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Income Tax Appellate Tribunal, AGRA (SMC
Before: SHRI A. D. JAIN
Fit For Publication
Sd/- J.M. IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH: AGRA
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER
I.T.A No. 04/Agra/2015 (ASSESSMENT YEAR-2009-10)
Shri Kaila Devi Ice & Cold Storage ITO, -4 (4), Agra. 19-20, Adesh Nagar, Sheetla Road, Khandari, Agra. PAN No.AAZFS2787H (Assessee) (Revenue)
Assessee by Shri R.C. Tomar, AR Revenue by Shri Waseem Arshad, Sr.DR.
Date of Hearing 21.11.2017 Date of Pronouncement 30.11.2017
ORDER This is assessee’s appeal for assessment year 2009-10, taking the following grounds: “1. That the CIT (A) has erred on facts and in law to appreciate that cold storage has been held to be engaged in business of cold chain facility, providing enhanced food security and agricultural development, up gradation and modernizing of infrastructure for storage, handling and providing facility with refrigeration back to back up to consumption and linking farmer and market with suitable transportation as also with greater efficiencies in the
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management system and minimizing post harvest food loss. 2. That CIT (A) has erred in law in not considering that exemption claimed u/s 80 IB (11A) followed by Audit Report on form no. 3CB along with CA’s report on from No.10 CCB (under Rule l8 BBB) is being accepted from year to year since the inception of assesee's industrial undertaking and the disallowance made during the year is in violation of ratio laid down by the honorable Supreme Court in the case of Radha Soami Satsang. 3. That the learned CIT Appeal has erred on facts and in law in applying the ratio of decision delivered in the case of Delhi Cold Storage which was exclusively on the issue of processing of goods and was delivered on the statute introduced prior to introduction of sec. 80IB (11A) by Finance Act, 2001 w.e.f. 01.4.2002 and was not subject matter of adjudication before the honorable supreme court.” 2. The AO made addition of Rs.13,75,990/- after disallowing the assessee’s claim of deduction u/s 80IB (11A) of the IT Act, having found that the assessee had not fulfilled the conditions contained in the said section. The ld. CIT(A) has confirmed the addition.
The assessee is in further appeal.
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I have heard both the parties and have perused the material on record. Section 80IB (11A) of the Act reads as follows:
“80IB (11A) The amount of deduction in a case of an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or meat and meat products or poultry or marine or dairy products or from the integrated business of processing, storage and food grains shall be hundred percent of the profit and gains derived from such undertaking for five assessment years beginning with the initial assessment year and thereafter, twenty-five percent (or thirty percent where the assessee is a company) of the profits and gains derived from the operation of such business in a manner that the total period of deduction does not exceed ten consecutive assessment years and subject to fulfillment of the condition that it begins to operate such business on or after the 1st day of April, 2001.” 5. Thus, for being entitled to deduction u/s 80IB(11A), as per this section, as applicable to the present case, the assessee needs to be an undertaking deriving profit from the business of processing, preservation and packaging of fruits and vegetables from the integrated business of handling, storage and transportation of food-grains, having begun to operate such business on or after 1.04.2001.
The assessee is in the business of cold storage of potatoes, having begun its operations from 15.01.2005. The date of commencement of business by the
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assessee is, thus, as per the requirement of section 80IB (11A). The other requirements of the section are processing, preservation, packaging, handling, storage and transportation of food-grains, in the assessee’s case, potatoes. So far as regards the requirement of processing, in ‘Delhi Cold Storage (P) Ltd. vs. CIT’, 191 ITR 656 (SC), it has been held that storing of goods in a cold storage does not involve any processing because processing involves bringing into existence a substance different from what the material was at the time of commencement of the process; and that in case of storage of potatoes in a cold storage, what is stored in the cold storage is potato and what is brought out from the cold storage is also potato and therefore, there is no change in the substance of the material stored in the cold storage and hence, such storing of potato in cold storage cannot be said to be processing. The Authorities below have concurrently followed ‘Delhi Cold Storage’(supra) against the assessee in this regard. No contrary decision has been brought to my notice.
The assessee has also not been found to do any packaging, handling or transportation of potatoes. The ld. CIT(A) had called for a remand report from the AO and the AO furnished a remand report to this effect. In para 5.3 of the impugned order, the ld. CIT(A) has observed that the decision of the AO, as discussed in the assessment order, is with respect to rejecting deduction u/s 80IB(11A), but the ld. AR presented the case of the assessee to plead for its
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eligibility for deduction u/s 80IB(11) and nowhere, any argument had been put by him to counter the finding of the AO rejecting the eligibility of the assessee for deduction u/s 80IB(11A).
This observation of the ld. CIT(A) has not been rebutted before me. In fact, as per para 5.5 of the impugned order:
“5.5 As regard to packaging it is very clear that the assessee is not doing any packaging of potato and it is also not providing any transportation facility. This fact has also been clearly admitted by the ld. AR in his rejoinder filed on 20.03.2014 in which, it has been stated by him that the potato is transported up to cold storage platform by the farmers through their tractors, trolleys, trucks whatever modes are available. He further mentioned that it is the common practice that the potato is transported up to cold storage by the farmers soon after digging from the agriculture field and is unloaded at the platform in gunny bags.” 9. Again, ‘Delhi Cold Storage’ (supra), to which, as observed, there is no counter, has been followed by both the Authorities below.
As correctly observed by the ld. CIT(A), though the assessee, being engaged in the running of a Cold Storage, can be said to be doing the business of preservation, handling and storage of fruits and vegetables, however, as it is not doing any processing, packaging or transportation thereof, it is not eligible for any
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benefit u/s 80IB(11A). The section requires all the conditions mentioned therein to be fulfilled conjointly for an assessee to be entitled to avail of the deduction made available by the provision. These conditions have not been shown to be mutually exclusive. The assessee, as observed, has not fulfilled all these conditions.
In view of the above, finding no force in the grievance sought to be raised by the assessee, the same is rejected. The well reasoned order of the ld. CIT(A) is confirmed.
In the result, the appeal is dismissed.
Order pronounced in the open court on 30/11/2017.
Sd/- (A.D. JAIN) JUDICIAL MEMBER Dated 30/11/2017 *AKV* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR