Income Tax Appellate Tribunal - Ahmedabad
Anand Food & Dairy Products,, Anand vs Assessee on 19 June, 2015
आयकर अपीलीय अिधकरण, अिधकरण अहमदाबाद यायपीठ ''ड ड ' ड अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER आयकर अपील सं./ ./ ITA Nos. 1828 & 1829/Ahd/2014 and 1422/Ahd/2013 िनधा रण वष /Assessment Year: 2007-08 to 2009-10 M/s. Anand Food & Dairy V/s. The ITO, Products, Ward - 2m Chikhodra-Sarsa Road, Anand At : Chikhodra, Tal. & Dist : Anand PAN : AAEFA 0212 E अपीलाथ / (Appellant) ू"यथ यथ / (Respondent) Assessee(s) by : Shri S.N. Divetia, AR Revenue by : Smt. Sonia Kumar, Sr. DR.
सुनवाई क% तार ख/
/ Dateof Hearing : 18/06/2015
घोषणा क% तार ख / Date of Pronouncement: 19/06/2015
आदे श/O R D E R
PER G.D. AGRAWAL, VICE PRESIDENT:
These are the appeals filed by the assessee against three separate orders of the Commissioner of Income Tax (Appeals)-IV, Baroda dated 21.04.2014, 21.04.2014 and 05.02.2013 for Assessment Years 2007-08, 2008-09 and 2009-10 respectively.
2. Ground No.1 of the assessee's appeal for Assessment Years 2007-08 and 2008-09 is against the validity of reopening of assessment u/s 147 of the Income-tax Act.
3. At the time of hearing before us, the ld. Counsel for the assessee did not press this ground in both the assessment years. Accordingly, the ITA Nos. 1828, 1829/Ahd/2014 & 1422/Ahd/2013 - Anand Food & Dairy Products For AY 2007-08 to 2009-10 2 ground No.1 of the assessee's appeal in Assessment Years 2007-08 and 2008- 09 are rejected.
4. The only other ground in Assessment Years 2007-08, 2008-09 and 2009-10 is against the allowing of deduction u/s 80IB(11A) @ 25% instead of 100% of the profits and gains of business.
5. The facts of the case are that the assessee is engaged in the business of processing, preservation and packing of vegetables and fruits. For all three years under appeal, the assessee claimed the deduction u/s 80IB(11A) at 100% of the profits and gains of business of processing, preservation and packaging of fruits/vegetables. The Assessing Officer accepted the assessee's claim of eligibility u/s 80IB(11A). However, according to the Assessing Officer, the assessee was entitled to deduction @ 25% and not 100%. Admittedly, the assessee commenced its business of processing, preservation and packaging of fruits/vegetables with effect from 02.06.2001. Therefore, as per Assessing Officer, the initial assessment year was Assessment Year 2002-03 and, beginning with this year, five years would end by Assessment Year 2006-07. The assessee is entitled to 100% deduction of the profit from the business of processing, preservation and packaging of fruits/vegetables for the period of 5 years, beginning with initial assessment year. Thereafter, he is entitled to deduction of 25% of the profit. Therefore, the Assessing Officer allowed deduction u/s 80IB(11A) at 25% in all the three years under appeal before us as against 100% claimed by the assessee. The same is sustained by the CIT(A); hence, this appeal by the assessee.
6. At the time of hearing before us, it is submitted by the ld. Counsel that in Section 80IB(11A) an undertaking deriving profit from business of processing, preservation and packaging of fruits/vegetables has become ITA Nos. 1828, 1829/Ahd/2014 & 1422/Ahd/2013 - Anand Food & Dairy Products For AY 2007-08 to 2009-10 3 entitled to deduction by virtue of amendment in the section by the Finance Act, 2004, w.e.f. 01.04.2005. Thus, the assessee became entitled to this deduction only for and from Assessment Year 2005-06. Therefore, the five years, beginning with initial assessment year, should be counted from Assessment Year 2005-06 and not Assessment Year 2002-03. He also submitted that the provision of section 80IB(11A) is an incentive provision and therefore, it should be interpreted liberally. He further stated that the intention of the legislature is to promote the undertaking in the business of processing, preservation and packaging of fruits/vegetables. It is also the intention of the legislature to provide 100% for first five years and then 25% for next five years. The provision of the section should be interpreted in such a manner which will give benefit to the assessee for the period of all ten years as provided by section 80IB(11A). If the interpretation put forth by the Revenue is considered, the assessees similar to one under appeal before the ITAT would not be entitled to 100% deduction in any of the year and would get the deduction only for five years, that too 25% of the profit derived from the business of processing, preservation and packaging of fruits/vegetables. He, therefore, submitted that the order of the CIT(A) should be reversed and that of Assessing Officer may be restored.
7. The ld. Departmental Representative, on the other hand, relied upon the order of the Assessing Officer as well as CIT(A) and she pointed out that the legislature has already defined the initial assessment year in Section 80IB(14)(c)(iv). As per this definition, the initial assessment year would be the assessment year relevant to the previous year in which undertaking begins such business. Admittedly, the assessee begins the business of processing, preservation and packaging of fruits/vegetables as on 02.06.2001 and therefore, the initial assessment year would be Assessment ITA Nos. 1828, 1829/Ahd/2014 & 1422/Ahd/2013 - Anand Food & Dairy Products For AY 2007-08 to 2009-10 4 Year 2002-03. She, therefore, submitted that the order of the Assessing Officer was perfectly justified and which was rightly upheld by the CIT(A).
8. We have carefully considered the arguments of both the sides and perused the material placed before us. Section 80IB(11A), as it stood at the relevant time, reads as under:-
"[(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 from] the integrated business of handling, storage and transportation of foodgrains, shall be hundred per cent of the profits and gains derived from such undertaking for five assessment years beginning 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 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 fulfilment of the condition that it begins to operate such business on or after the 1st day of April, 2001.]"
9. From the above, it is evident that an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables is entitled to 100% of the profit and gains derived from such undertaking for five assessment years, beginning with the initial assessment year and thereafter 25% of the profit and gains derived from such undertaking. Thus, the 100% deduction is to be allowed for five years, beginning with the initial assessment year. Therefore, the crucial question is
- which is the initial assessment year? As per assessee, the initial assessment year would be Assessment Year 2005-06, because the provision giving the benefit of Section 80IB(11A) to the undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables came into force from 01.04.2005. However, we find that the Act has already defined the word "initial assessment year" in Section 80IB(14)(c). The sub- clause (iv) of the above section reads as under:-
ITA Nos. 1828, 1829/Ahd/2014 & 1422/Ahd/2013 - Anand Food & Dairy Products For AY 2007-08 to 2009-10 5 " [( iv) in the case of an undertaking engaged [in the business of processing, preservation and packaging of fruits or vegetables or] in the integrated business of handling, storage and transportation of foodgrains, means the assessment year relevant to the previous year in which the undertaking begins such business;]"
10. Thus, as per the definition, the initial assessment year for an undertaking engaged in the business of processing, preservation and packaging of fruits or vegetables means the assessment year relevant to previous year in which the undertaking begins such business. Admittedly, the assessee has begun the business of processing, preservation and packaging of fruits or vegetables with effect from 02.06.2001. Therefore, the assessment year relevant to previous year 01.04.2001-31.03.2002 would be the initial assessment year. In view of above, we agree with the finding of the lower authorities that the initial assessment year was Assessment Year 2002-03 and the assessee would be entitled to 100% deduction only for first five years, including initial assessment year. This will last up to Assessment Year 2006-07 and thereafter, the assessee would be entitled to 25% deduction for the next five years. The ld. Counsel for the assessee has contended that the provision of the Act should be interpreted in a manner which makes the assessee entitled for the deduction for full ten years as intended by Section 80IB(11A). However, in our opinion, when the Act itself has defined the initial assessment year, then we cannot put any artificial definition to the initial assessment year by holding that the initial assessment year would be 2005-06, even though the assessee had commenced the business with effect from 02.06.2001. It is a settled law that when the language of the statute is clear and unambiguous, then there should be literal interpretation i.e., as per the plain language of the statute. In the case under appeal before us, we are of the opinion that the provision of Statute is clear and unambiguous, the initial assessment year has been ITA Nos. 1828, 1829/Ahd/2014 & 1422/Ahd/2013 - Anand Food & Dairy Products For AY 2007-08 to 2009-10 6 defined in the Act and therefore, the deduction u/s 80IB(11A) is to be allowed as per the plain language of the Section as well as plain language of the definition of 'initial assessment year'. From the plain language of definition of initial assessment year, it is evident that initial assessment year would be 2002-03 and not 2005-06 as claimed by ld. Counsel. In view of above, we do not find any justification to interfere with the order of the CIT(A), accordingly the same is sustained.
11. In the result, the assessee's appeals are dismissed.
Order pronounced in the Court on 19th June, 2015 at Ahmedabad.
Sd/- Sd/-
(RAJPAL YADAV) (G.D. AGRAWAL)
JUDICIAL MEMBER VICE-PRESIDENT
Ahmedabad; Dated 19/06/2015
Biju T., PS
षत Copy
आदे श क% ूितिल,प अमे,षत/ of the Order forwarded to :
1. अपीलाथ / The Appellant
2. ू"यथ / The Respondent.
3. संबंिधत आयकर आयु. / Concerned CIT
4. आयकर आयु.(अपील) / The CIT(A)
5. ,वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
/ BY ORDER, आदे शानु सार TRUE COPY Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad