SMT. UMA SAINI,LUDHIANA vs. ITO, W-7(2), LUDHIANA

आदेश/ORDER

The present appeal has been filed by the assessee assailing the correctness of the order dated 29.05.2018 of CIT(A)-3, Ludhiana pertaining to 2015-16 assessment year on the following grounds : “That order passed u/s 250(6) of the Income Tax Act,1961 by the ld. CIT(A)-3 Ludhiana is against law and facts on the file in as much as she was not justified to arbitrarily uphold the action of the ld. Assessing Officer in denying the claim of deduction u/s 80JJA of the Income Tax Act ,1961 amounting to Rs. 12,49,363/- on the ground that the appellant did not satisfy the stipulated conditions. 2. The relevant facts of the case are that the assessee who had been claiming deduction u/s 80JJA since 2009-10 assessment year, in the year under consideration put up a claim that it has set up a new business claiming deduction u/s 80JJA for producing bio fertilizers. Noting the fact that the assessee till 2014-15 assessment year claimed to have engaged in the production and sale of bio pesticides on account of which tax exemption u/s 80JJA had been sought and had been granted the claim for producing bio fertilizers after setting up a new unit was questioned. The assessee relied upon Certificate of Ministry of Agriculture dated 30.05.2014 to state that the

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assessee is manufacturing organic fertilizers under the brand name SOIL Food. Referring to the fact that there is an earlier certificate dated 29.05.2008 claiming that the assessee was manufacturing fertilizers the AO and the CIT(A) questioned the evidence relied upon by the assessee on the ground that said certificate dated 30.05.2014 does not declare the specific period i.e. for how many years the assessee is stated to be engaged in the specific business. The assessee also put up an alternate plea that he was engaged in the agriculture activity which was also rejected. 3. Both the parties have been heard. The relevant provision invoked by the assessee for claim of deduction is extracted hereunder : “80JJA- "Deduction in respect of profits and gains from business of collecting and processing of bio-degradable waste " "Where the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of bio-degradable waste for generating power [or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas or] for making pellets or briquettes for fuel or organic manure, there shall be allowed, in computing the total income of the assessee, [a deduction of an amount equal to the whole of such profits and gains for a period of five consecutive assessment years beginning with the assessment year relevant to the ^previous year in which such business commences]. 3.1 It is seen that admittedly the law requires the fulfillment of the certain conditions before the deduction is to be allowed. The deduction under the Section is available to an assessee who is engaged in the business of : (i )Collecting of bio-degradable waste (ii) Either Processing or treating of bio-degradable waste (iii)The purpose of collection and—processing/ treating of bio-degradable waste could be one of the followings: Generation of power. • Production of Bio-fertilizers, • Production of Bio-pesticides • Production of Other biological agents • Production of Bio-gas • Production of Pellets/ briquettes for fuel • Production of Organic Manure. • The profits of such business are deductible from the Gross Total Income of the assessee. Such deduction is available for a period of Five consecutive years beginning with the Assessment Year relevant to Previous Year in which such business has commenced. 3.2. In the facts of the present case, admittedly a tax holiday u/s 80JJA from 2009-10 to 2013-14 assessment year had been sought and has been granted

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to the assessee for producing bio pesticides. Certificate dated 30.05.2014 admittedly does not refer to the fact whether the activity of producing organic manure or bio-fertilizer has been started simultaneously with bio-pesticides as a new product. The reply of the assessee extracted in para 6.2.2 of the assessment order shows that some bio-degradable waste was collected from various industries. The same is extracted hereunder : 6.2.2 As far as the contention of the assessee raised vide reply dated 04.12.2017 sent through email is concerned, it is observed that none of the conditions as laid down in section 2(1 A) of the Act applies to the case of assessee, as the purpose for which the land is being"" used is not for agricultural purposes, rather it is being used for processing the biodegradable waste like industrial waste, crop waste, cow dung etc to produce manure or fertilizers which are used to help agriculture. Moreover, no agricultural activity in terms of cultivation, irrigation, sowing etc is being carried out in the case of the assessee. Secondly, the raw material being used by the assessee is bio-degradable waste collected from various industries like Maggi, Chocolates, Milk Powder, sugar, etc. The assessee is also using agricultural waste like wheat straw, rice straw, kitchen waste etc in the production process. There is neither any cultivation of crops nor any crop or livestock products being produced: nor is any Animal Husbandry & Dairy Science involved. Moreover, during the course of assessment proceedings, the assessee in her replies filed from time to time has taken a plea that the assessee is doing business and thus is eligible for deduction under section 80JJA. (emphasis supplied) 3.3. Accordingly, in the facts of the present case, for want of relevant discussion the issue cannot be decided on the basis of bald pleas and a non- speaking general Certificate. The assessee as per its claim has stated that organic fertilizers are being produced. It is seen that the raw material utilized as per record is waste collected from various industries like Maggi, Chocolates, Milk Powder, sugar, etc. The assessee is also using agricultural waste like wheat straw, rice straw, kitchen waste etc. Some of these necessarily would have chemicals for preservation, taste etc. whether the product manufactured with these constituents would be labled organic fertilizer is an area which is required to be addressed. It is necessary for the assessee to also clarify whether along with the original production of “bio-pesticides’ has the assessee supplemented it with an additional production of organic manure or bio- fertilizers or is the assessee carrying on the very same activity which is now being shown as bio-fertilizers. The Report of a Chemical Expert certifying the contents of the two separate and distinct products namely “bio-pesticides” and “bio-fertilizers” or “organic manure” needs to be brought on record. Accordingly, in order to carry out relevant enquiry on facts and consider the

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evidences of Reports or orders of Experts/Appropriate Regulatory Authorities etc., if any on the issue, the matter is remanded to the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is advised to participate fully and fairly by placing relevant facts and evidences in support of its claim as failing which it is made clear that the AO would be at liberty to pass an order on the basis of material available on record. Said order was pronounced in the Open Court at the time of hearing itself. 4. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 03.06.2019. Sd/- (�दवा �संह ) (DIVA SINGH) �या�यक सद�य/Judicial Member