHEETALAYA DATED 21.11.2008. IT IS OBSERVED THAT THE ORDER OF THE LD.CIT(A) DATED 21.11.2008 PASSED IN THE CASE OF M/S. SHARWAN SHEETALAYA FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 WERE CHALLENGED BY THE REVENUE IN APPEAL IN I.T.A.NOS.59 & 60(LKW)/2009 BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DATED 6.3.2009 RESTORED THE MATER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE FACTS MENTIONED IN THE CASE OF AMBIKA SHEET GRAH (P.) LTD. NOW REPORTED AS ITO VS. AMBIKA SHEET GRAH (P.) LTD. (2009) 119 ITD 235 (AGRA). IN THAT CASE THE ASSESSEE WAS RUNNING A COLD STORAGE PLANT FOR PRESERVATION OF AGRICULTURAL PRODUCE CLAIMED DEDUCTION UNDER SECTION 80-IB(11). THE AO DID NOT ALLOW THE CLAM ON THE GROUND THAT THE ASSESSEE WAS SIMPLY OPERATING A COLD STORAGE THOUGH IT WAS SUCCESSFUL IN PRESERVING THE POTATOES AND OTHER AGRICULTURAL PRODUCE BUT NOTHING ELSE. THE AO FURTHER HELD THAT DEDUCTION UNDER SECTION 80-IB(11) COULD BE ALLOWED TO THOSE UNDERTAKINGS WHO CAME UNDER THE CHAIN FACILITY FROM THE PRODUCER-END I.E. AGRICULTURIST TO THE CONSUMER END. THE ASSESSEE PROVIDED MERE REFRIGERATION AT THE TIME OF STORAGE AND COULD NOT BE 8 CONSIDERED AS A COLD CHAIN FACILITY. ON APPEAL THE LD.CIT(A) HOWEVER ALLOWED THE ASSESSEES APPEAL. ON REVENUES APPEAL THE TRIBUNAL HELD (HEAD NOTES) AS UNDER : THE CONTROVERSY WAS AS TO WHETHER THE ASESSEE WAS RUNNING A COLD STORAGE PLANT SIMPLICITOR OR IT WAS A COLD CHAIN FACILITY OR A PART OF' COLD CHAIN FACILITIES ENTITLING IT TO DEDUCTION UNDER SECTION 80-IB(11). TO RESOLVE THE CONTROVERSY IT WAS NECESSARY TO REFER TO SECTION 800- IB(11) AND DEFINITION OF 'CHAIN OF FACILITIES AS PROVIDED IN SECTION 80- IB(14)(A). [PARA 27J IT WAS FAIRLY ADMITTED BY BOTH THE PARTIES THAT WHATEVER FACILITIES THE ASSESSEE HAD THEY WERE UNDER SCIENTIFICALLY CONTROLLED CONDITIONS. THUS THE DISPUTE WAS CENTRALIZED ON THE INTERPRETATION OF' THE DEFINITION OF 'COLD CHAIN FACILITY' AS PROVIDED IN SUB-SECTION (14)(A) OF OF SECTION 80-IB. THE FIRST VIEW OF DEFINITION IS.COLD CHAIN FACILITY WHICH MEANS 'A CHAIN OF FACILITATES FOR STORAGE OR TRANSPORTATION. FROM THIS INTERPRETATION IT IS APPARENT THAT EVEN THOUGH WORDS 'STORAGE' AND 'TRANSPORTATION' HAVE BEEN SEPARATED BY THE CONJUNCTION 'OR' YET BOTH ARE LINKED TOGETHER TO THE WORDS 'CHAIN OF FACILITIES' AND HENCE AN INDUSTRIAL UNDERTAKING SHOULD HAVE BOTH SYSTEM OF STORAGE AS WELL AS TRANSPORTATION TO BECOME A PART OF THE CHAIN OF FACILITIES. IN OTHER WORDS CONJUNCTION 'OR' WOULD EFFECTIVELY MEAN 'AND' SO THAT WORDS 'STORAGE' AND 'TRANSPORTATION' BOTH ARE EQUALLY TAGGED TO THE WORDS 'CHAIN OF FACILITIES'. IN OTHER WORDS BOTH SHOULD FORM A CHAIN WITH EACH OTHER. BOTH ARE COMPLIMENTARY LO EACH OTHER AND ABSENCE OF ONE WILL NOT MAKE THE CHAIN COMPLETE. WHEN EFFECT IS GIVEN TO THIS INTERPRETATION THEN UNLESS AN ASSESSEE HAS BOTH THE SYSTEM OF STORAGE AS WELL AS TRANSPORTATION UNDER ZERO TEMPERATURE IT WILL NOT GET DEDUCTION UNDER SECTION 80-1B(11) I.E. AN INDUSTRIAL UNDERTAKING HAVING ONLY COLD STORAGE SYSTEM OR ANOTHER INDUSTRIAL UNDERTAKING HAVING ONLY REFRIGERATED TRANSPORTATION SYSTEM.[ PARA 28] THE SECOND INTERPRETATION IS TO READ THE DEFINITION AS PER CONJUNCTION 'OR' USED THEREIN I.E. TO READ THE 'STORAGE' AND 'TRANSPORTATION SEPARATELY I.E. A COLD CHAIN FACILITY MEANS 'A CHAIN OF FACILITIES FOR STORAGE..... OR 'A CHAIN OF FACILITIES FOR TRANSPORTATION.FROM THIS INTERPRETATION ONE CAN INFER THAT IF AN INDUSTRIAL UNDERTAKING HAS A CHAIN OF FACILITIES FOR STORAGE WITH OTHER CONDITIONS FULFILLED OR IF IT 9 HAS A CHAIN OF FACILITIES FOR TRANSPORTATION WITH OTHER CONDITIONS FULFILLED THEN BOTH THE TYPES OF ASSESSES WILL BE ENTITLED TO SUCH DEDUCTION UNDER THIS SECTION. THERE IS NO DISPUTE THAT THE ASSESSEE WAS HANDLING AGRICULTURAL PRODUCE SUCH AS POTATOES. THERE WAS ALSO NO DISPUTE THAT THE FACILITIES LAID DOWN FOR STORAGE WERE SCIENTIFIC. THE CHAIN OF FACILITIES HERE WOULD MEAN SEVERAL FACILITIES IN SEQUENCE FOR THE PURPOSES OF STORAGE OR TRANSPORTATION OF AGRICULTURAL PRODUCE. IN RESPECT OF STORAGE THIS WOULD START FROM UNLOADING PRE- COOLING FURTHER COOLING BADLA (TURN AROUND) HUMIDITY CONTROL TEMPERATURE CONTROL REMOVAL NORMALIZING TEMPERATURE AND THEN LOADING BACK THERE IS NO OTHER ITEM IN THE LIST OF FACILITIES PROVIDED EITHER IN THE STATUTE OR IN THE RULES OR THROUGH ANY EXECUTIVE INSTRUCTIONS WHICH AN ASSESSEE SHOULD POSSESS FOR FORMING A CHAIN AND /OR BEING ELIGIBLE TO THIS DEDUCTION. IN ABSENCE OF ANY SPECIFIC LIST OF FACILITIES WHICH COULD ALONE FORM A CHAIN THE LIST OF FACILITIES PROVIDED BY THE ASSESSED AND HIGHLIGHTED BY THE COMMISSIONER (APPEALS) WERE THEREFORE ACCEPTABLE IF THE SECOND INTERPRETATION WAS CONSIDERED. THERE WAS NO MATERIAL ON RECORD OR SUGGESTED BY THE REVENUE SO AS TO REJECT THESE FACILITIES AS NOT IN SEQUENCE AND THEREFORE NOT A CHAIN. IT WAS NOT PROVED BY THE REVENUE THAT FACILITIES PROVIDED BY THE ASSESSEE WERE INBUILT OR INTEGRAL TO COLD STORAGE PLANT AND HENCE WERE NOT ADDITIONAL AND THUS DID NOT BECOME PART OF CHAIN OF FACILITIES. ON THE OTHER HAND THE ASSESSEE SUGGESTED THAT THESE FACILITIES WERE NOT AVAILABLE IN EVERY COLD STORAGE PLANT. FOR EXAMPLE FOR PRESERVATION OF MEAT OR DAIRY PRODUCTS THERE WAS NO FACILITY FOR PRE-COOLING OR OF MULTI-CHAMBERS OR OF ALUMINUM FINNED COILS OR OF DEHUMIDIFIERS. THE REVENUE HAD NOT REFERRED TO ANY DECIDED AUTHORITIES AS TO WHICH INTERPRETATION WAS TO BE FOLLOWED. IN THE ABSENCE OF THIS BOTH THE INTERPRETATIONS OF THE DEFINITION OF COLD CHAIN FACILITIES WERE PLAUSIBLE AND DISCERNIBLE FROM THE WORDS USED IN SECTION 80-13B(14)(A). BOTH HAD APPARENTLY EQUAL FORCE. BOTH WERE LOGICAL AND LEGAL AND SAID SECTION WAS CAPABLE OF BOTH THESE INTERPRETATIONS. NOW IF ONE GOES BY THE INTENTION OF THE GOVERNMENT THEN ONE MAY NOTICE THAT INTENTION IS TO ENCOURAGE THE ASSESSEES TO PRESERVE THE AGRICULTURAL PRODUCE AND TO MINIMIZE THE LOSS IN TRANSIT OR IN STORAGE WHEN THE AGRICULTURAL PRODUCE MOVES FROM PRODUCER TO THE CONSUMER OR IS HELD BACK IN BETWEEN IN THE STORAGE. TO PREVENT SUCH LOSS ENCOURAGEMENT WAS GIVEN TO COLD STORAGE PLANTS BY GIVING THEM DEDUCTION UNDER SECTION 80-IA. NOW THE CONCEPT OF COLD CHAIN FACILITY HAS BEEN ENVISAGED. THE CONCEPT OF COLD STORAGE PLANT HAS 10 BEEN ENLARGED TO COLD CHAIN FACILITY. IT DOES NOT MEAN THAT COLD STORAGE PLANT IS NOT INCLUDED IN THIS CONCEPT AND HENCE IT IS DENIED LARGER DEDUCTION. THE 'COLD CHAIN FACILITY' IS A LARGER CONCEPT IN WHICH COLD STORAGE PLANT IS INBUILT OR IS PART OF IT. [PARA 29] THUS INTENTION HAS BEEN MADE CLEAR THAT MORE AND MORE COLD STORAGE PLANTS AND COLD STORAGE TRANSPORTATION EITHER SINGLY OR IN AN INTEGRATED MANNER SHOULD COME UP AND HELP IN PRESERVATION OF AGRICULTURAL PRODUCE. THIS INTENTION CANNOT BE FULFILLED IF A RESTRICTED MEANING IS GIVEN TO THE DEFINITION OF COLD CHAIN FACILITY I.E. UNLESS THERE IS AN INTEGRATED FACILITY FOR STORAGE AND TRANSPORTATION FROM 'END TO END' AN INDUSTRIAL UNDERTAKING WILL NOT BE ENTITLED TO DEDUCTION UNDER SECTION 80-1 B(11). FOLLOWING ARE SOME MORE REASONS AS TO WHY RESTRICTIVE INTERPRETATION PLEADED BY THE REVENUE WAS NOT ACCEPTABLE: (1) IT WAS NOT EXPLAINED BY THE REVENUE AS TO WHAT FACILITIES SHOULD AN INDUSTRIAL UNDERTAKING HAVE TO CONSTITUTE A CHAIN OF FACILITIES OTHER THAN WHAT THE ASSESSES HAD DESCRIBED FOR THE PURPOSES OF STORAGE. (2) INTEGRATED BUSINESS OF COLD STORAGE AND COLD TRANSPORTATION IS NOT ENVISAGED BY THIS SECTION OR BY THE DEFINITION OF COLD CHAIN FACILITY AS DISTINGUISHED FROM SECTION 80-IB(11 A) WHERE SUCH AN INTEGRATED BUSINESS IS VISUALIZED. (3) NON OBSTANTE CLAUSE USED IN THE BEGINNING OF SUB-SECTION (11) SHOWS THAT BENEFIT UNDER THIS SECTION CAN BE CONSIDERED TO A COLD STORAGE PLANT INDEPENDENT OF ANY BENEFIT TO IT COVERED UNDER SUB-SECTIONS (3) (4) OR (5) UNDER DIFFERENT CONDITIONS STIPULATED THEREIN. (4 ) ITEMS TO BE STORED IN A COLD STORAGE PLANT FOR CLAIMING DEDUCTION UNDER SUB-SECTIONS (3) (4) OR (5) ARE NOT SPECIFIED BUT FOR CLAIMING DEDUCTION UNDER SUB-SECTION (11) THE CLASS OF ITEMS TO BE DEALT WITH ARE SPECIFIED I.E. SUCH DEDUCTION CAN BE CLAIMED ONLY IF AN UNDERTAKING DEALS IN AGRICULTURAL PRODUCE. 11 (5) FROM THE INTERPRETATION CANVASSED BY THE REVENUE IT IS NOT CLEAR WHETHER AN ASSESSEE OWNING COLD TRANSPORTATION SYSTEM TO BRING AGRICULTURAL PRODUCE FROM FARM LAND TO THE COLD STORAGE OR ANOTHER ASSESSEE OWNING COLD STORAGE PLANT AND THE THIRD ASSESSEE OWNING ANOTHER COLD TRANSPORTATION SYSTEM FOR AGRICULTURAL PRODUCE FROM STORAGE PLANT TO THE CONSUMER JOIN TOGETHER TO FORM A CHAIN AS CANVASSED BY THE REVENUE WOULD GET BENEFIT INDEPENDENTLY. SIMILARLY IT WAS NOT MADE CLEAR BY THE REVENUE THAT IF AN ASSESSEE OWNING A FLEET OF REFRIGERATED TRANSPORTATION-ONLY WOULD GET DEDUCTION UNDER SECTION 80- 1B(11) EVEN THOUGH IT DOES NOT OWN ANY COLD STORAGE PLANT. IF A FLEET OF REFRIGERATED TRANSPORTATION CAN BE CALLED A CHAIN OF FACILITIES FOR TRANSPORTATION THEN MULTIPLE CHAMBERS IN A BIG COLD STORAGE PLANT SHOULD BE EQUALLY SAID TO BE A CHAIN OF FACILITIES FOR STORAGE OR EVEN OWNING OF NUMBER OF COLD STORAGE PLANTS OF SINGLE CHAMBERS CAN BE CALLED A CHAIN OF FACILITIES FOR STORAGE. (6) FURTHER SUB-SECTION (11) USES THE WORDS 'A COLD CHAIN FACILITY'. USE OF THE WORD 'A' SIGNIFIES THAT EVEN ONE CHAIN OF FACILITY WILL BE ENTITLED TO DEDUCTION I.E. ANY INDUSTRIAL UNDERTAKING HAVING FACILITY EN HER IN THE BEGINNING OR IN THE MIDDLE OR IN THE END OF AN OTHERWISE INTEGRATED BUSINESS CAN AVAIL OF THE BENEFIT. (7) AS PER INTERPRETATION CANVASSED BY THE REVENUE UNLESS AN ASSESSEE OWNS AN INDUSTRIAL UNDERTAKING OPERATING THE COMPOSITE BUSINESS OF TRANSPORTATION AND STORAGE FROM FARMER TO THE CONSUMER IT WOULD NOT BE ENTITLED TO SUCH DEDUCTION UNDER SECTION 80-1B(11). IN OTHER WORDS UNLESS SOMEBODY HAS INFRASTRUCTURE TO THAT EXTENT BENEFIT COULD NOT BE AVAILED. THIS RESTRICTS CONFERRING OF BENEFIT TO A VERY SMALL SEGMENT OF THE ASSESSEES WHO ARE CAPABLE OF OWNING SUCH COMPOSITE SYSTEM AND THUS WOULD RESTRICT THE DEDUCTION TO A SMALLER NUMBER OF THE ASSESSEES WHICH IS AGAINST THE INTENTION OF THE LEGISLATURE WHICH HAS INTRODUCED THESE PROVISIONS TO ENCOURAGE MORE AND MORE SETTING-UP OF COLD STORAGE FACILITIES OR COLD STORAGE TRANSPORTATIONS. 12 (8) THE REVENUE COULD NOT POINT OUT CONVINCING REASONS AS TO WHY THE ASSESSEE SHOULD BE DENIED DEDUCTION. THUS THE INTERPRETATION WHICH CONFERRED THE GRANT OF BENEFIT WAS TO BE ADOPTED BECAUSE OUT OF TWO PLAUSIBLE INTERPRETATIONS ONE WHICH CONFERS THE BENEFITS TO THE ASSESSEE SHOULD BE ADOPTED. [PARA 30] ONE OF THE ARGUMENTS OF THE REVENUE WAS THAT DEDUCTION TO A COLD STORAGE PLANT WAS PROVIDED BY SUB-SECTION (3) (4) OR (5) THEREFORE DEDUCTION TO A COLD STORAGE PLANT WOULD NOT BE AVAILABLE UNDER SUB- SECTION (11). IT MAY BE NOTED THAT THERE IS NO CONDITION ATTACHED FOR THE USE OF THE COLD STORAGE PLANT IN SUB-SECTIONS (3) (4) OR (5) WHEREAS SUB-SECTION (11) IS SPECIFICALLY LEGISLATED FOR AGRICULTURAL PRODUCE. FURTHER NON OBSTANTE CLAUSE IN SUB-SECTION (11) CLEARLY PROVIDES THAT IN SPITE OF A COLD STORAGE PLANT BEING CONSIDERED FOR DEDUCTION UNDER SUB-SECTIONS (3) (4) OR (5) II CAN ALSO BE CONSIDERED FOR DEDUCTION UNDER SUB-SECTION (11). IN THE INSTANT CASE SUB-SECTIONS (3) (4) OR (5) AND SUB-SECTION (11) OCCUPIED THE SAME FIELD ON COLD STORAGE. AS SUB-SECTION (11) IS A SPECIAL PROVISION AS COMPARED TO SUB-SECTIONS (3) (4) OR (5) WHICH ARE GENERAL PROVISION I.E. FOR GENERAL USE OF COLD STORAGE PLANT THEN SPECIAL PROVISION WHICH PROVIDES USE FOR AGRICULTURAL PRODUCE WOULD PREVAIL. [PARA 32] THE ARGUMENT OF THE REVENUE THAT FACILITIES FOR STORAGE OR ACTIVITIES AS LISTED BY THE ASSESSEE WOULD BE INTEGRAL TO THE COLD STORAGE PLANT WOULD NOT HOLD GROUND BECAUSE IT WAS NOT PROVED THAT ALL THESE FACILITIES SHOULD NECESSARILY BE OWNED BY EVERY COLD STORAGE PLANT. FURTHER IT WAS ONLY ENVISAGED THAT THE FACILITIES SHOULD BE SEQUENTIAL TO EACH OTHER. THE FACILITIES PROVIDED BY THE ASSESSEE WERE SEQUENTIAL AND THIS FACT WAS NOT CONTROVERTED. TO THIS EXTENT CERTIFICATES ISSUED BY NABARD OR OTHER AUTHORITIES WOULD BE USEFUL EVEN THOUGH IT MIGHT HAVE BEEN ISSUED FOR A DIFFERENT PURPOSE. [PARA 33] SO FAR AS THE OWNERSHIP OF FACILITIES WAS CONCERNED THERE WAS NO SUCH REQUIREMENT. DIFFERENT PARTS OF THE CHAIN COULD BE OWNED BY THE SAME PERSON OR BY SEVERAL PERSONS JOINING TOGETHER. [PARA 34] THE INTENTION OF THE LEGISLATURE IS NOT TO DISCOURAGE THE DEVELOPMENT OF COLD STORAGE FACILITIES BUT TO ENCOURAGE SUCH FACILITIES EITHER IN 13 SINGLE OR IN MULTIPLE FOR PRESERVATION OF AGRICULTURAL PRODUCE. FURTHER STORAGE BY ITSELF IS CONTEMPLATED AS CHAIN BY THE DEFINITION. THE DIFFERENT ACTIVITIES IN THE PROCESS OF STORAGE THEMSELVES ARE AS A CHAIN. [PARA 35] AS A RESULT THE ORDER PASSED BY THE COMMISSIONER (APPEALS) IN CONFERRING BENEFIT TO THE ASSESSEE WAS TO BE UPHELD AND THE APPEAL FILED BY THE REVENUE WAS TO BE DISMISSED. [PARA 38] 4.1 SHRI RAKESH GARG ADVOCATE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN HAND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE I.T.A.T. AGRA BENCH IN THE CASE OF ITO VS. AMBIKA SHEET GRAH (P.) LTD. (2009) 119 ITD 235(AGRA). IN THE SAID CASE THE TRIBUNAL HAS HELD THAT DIFFERENT ACTIVITIES IN PROCESS OF STORAGE OF AGRICULTURAL PRODUCE THEMSELVES CAN BE CONSIDERED AS COLD STORAGE CHAIN FACILITY AS DEFINED IN SECTION 80-IB(11) OF THE ACT. THE TRIBUNAL ALSO HELD THAT THE ASSESSEE WAS RUNNING A COLD STORAGE PLANT FOR PRESERVATION OF AGRICULTURAL PRODUCE AND THEREFORE WAS ENTITLED TO DEDUCTION UNDER SECTION 80IB(11 OF THE ACT. SHRI RAKESH GARG LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE OF AMBIKA SHEET GRAH (P.)LTD.(SUPRA). HE THEREFORE SUBMITTED THAT FOLLOWING THE ORDER OF THE I.T.A.T. AGRA BENCH IN THE CASE OF AMBIKA SHEET GRAH (P.) LTD.(SUPRA) THE ORDER OF THE LD.CIT(A) NEEDS NO INTERFERENCE. 4.2 SHRI P.K.BAJAJ LD.S.R.D.R. HEAVILY RELIED ON THE ORDER OF THE AO. 4.3 IN OUR CONSIDERED OPINION THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE I.T.A.T. AGRA BENCH IN THE CASE OF AMBIKA SHEET GRAH (P.) LTD.(SUPRA). NO CONTRARY 14 DECISION OF THE TRIBUNAL OR THE HON'BLE HIGH COURT WAS BROUGHT TO OUR NOTICE BY THE DEPARTMENT. WE ALSO OBSERVE THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE DEPARTMENT TO DISTINGUISH THE FACTS OF THE CASE OF AMBIKA SHEET GRAH (P.) LTD.(SUPRA) AS COMPARED TO THE FACTS OF THE INSTANT CASE. IN VIEW OF THE ABOVE DISCUSSION WE RESPECTFULLY FOLLOW THE DECISION OF THE I.T.A.T. AGRA BENCH IN THE CASE OF AMBIKA SHEET GRAH (P.) LTD.(SUPRA) AND THEREFORE DISMISS THE APPEAL OF THE REVENUE BEING DEVOID OF ANY MERIT. I.T.A.NO.476(LKW)/2010 5. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THE FACTS OF THE CASE OF THE ASSESSEE RELATING TO THE ASSESSMENT YEAR 2004-05 THE ONLY DIFFERENCE IS IN THE AMOUNT OF ADDITION. IN THIS YEAR THE IMPUGNED ADDITION OF RS.8 74 735 WAS MADE BY THE AO. THE REMAINING FACTS ARE SIMILAR TO THAT OF ASSESSMENT YEAR 2004-05. WE HAVE DISMISSED THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2004-05 FOR THE DETAILED REASONS GIVEN THEREIN. THE FINDINGS GIVEN IN I.T.A.NO.475(LKW)/2010 RELATING TO THE ASSESSMENT YEAR 2004-05 SHALL APPLY WITH EQUAL FORCE TO THE ISSUES RAISED IN I.T.A.NO.476(LKW)/2011 RELATING TO THE ASSESSMENT YEAR 2005-06. THUS IN VIEW OF OUR ORDER PASSED IN I.T.A.NO.475(LKW)/2010 WE DISMISS THIS APPEAL ALSO. 6. AS REGARDS THE C.O.NOS.38 & 39(LKW)/2010 SHRI RAKESH GARG ADVOCATE LEARNED COUNSEL FOR THE ASSESSEE HAS PUT A NOTE ON THE ORDER SHEET OF BOTH THE FILES OF THE CROSS OBJECTIONS THAT THE SAME ARE NOT PRESSED. KEEPING IN VIEW THE NOTES PUT ON THE RECORD BY SHRI RAKESH GARG LEARNED 15 COUNSEL FOR THE ASSESSEE WE DISMISS BOTH THE CROSS OBJECTIONS AS NOT PRESSED. 7. IN THE RESULT THE APPEALS OF THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 8.7.2011. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT JULY 8TH 2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R. ITAT LUCKNOW. SRIVASTAVA.