Income Tax Appellate Tribunal - Amritsar
Sh. Yash Raj Singh, Jammu vs The Income Tax Officer-1(3), Jammu on 17 March, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. N.K. CHOUDHRY, JUDICIAL MEMBER AND
SH. ANADEE NATH MISSHRA, ACCOUNTANT MEMBER
I.T.A. Nos. 82 to 84(Asr)/2014
Assessment Years: 2008-09, 2007-08 & 2006-07
Sh. Yash Raj Singh, Vs. I.T.O. -1(3), Jammu
Jammu
[PAN:ACEPS 5319L]
(Appellant) (Respondent)
Appellant by: None
Respondent by: Sh. Charan Dass (Ld. D.R.)
Date of hearing: 16.03.2020
Date of pronouncement: 17.03.2020
CONSEQUENTIAL ORDER
PER N.K.CHOUDHARY, JM:
While disposing of these appeals under consideration, the Hon'ble Accountant Member and the Hon'ble Judicial Member have taken the divergent views vide their separate orders dated 17.06.2019 and 05.07.2019 which resulted into reference u/s 255(4) of the Income Tax Act, 1961 (hereinafter called as the 'Act'). Consequently, the Hon'ble third Member vide its order dated 04.03.2020 concurred with the view taken by the Hon'ble Judicial Member by concluding as under:
"7. I have considered the submissions of both the parties and perused the material available on the record alongwith the 2 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) orders passed by the Revenue authorities as well as the dissenting orders passed by the Ld. Members of the ITAT Amritsar Division Bench. In the present case the sole controversy to be resolved relates to the deduction under section 80IB of the Act i.e; as to whether the conversion of water into ice is a manufacturing activity for claiming the deduction under section 80IB of the Act.
7.1 The word "manufacturing" has been defined in Sub Section 29BA of the Section 2 of the Act which read as under:
"(29BA) "manufacturer", 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, character and use;
or
(b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;"
From the aforesaid definition it is clear that when there is change in non living physical object or article or thing resulting into a new and distinct object or article or thing, having a different name, character and use or bringing into existence of an new and distinct object or article or thing with a different chemical composition or integral structure. In the present case the water and ice are different in form and shape as the water is in liquid form while the ice is a solid form, even the nomenclature of both and their uses are different.
8. On a similar issue the Hon'ble Jurisdictional High Court in the case of Glacier Cold Storage & Ice Mills & Ors Vs. Assessing Authority, Sales Tax, Jammu (supra) held as under:3 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07) " Although Ice derived its source or genus from water by being reduced to a solid state, yet water on solidification into ice completely changes its state and becomes a distinct entity; the specific gravity is changed, the melting point has a temperature of O'c or 32'F and the substance which forms are hexagonal crystals. Therefore we are unable to agree with the contention of the petitioners that Ice and water are the same things and when the notifications includes water in the exemption list, it includes Ice also."
8.1 Similarly the Hon'ble Allahabad High Court distinguished water from ice in the case of Goel Industries (Pvt.)Ltd. Vs. Commissioner of Sales Tax (supra) and held as under:
" The short question involved in this case is as to whether ice and water are the same thing. It is true that ice is manufactured from water without addition of any chemical or substance. The chemical composition of ice and that of water is the same, but even then ice cannot be regarded as water. It is a matter of common experience that while water is generally available free, ice is always sold in the market."
It has further been held that :
"Chemically, ice and water may have the same composition, but in commercial and popular sense they are different commodities."
9. Therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court and the Hon'ble Allahabad High Court in the aforesaid referred to cases, I concur with the view taken by the Hon'ble Judicial Member who held that the making of ice from water is a manufacturing activity and the assessee was entitled to get the deduction under section 80IB of the Act. Now the matter would be placed before the regular Bench for passing the order as per the majority view."
4 ITA Nos.82 to 84 /Asr/2014(Asst. Years: 2008-09, 2007-08 & 2006-07)
2. Hence as per majority view, the order under challenge are liable to be partly set aside. Consequently, the appeals of the assessee stands partly allowed.
Order pronounced in the open Court on 17.03.2020.
Sd/- Sd/-
(ANADEE NATH MISSHRA) (N. K. CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 17.03.2020
/GP/Sr. Ps.
Copy of the order forwarded to:
1. The Appellants
2. The Respondent
3. The CIT
4. Then CIT(Appeals)
5. SR DR, I.T.A.T. Amritsar
6. Guard File
True Copy
By Order
5 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07)
IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT (THIRD MEMBER) ITA Nos.84, 83 & 82/ASR/2014 Assessment Years : 2006-07, 2007-08 & 2008-09 Shri Yash Raj Singh Vs The ITO Prop. Nav Bharat Steel, 1(3), Jammu Pouni Chak, Jammu PAN NO: ACEPS5319L Appellant Respondent Assessee by : Shri Joginder Singh, CA Revenue by : Smt. Abha Rani Singh, CIT DR Date of Hearing : 03/03/2020 Date of Pronouncement :
आदे श/Order PER N.K. SAINI, VICE PRESIDENT On account of difference of opinion in between the Ld. Accountant Member and Ld. Judicial Member of the ITAT, Amritsar Bench, this matter has been referred to me by the Hon'ble President ITAT for consideration and disposal under section 255(4) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). It may be noted that even while framing the question for making the reference, there was a difference of opinion and different questions have been framed by both the Ld. Members. The Ld. Accountant Member formulated the following questions:
1 a). Whether, the natural transformation of a liquid substance into solid on loosing heat, or vice versa, could be said to be a result of 'manufacture'?
b) Whether the condensation from one state to another (i.e., from gaseous to liquid to solid) of matter could be regarded as 'manufacture' inasmuch as a same represents a natural 6 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) phenomena, i.e., where undertaken artificially, as opposed to naturally ?
c) Whether 'water' (or its'variants in the form of water vapor(steam) or ice), a chemical compound found in abundance in nature, and in all the three physical states, could be said to be manufactured unless 'produced' from its' constituent elements, i.e., hydrogen and oxygen? That is, could this natural phenomenon of conversion of one form of water into another - which is reversible, occurring in nature all the time, could be said to be 'manufacture' of its'one form from another?(also see Q. 3(c)) 2 a).Whether the process of refrigeration -held to be not manufacture in Delhi Cold Storage Pvt. Ltd. v. CIT[1991] 191ITR 656 (SC), is to be regarded as a manufacture in the instant case as the good (water) refrigerated solidifies thereupon?
b) Whether the process of changing (increasing or decreasing) the temperature of any matter, and it's physical state in consequence, could by itself result in a and distinct article or thing?
c) Whether 'water' could be said to be manufactured from 'ice' when the latter, on gaining heat, naturally or artificially, gets converted into the former?
3 a). Whether the conversion of water into ice, or of ice into water for that matter, satisfies the determinative tests of 'manufacture' as laid down by the Hon'ble higher courts of law, including in Delhi Cold Storage Pvt. Ltd. (supra), as referred to by the AM in his order, besides those relied upon by the Revenue, including by the Tribunal relying on those decisions?
b). Whether water (ice) can be said to be 'consumed' in the process of manufacture of ice(water), or is it only a change of one form into another, retaining its' essential identity and characteristics?
c). Whether a reversible process could at all be regarded as one of 'manufacture' even as explained as not by the Hon'ble Apex Court in Punjab Aromatics v. State of Kerala [2008] 11 SCC 482 (in CA No. 3160 of 2008, dated 30/4/2008), emphasizing the test of irreversibility for constituting 'manufacture'?
d). Whether, again, that a unit is a factory under the Factories Act, 1948 would be determinative of the matter, even as held to be not so in Mittal Ice & Cold Storage v. CIT [1986] 159 ITR 18, 21-22 (MP), noted with approval in CIT v. Everest Cold Storage [1996] 220 ITR 241, 244 (MP), relied upon by the assessee?
4. Whether the different applications of ice are (or are not) only a manner of using water, involve as it does the transmission of higher 7 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) temperature thereto through contact - a property of water (matter), getting converted back into water in the process (viz. ice cubes in a beverage)?
5 a). Whether the question involved in the present case is essentially a question of fact, i.e., given the law as expounded and settled per its' various decisions by the Apex Court, so that it is essentially a question of applying the same (the said law) to the facts of a particular case, as explained in Ujagar Prints v. Union of India [1989] 179 ITR 317 (SC)? (also see: Assam Bengal Cement Co. Ltd. [1955] 27 ITR 34, 46 (SC)).
b) Whether the classification of 'water' and 'ice' as different products under the sales-tax or excise law for purpose of tax on it's sale or disposal could be determinative of whether the conversion of one into another is a 'manufacture' under the Act?
c) Whether the decision by the Hon'ble jurisdictional High Court in Glacier Cold Storage v. Assessing Authority, Sales Tax [1974] Law Journal 142 (J&K), in ratio, states of the conversion of water into ice or, equivalently, ice into water, to be a result of 'manufacture', as judicially defined and explained?
d) Whether the said conversion, if regarded as 'manufacture' in terms of the said decision, is a question of law, or a question of fact and/or a mixed question of fact and law (viz. CIT v. Greaves Cotton & Co. Ltd. [1968] 68 ITR 200, 207(SC))?
e) Whether the said decision, if regarded as holding the said conversion as 'manufacture' and, further, as a question of law, is consistent with the decisions by the Apex Court in respect of 'manufacture' so as to constitute a binding precedent?
f) Whether the decisions relied upon by the assessee are applicable, i.e., in ratio, in the present case, or are distinguishable?
6 a).Whether the acceptance of the assessee's claim for deduction u/s. 80-IB in assessment for AY 2010-11, which is without any finding with regard to the issue at hand, or reference to the orders for the earlier years where the same is discussed at length, and is being contested between the parties, could be regarded as conclusive of the matter?
b) Whether, particularly considering that the proceedings under the Income Tax Act are not adversarial in nature or in the nature of a I is (S. S. Gadgil v. Lal& Co. [1964] 53 ITR 231 (SC); CIT v. Indian Express (Madurai) Pvt. Ltd. [1983] 140 ITR 705, 722 (Mad)), the acceptance afore-said resolves the controversy arising for the years under reference, being separate units of assessment?
8 ITA Nos.82 to 84 /Asr/2014(Asst. Years: 2008-09, 2007-08 & 2006-07)
c) Whether the opinion of the Assessing Officer (AO), assuming so (inasmuch as his order for AY 2010-11 is sans any discussion in the matter), would override that by the AO for the earlier years?
d) Whether the opinion by the assessing authority for AY 2010- 11, i.e., assuming so, would be binding on the higher appellate forums, or are they obliged to decide the issue for the other years on merits, particularly considering that the proceedings under the Act are not adversarial in nature?
2. The Ld. Judicial Member formulated the following question while referring the matter to the Hon'ble President.
" Whether process of making ice from water comes within the definition of "Manufacture" as per Section-2(29BA) of the Income Tax Act, 1961."
3. In the present case, although both the Ld. Members have referred different questions for consideration under section 255(4) of the Act. However the sole controversy to be resolved is that as to whether the conversion of water into ice amounts to manufacturing for qualifying the deduction under section 80IB of the Act.
3.1 In the present case both the Ld. Members have discussed the facts in their respective orders, therefore, there is no need to narrate the same again.
4. In the instant case while dismissing the appeals of the assessee the Ld. Accountant Member has held that neither the conversion of water into ice nor of ice into water i.e; changing in effect the temperature of the matter (H2O), would amount to manufacture, but it is only a processing. And that the basic contention for deduction under section 80IB i.e; manufacture or production of an article or thing was not satisfied. On the contrary the Ld. Judicial Member in his dissenting order was of the view that 9 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) the manufacturing means a change in non living physical objects or article or thing resulting into transformation into a new and distinct object or article or thing having a different name, character and use, once the ice is made from the water, it changes in non living physical article and results into a new and distinct article, having different name, character and use, hence inference can be drawn that ice is the final product of water which requires transformation of water (raw product) into final product (ice), indisputably having a new and distinct form, name, character and use, and that for bringing into final product, such as to make or produce ice, different chemical composition for change of integral structure on a large scale, a range of human activities, labour and use of machinery is being required by which raw material (water) transformed into finished goods(ice), in order for use or sale.
5. During the course of hearing the Ld. Counsel for the Assessee reiterated the submissions made before the Assessing Officer and the ITAT, Amritsar Division Bench. It was further submitted that an identical issue has been dealt by the Hon'ble Jurisdictional High Court in the case of Glacier Cold Storage & Ice Mills & Ors Vs. Assessing Authority, Sales Tax, Jammu in writ petition No. 93 and 99 of 1972 copy of which is placed at page no. 67 to 69 of the assessee's paper book. It was further submitted that the Hon'ble Allahabad High Court also in the case of Goel Industries (Pvt. )Ltd. Vs. Commissioner of Sales Tax vide order dated 12 July 1971 reported at (1971) 28 STC 729(All) held that chemically ice and water may have the same composition but in commercial and popular sense they are different commodities. The reliance was also placed on the judgment of the Hon'ble Madhya Pradesh High 10 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) Court in the case of CIT Vs. Everest Cold Storage reported at [1996] 220 ITR 241. It was stated that conversion of water into ice is a manufacturing activity, therefore, the assessee was entitled for deduction under section 80IB of the Act. It was pointed out that the A.O. himself in the succeeding A.Y. 2010-11 accepted the claim of the assessee and allowed the deduction under section 80IB of the Act. He supported the dissenting order passed by the Ld. Judicial Member. The Ld. Counsel for the assessee relied on the following case laws:
• Aspinwall and Co. Ltd. v/s CIT- (2001) 251 ITR 323 (SC) • Delhi Cold Storage Pvt. Ltd. v. CIT (1991) 191 ITR 656 (SC) • Mittal Ice and Cold Storage v. CIT (1986) 159 18, 21-22 (MP) • Assam Bengal Cement Co. Ltd. v/s CIT- (1955) 27 ITR 34 (SC) • CIT v/s Greaves Cotton and Co. Ltd. (1968) 68 ITR 200 (SC) • Distributors (Baroda) Pvt. Ltd. v/s Union of India • Commissioner of Income tax v/s Indian Express (Madurai) Pvt. Ltd.(1983) 140 ITR 705 (MAD) • Dy. CST v/s Pio Food Packers (1980) 46 STC 63 • CIT v/s Relish Foods (1999) 237 ITR 59 (SC) • Sacs Eagles Chicory v/s CIT (2002) 255 ITR 178 (SC) • CIT v/s Venateshwara Hatcheries Pvt. Ltd. (1999) 237 ITR 174 (SC) • CIT v/s Gem India Manufacturing Co.(2001) 249 ITR 307 (SC) • Empire Industries Ltd. and Anothers v/s Union of India (1986) 162 ITR 846 (SC) • Ujagar Prints v/s Union of India- (1989) 179 ITR 317 (SC) • Turigabhadra Industries Ltd. v/s CTO (1960) 11 STC 827 (SC)
6. In her rival submissions the Ld. CIT DR reiterated the observations made by the Assessing Officer in para 2.2 of the 11 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) assessment order dt. 28/12/2010 and submitted that the assessee was engaged in conversion of water from liquid form to a solid form i.e ice which regains this original form once kept in normal temperature, therefore, the conversion of water from liquid form to a solid form ice is a reversible process, so it was only a commercial activity for claiming the deduction under section 80IB of the Act.
She also referred to para no. 3.4 of the order of the Ld. CIT(A) and submitted that conversion of water into ice was not manufacturing, therefore the deduction claimed by the assessee under section 80IB of the Act was not admissible.
7. I have considered the submissions of both the parties and perused the material available on the record alongwith the orders passed by the Revenue authorities as well as the dissenting orders passed by the Ld. Members of the ITAT Amritsar Division Bench. In the present case the sole controversy to be resolved relates to the deduction under section 80IB of the Act i.e; as to whether the conversion of water into ice is a manufacturing activity for claiming the deduction under section 80IB of the Act.
7.1 The word " manufacturing" has been defined in Sub Section 29BA of the Section 2 of the Act which read as under:
" (29BA) "manufacturer", 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, character and use; or
(b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;"
From the aforesaid definition it is clear that when there is change in non living physical object or article or thing resulting into a new 12 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) and distinct object or article or thing, having a different name, character and use or bringing into existence of an new and distinct object or article or thing with a different chemical composition or integral structure. In the present case the water and ice are different in form and shape as the water is in liquid form while the ice is a solid form, even the nomenclature of both and their uses are different.
8. On a similar issue the Hon'ble Jurisdictional High Court in the case of Glacier Cold Storage & Ice Mills & Ors Vs. Assessing Authority, Sales Tax, Jammu (supra) held as under:
" Although Ice derived its source or genus from water by being reduced to a solid state, yet water on solidification into ice completely changes its state and becomes a distinct entity; the specific gravity is changed, the melting point has a temperature of O'c or 32'F and the substance which forms are hexagonal crystals. Therefore we are unable to agree with the contention of the petitioners that Ice and water are the same things and when the notifications includes water in the exemption list, it includes Ice also."
8.1 Similarly the Hon'ble Allahabad High Court distinguished water from ice in the case of Goel Industries (Pvt.)Ltd. Vs. Commissioner of Sales Tax (supra) and held as under:
" The short question involved in this case is as to whether ice and water are the same thing. It is true that ice is manufactured from water without addition of any chemical or substance. The chemical composition of ice and that of water is the same, but even then ice cannot be regarded as water. It is a matter of common experience that while water is generally available free, ice is always sold in the market."
It has further been held that :
"Chemically, ice and water may have the same composition, but in commercial and popular sense they are different commodities."
9. Therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court and the Hon'ble Allahabad High 13 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) Court in the aforesaid referred to cases, I concur with the view taken by the Hon'ble Judicial Member who held that the making of ice from water is a manufacturing activity and the assessee was entitled to get the deduction under section 80IB of the Act. Now the matter would be placed before the regular Bench for passing the order as per the majority view.
Sd/-
एन.के.सैनी,
( N.K. SAINI)
उपा य / VICE PRESIDENT
AG
Date: 04/03/2020
आदे श क त ल प अ े षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. !यथ / The Respondent
3. आयकर आय$
ु त/ CIT
4. आयकर आय$
ु त (अपील)/ The CIT(A)
5. वभागीय त न*ध, आयकर अपील,य आ*धकरण, अम/तसर/ DR, ITAT,
AMRITSAR
6. गाड/ फाईल/ Guard File
14 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07)
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER
AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER
I. T. A. Nos. 82 to 84/Asr/2014
Assessment Years: 2008-09, 2007-08 & 2006-07 Yash Raj Singh, vs. ITO-1(3), M/s. Nav Bharat Steel, Jammu Pouni Chak, Jammu [PAN: ACEPS 5319L] (Appellant) (Respondent) Appellant by : Sh. Joginder Singh (C.A.) Respondent by: Sh. Charan Dass (D.R.) Date of Hearing: 03.04.2019 Date of Pronouncement: .06.2019 ORDER Per Sanjay Arora, AM:
These are a set of three Appeals by the Assessee directed against separate Order by the Commissioner of Income Tax (Appeals), Jammu ('CIT(A)' for short) dated 06.12.2013, dismissing the assessee's appeals contesting his assessments u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for Assessment Years (AYs.) 2006-07 to 2008-09 by again separate orders.
2. The principal issue in these appeals is if the conversion of water into ice amounts to 'manufacture' within the meaning of the term under the Act, qualifying thus the profit from the said activity on the 15 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) sale of ice for deduction u/s. 80-IB of the Act. 'Manufacture' or 'production' of an article or thing, other than that specified in the eleventh Schedule, a negative list, or that specified in Part C of the thirteenth Schedule (for units located in the State of Jammu and Kashmir), is a primary condition for deduction u/s. 80-IB. While the provision lists several other conditions as well, there is no reference to the non-satisfaction of any of these in the orders by the Revenue authorities, so that, impliedly, the assessee's industrial undertaking, namely, 'Aditya Ice Factory', but for this condition, i.e., whether 'ice' is a result of manufacture, which is the bone of contention between the Revenue and the assessee, is otherwise an eligible undertaking u/s.
80-IB.
The background facts
3. The Assessing Officer (AO) has in holding it to be not a case of manufacture, relied on a series of decisions (refer pgs. 4-7 of the assessment order), also reproducing from some of them, viz.
- Tungabhadra Industries Ltd. v. CTO [1960] 11 STC 827 (SC);
- CIT v. Delhi Cloth and General Mills Co. Ltd., AIR 1963 SC 791;
- E. Vasantha & Co. v. State of Madras [1963] 14 STC 696 (Mad);
- State of Gujarat v. Sakarwala Bros. [1967] 19 STC 24 (SC);
- CST v. Dunken Coffee Mfg. Co. [1975] 35 STC 493 (Bom);
- Dy. CIT v. Pio Food Packers [1980] 46 STC 63 (SC); and 16 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07)
- State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213 (SC);
All these decisions have been, again, emphasized upon by the first appellate authority. He has also met the assessee's reliance on the following decisions:
- Glacier Cold Storage & Ice Mills v. Assessing Authority, Sales Tax [1974] Law Journal 142 (J&K);
- Goel Industries Pvt. Ltd. v. CST [1971] 28 STC 729 (All);
- CIT v. Everest Cold Storage [1996] 220 ITR 241 (MP), as did the AO prior thereto, endorsing the findings by the AO, before whom the same were also pressed, and discussed by him (at paras 2.3 and 2.4 of the assessment order for AY 2006-07). The ld. CIT(A), in addition, relied on the following decisions:
- B.G. Chitale v. Dy. CIT [2008] 305 ITR (AT) 1 (Pune)(SB);
- Aqua Minerals Pvt. Ltd. v. Dy. CIT [2005] 279 ITR (AT) 106 (Ahd); and
- Shaw Scott Distilleries Pvt. Ltd. v. Asst. CIT [2002] 255 ITR (AT) 14 (Cal) (SB).
In B.G. Chitale (supra), the process involved was the pasteurization of milk, which was said to involve 15 processes, carried out with the help of apparatuses. In Aqua Minerals Pvt. Ltd. (supra), the conversion was of municipal water into demineralized water, which was bottled and marketed (as mineral water). In Shaw Scott Distilleries Pvt. Ltd. (supra), it was the conversion of potable spirit into Indian Made Foreign Liquor (IMFL), which was bottled and sold.
17 ITA Nos.82 to 84 /Asr/2014(Asst. Years: 2008-09, 2007-08 & 2006-07) In each of these decisions, the article or thing, which is the output of different processes, was held by the Tribunal to be not a result of 'manufacture', but of 'processing' only. The ld. counsel for the assessee, Sh. Singh, would, upon being queried in the matter, each of these decisions being rendered upon considering the judicial precedents in the matter, would submit that these decisions pertained to the period for which the term 'manufacture' was not defined under the Act, as it now is u/s. 2(29BA), which reads as under:
Section 2(29BA) 'Definitions.
In this Act, unless the context otherwise requires, -- (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, character and use; or
(b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;' The controversy 4.1 It is apparent that there is abundant case law in the matter, so that the question boils down to the correct application of the same in the facts and circumstances of the case, even as explained by the Apex Court in Ujagar Prints (infra). While there has been, as a reading of the cited decisions shows, a focus on the processes involved in the conversion undertaken, what has weighed with the adjudicating authority, as indeed with the appellate court, is, the mechanism aside, 18 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) the change wrought by, or as the cumulative effect of, these processes.
This, it shall be seen, is also the object of the definition of the word 'manufacture' provided since, i.e., w.e.f. 01/4/2009 and, therefore, applicable for AY 2009-10 onwards (and which, therefore, is not, strictly speaking, applicable for the years under reference). The process involved in the instant case is of refrigeration, i.e., reducing the temperature, which results in the freezing of water, commonly called 'ice', a product of everyday use and application, which is primarily in the food industry. Water, on the other hand, is employed for a far wider variety of uses, viz. drinking - by the plant and animal kingdom; washing and cleaning, besides being widely used in industrial processes, being in fact an intrinsic part of most foods, chemicals, beverages and drugs. Water, indeed, is basic to life, forming the base of most food items, and integral to organic matter. Why, it is the main constituent of the human body, as also that of animals and plants. This states the assessee's case. Here it may though not be out of place to clarify that water as a constituent of the human body or the like, and indeed as an integral part of food, assumes the character of an organic matter, i.e., as opposed to being otherwise inorganic.
The Revenues' case is that though, without doubt, there is a change from one form to another, the same is not sufficient to qualify it as 'manufacture'. There is no essential difference between water and ice; the two being different forms of the same matter, chemically, hydrogen oxide, symbolically, H2O. Water, as any other matter, exists in three different physical states, i.e., solid, liquid and gaseous, 19 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) depending on it's temperature. It is chemically and structurally the same, i.e., H2O, though may have different applications. Why, ice is only to be kept at room temperature (as normally obtains, i.e., upward of 0 C, to turn it into water again, i.e., the process is reversible, indicating, if it was required to be, that no new article or thing had come into existence.
The law - As explained 4.2 We may, to begin with, advert to the case law. It may at the outset be clarified that it is nobody's case that the 'conversion' of water into ice is not 'processing', but if the same is to the extent as would qualify it as 'manufacture'. Every process involves a change, so that the question is one of degree of change.
a). in Delhi Cloth & General Mills Co. Ltd. (supra), it stands held as: 'Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation, a new and different article must emerge having distinctive name, character or use. '
b). in Dy. CIT v. Pio Food Packers [1985] 46 STC 63 (SC), it was held as: "Manufacturing normally involves consumption of a particular commodity in the process of manufacturing of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture and the result must be the manufacture of other goods. There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of 20 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take 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. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity."
(in this case the assessee was engaged in 'manufacture' and selling of canned fruit, which involved different processes, including cutting, adding preservatives, sterilization by putting into boiling water - though was held to be as not constituting 'manufacture')
c). in Ujagar Prints vs. Union of India [1989] 179 ITR 317 (SC), it was held that the prevalent and generally accepted test to ascertain that there is 'manufacture' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognized as a distinct and new article that has emerged as a result of the processes. There might be borderline cases where either conclusion with equal justification can be reached. Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture', results in an oversimplification of both and tends to blur their interdependence.
(the Apex Court upheld the view taken by it in Empire Industries Ltd. & Anr. (infra), negating the assessee-petitioner's contentions to the contrary, that the processes of bleaching, dyeing, printing, sizing, shrink-proofing, water-proofing, rubberizing and organdie processing carried on in respect of cotton or man-made grey fabric, cannot be regarded as alien or foreign to the concept of manufacture and, thus, was to be regarded as amounting to 'manufacture'. It was not necessary to insist on any sharp or intrinsic distinction between 21 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) 'processing' and 'manufacture', results in an oversimplification of both and tends to blur their interdependence.)
d). in Empire Industries Ltd. & Anr. vs. Union of India & Ors. [1986] 162 ITR 846 (SC), it was explained that the test to determine whether a particular activity amounts to 'manufacture' or not is: Does new and different goods 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 matter into something else and that something else is a question of degree, whether that something else is a different commercial commodity having its distinct 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.
e). the Hon'ble Supreme Court in Aspinwall & Co. Ltd. vs. CIT [2001] 251 ITR 323 (SC) stated that the word "manufacture" is not defined in the Act, and in the absence of definition of the word "manufacture" therein, it has to be given a meaning as is understood in common parlance. It further observed that it is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines, so that if the change made in the article results in a new and different article then it would amount to a manufacturing activity.
(in this case the curing of coffee whereby the coffee cherries are subject to several natural and man-made processes to lead to coffee beans, i.e., from the coffee plucked from the plants, was held as 'manufacture')
f). in Tungabhadra Industries Ltd. (supra), it was held that merely because certain articles are known by different names, it does not mean that they are different commercial commodities if in fact they 22 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) are merely different forms of the same commodity. Similar view stands expressed in Dunken Coffee Mfg. Co. (supra).
{emphasis, supplied} The term, thus, stands sufficiently explained, so that we do not think it necessary to advert to further case law in the matter, which is legion, decision in each case, as would be apparent, turning on the facts of the case. Further, given the exposition the word has received, it may be relevant to state the verdicts of the Hon'ble Courts in the several cases that have come before them in the context of different processes:
(i) in Tungabhadra Industries Ltd. (supra) the conversion of raw groundnut oil into refined oil was held to be no doubt processing, but not amounting to manufacture inasmuch it only led to its' purification and refining.
(ii) in E. Vasantha & Co. (supra), sugar candy, though subject to sales-tax, as opposed to 'sugar' which was tax-exempt, was held to be only a purer form of sugar, so that there has been no manufacture of any new article or thing. Clearly, what had been undertaken was only a process/es.
(iii) in Sakarwala Bros. (supra), the process involved the passing of hydrogen sulphide through sugar solution for bleaching, after which patashas are prepared by splaching the solution on a piece of wood, converting sugar into amorphosed sugar, allowed to cool in a sieve of appropriate thickness, converting into granulate sugar lumps. The same, with the same sucrose content, were held to be only refined sugar and, thus, not a 'manufacture'.
iv) Chowgule & Co. (P.) Ltd. v. Union of India [1981] 47 STC 124 (SC), the process of blending of different qualities of ores possessing different chemical and physical composition was held as not a manufacture. The Hon'ble'ble Court relied on its' decision in Pio Food Packers (supra).23 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07)
v) in Sacs Eagles Chicory vs. CIT [2002] 255 ITR 178 (SC) it was in the context of ss. 80HH, 80-I and 80J held, on the application of test laid down in Aspinwall & Co. Ltd. (supra), that the conversion of chicory root into chicory powder by roasting and powdering did not amount to manufacture.
(vi) in CIT vs. Gem India Manufacturing Co. [2001] 249 ITR 307 (SC) it was held that cutting and polishing of uncut raw diamonds did not amount to manufacture or production of article or thing within the meaning of the term u/s. 80-I of the Act.
(vii) in Dy. CST vs. Bherhaghat Mineral Industries [2000] 246 ITR 230 (SC), it was held that crushing dolomite lumps into chips and powder is not a process of manufacture that brings about a new commercial commodity.
(viii) in CIT vs. Venkateshwara Hatcheries (P.) Ltd. [1999] 237 ITR 174 (SC), it was held that the production of chicks did not amount to manufacture or production of articles so as to enable the assessee deduction under ss. 32A/80HH/80HHA/80-I/80J of the Act. Being essentially a natural or biological process, it could, by application of the mechanical method, only be better regulated.
(ix) in CIT vs. Relish Foods [1999] 237 ITR 59 (SC), it was held that peeling and freezing of shrimps did not lead to a distinct commodity so as to entitle the assessee the special deduction under s. 80HH of the Act, after applying its own decision and in the sales-tax cases, i.e., Sterling Food vs. State of Karnataka [1986] 63 STC 239 (SC).
There are in fact decisions by the Hon'ble High Courts as well, though in view of the several by the Apex Court, settling the law, it is not considered necessary to burden this order further therewith. The fore-going would also enable a better appreciation of the three decisions by the tribunal relied upon by the ld. CIT(A), viz. B.G. 24 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) Chitale (supra); Aqua Minerals (supra); and Shaw Scott Distilleries (supra). In each of these decisions, after referring to judicial precedents, the conversion under reference was held as not amounting to 'manufacture'.
4.3 At this stage it would be pertinent to emphasize the difference between 'manufacture' and 'processing'. Every change in any article or thing is a result of a process, but it is only where the change - upon being usually subject to a series of processes, undergone by the raw (base) material, is such that it can no longer be identified with or as only a modified version of the former, i.e., assumes the character of a 'new' and 'different' material, distinct, even though derived, from the former, that it qualifies to be a 'manufacture' of a new article or thing. In Chowgule and Co. (P.) Ltd. (supra), the Supreme Court observed that the word 'processing' has not been defined in the Act and it must, therefore, be interpreted according to its plain natural meaning. As explained by it: 'Webster's Dictionary gives the following meaning of the word "process": "to subject to some special process or treatment, to subject (especially raw material) to a process of manufacture, development or preparation for the market, etc., to convert into marketable form as livestock by slaughtering, grain by milling, cotton by spinning, milk by pasteurising, fruits and vegetables by sorting and repacking". Where therefore any commodity is subjected to a process or treatment with a view to its 'development or preparation for the market', as, for example, by sorting and repacking fruits and vegetables, it would amount to processing of the commodity. The 25 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) nature and extent of processing may vary from case to case; in one case the processing may be slight and in another it may be extensive; but with each process suffered, the commodity would experience a change. Wherever 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. The nature and extent of the change is not material. It may be that camphor powder may just be compressed into campher cubes by application of mechanical force or pressure without addition or admixture of any other material and yet the operation would amount to processing of camphor powder as held by the Calcutta High Court in Shri Om Prakash Gupta vs. CCT [1965] 16 STC 935. What is necessary in order to characterize an operation as "processing" is that the commodity must, as a result of the operation, experience some change.' Application 4.4 In Delhi Cold Storage (P.) Ltd. v. CIT [1991] 191 ITR 656 (SC), following Chowgule and Co. (P.) Ltd. (supra), it was held that refrigeration in a cold storage could not be said to be a 'processing', so as to entitle the appellant-company to the benefit under the relevant Finance Act as an industrial company. The basis for so holding by the Apex Court was that the same does not bring forth the change or alteration of the goods or material subject to processing as understood or signified by the said word in common parlance. A cold storage, it explained, was only an act of preservation, without any positive action. True, it could be argued that conversion of water into 26 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) ice does lead to a change in the physical state thereof with concomitant attributes, so that the said decision may not strictly apply to the instant case, and the transformation or the change brought about may be regarded as a 'process'. Equally, it could be argued, that the change being only on account of lowering its temperature, which is reversible, as indeed it would be where the temperature is, on the other hand, increased, the same, i.e., alteration of temperature, without anything further, may not be regarded as a 'process'. The question before us, however, is not if the same is a 'process' (- which in our view it is, albeit reversible), or not, but if it is substantial enough to qualify the output to be a result of 'manufacture'. Cold Storages, it may be clarified, have since been included as a separate category for being eligible u/s. 80-IB of the Act.
4.5 At this stage it may also be emphasized, and as would also be apparent from the several decisions referred to hereinbefore, that there is no essential difference between the term 'manufacture' as elucidated by the Hon'ble Courts, and as defined now (i.e., AY 2009- 10 onwards) under the Act. Indeed the definition invokes the same prescription as advocated by the several decisions. The emphasis, it would be evident, in each case, being not on the individual processes per se, which there may be in a given case many (viz. stated to be fifteen in the case of pasteurization of milk), but the impact and the overall change wrought by these processes. That is, whether a raw material/s has been consumed, transforming it into a new product with 27 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) different characteristics, signified by a change in the chemical composition or integral structure thereof.
4.6 We have, thus, in view of the abundant enunciation of the term, and in different fact-situations, involving different processes; the court in each case examining the effect of those processes, have little difficulty in holding that the conversion of water into ice, irrespective of the processes involved and the different applications of ice, sold in the market as such, i.e., as distinct from water, does not amount to manufacture. There is in fact no consumption of any raw material, as explained in Pio Food Packers (supra), which was held to be a case of processing. Why, the raw material (water) remains the same, ice being only a form of water - nothing more, and nothing less. Why, if conversion of water into ice is manufacture, so would be the conversion of the ice into water, i.e., by necessary implication. As argued by the Revenue, the exposure to room temperature would convert ice into water. So much for the change stated to be wrought in/or on water! Could the latter process, then, by any stretch of imagination, be regarded as manufacture of water (from ice)? One could understand 'heating' - which is the opposite of 'refrigeration', to be a process, but it would be far-fetched to regard it as 'manufacture'. The conversion of ice into water and, in fact, into water vapour, happens in nature all the time, being only a function of the temperature to which physical state, as obtaining for the time being, it is subject to. The process of refrigeration, i.e., regulating temperature or maintaining it at a particular level, different from the 28 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) room temperature; its' uses apart, cannot by itself amount to manufacture, and it is this process that is being undertaken - though on a different scale, in the refrigerators at home or even in the industry. In fact, refrigeration is widely used to preserve many things, which is meant to maintain the integrity of the article or thing subject to refrigeration by being kept at a particular temperature. The conversion of ice into water (or into gas) as by heating it), or vice- versa, is, without doubt, processing thereof, which though cannot be regarded as 'manufacture', which requires a greater and more enduring change. As explained in Pio Food Packers (supra), it is largely a question of the degree of change, which we do not find as to any material extent, so that although it has undergone processing, it must still be regarded as retaining its original identity. As regards the different applications of ice, are not they, if one may ask, in effect, or only a manner of, using water, as, for instance, is hot/boiling water?
4.7 Though the ld. CIT(A) has met the assessee's reliance on the three decisions, it may be, even as noted during hearing, pertinent to discuss these cases as well for the sake of completeness of this order. The assessee's principal reliance is on Glacier Cold Storage (supra), which was also read out during hearing. The issue involved in that case was whether the levy of sales-tax under the J&K Sales Tax Act on ice; water being exempt there-under, was constitutionally valid or ultra vires the constitution. That is, whether the classification was intelligible, based on objective differential criteria and, thus, not arbitrary and therefore valid. The same was held by the Hon'ble Court 29 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) to be so, explaining that water and ice cannot be regarded, on account of change in form, with ice having applications different from water, as the same. How could, one wonders, the said decision be of assistance to the assessee? The question of whether the said change, i.e., from water to ice, or equivalently, from ice to water (and which could be to/from water vapour (gaseous state of H2O) as well), as being a manufacture, or only processing, was not before the Hon'ble Court or dwelt upon by it. Why, there is no reference to any judicial precedents qua or even otherwise in its' decision as to what amounts to manufacture, i.e., per se, or in contradistinction to 'processing', case law on which is legion. The question before the Hon'ble Court was whether, ice, i.e., frozen water, in solid state, can be regarded as water (liquid form) per se, and which did not find agreement of the Hon'ble Court, validating, in consequence, the levy of tax under the relevant Act on ice. To say that it is not so would amount to ignoring the actual, physical difference between the two states. We have already noted that an article or thing experiences some change with each process, that rather being the premise or attribute of a 'process'. As such, nothing turns on the said decision holding 'water' and 'ice' to be not the same thing and, therefore, the classification between the two as constitutionally valid. It is trite law that a decision is an authority only for what it actually decides; the Apex Court in Goodyear India Ltd. vs. State of Haryana & Anr. [1991] 188 ITR 402 (SC) famously holding as:
"A precedent is an authority only for what it actually decides and not what may remotely or even logically follow from it."30 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07) (also refer in this regard the decisions in CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC); Lachman Dass Bhatia Hingwala (P.) Ltd. vs. Asstt. CIT [2011] 330 ITR 243 (Del)(FB); Blue Star Ltd. v. CIT (1996) 217 ITR 514 (Bom); Rajpur Ruda Meha vs. State of Gujarat [1980] 2 SCR 353)).
That apart, it is well settled that it is not a sound principle of construction to interpret expressions used in one Act with reference to their use in another Act (refer, inter alia, Ram Narain v. State of Uttar Pradesh, AIR 1957 SC 18). That classification of products under the excise law, or sales-tax, differently, is no ground to regard it as 'manufacture', i.e., of one from the other, under the Act - an argument in that respect assumed before it in Aqua Minerals Pvt. Ltd. (supra), stands answered extensively by the tribunal, even as it found that the 'treated' water by the assessee in that case was demineralized water, not subject to excise-duty, which though was not a decisive factor (refer paras 5 & 9.5 of the said order). Similarly, in Shaw Scott Distilleries Pvt. Ltd. (supra), IMFL is marketed and known as a different product (than potable spirit), subject to excise. Manufacture would, as explained in the decisions afore-noted, involve the consumption of one or more materials in the manufacture of a new, different material. The decision in Glacier Cold Storage (supra) would thus of no assistance to the assessee in the instant case. The decision in Goel Industries Pvt. Ltd. (supra) is to the same effect, being also under the State sales-tax law and rendered on the same basis.
The third decision relied upon by the assessee is in Everest Cold Storage (supra). Reliance thereon is again misplaced. There is no 31 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) reference to the process of conversion of water into ice, much less of it being a result of 'manufacture' or not, being only a 'process'. The only issue arising in that case was if the revision by the revisionary authority, as made, was sustainable in law. The assessing authority had allowed investment allowance u/s. 32A on the cold storage, which did not find acceptance by the CIT, being of the view that the operation of a cold storage, despite being undertaken through a plant, did not result in bringing into existence any new and distinct article or thing. The Hon'ble Court, on challenge, upheld the invocation of s. 263, finding it to have in fact expressed the same view in Mittal Ice & Cold Storage v. CIT [1986] 159 ITR 18 (MP). The reference to the definition of 'factory' under the Factories Act by the tribunal, made in justifying its' decision, was, being in a different context, not found relevant by the Hon'ble Court. Both the aspects on which the decision is based, stand, in fact, squarely covered by the decisions by the Apex Court. The issue whether ice, even if the ice plant is a factory under the relevant Act, is a result of 'manufacture' or is only 'processing', was not in controversy and, accordingly, not addressed by the Hon'ble Court, for the said decision to be any assistance to the assessee.
Decision
5. In our clear view, therefore, (refer paras 4.1 thro' 4.7) neither the conversion of water into ice, or of ice into water, an opposite process, being refrigeration and, as the case may be, heating, i.e., changing in effect the temperature of the matter (H2O), would not amount to manufacture, but is only its' processing. In fact, even this 32 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) processing is of passing, as opposed to enduring, value or significance, as all that has been done is to change the temperature of water, which is subject to processing, by subjecting it to a higher or, as the case may be, lower temperature. In fact, even the purpose of this change in temperature is to transmit this change in temperature, i.e., the lower temperature (with reference to the room or atmospheric temperature), of other materials through contact with ice, thus, lowering their temperature. This is akin to raising the temperature of any article or thing by putting it into boiling water or through contact with steam. This is precisely why it stood mentioned earlier, so as to emphasize the anomaly in the proposition, if heating - an equivalent process in terms of its impact, could by itself, i.e., without anything more, be regarded as manufacture. If that is so, so would be, by implication, the conversion of water into ice in the home refrigerators, which is only different in scale and undertaken on commercial basis, or indeed the lowering of room temperature by air conditioning in homes and offices. Why, ice cubes are commonly added to beverages for the same reason, i.e., lower their temperature. As indeed is the reason for keeping food items - and which has industrial equivalents as well, in home refrigerators. Why, ice could, after a time, or even earlier, as by heating it, be used for any use to which water is! A change in temperature, thus, either on its own, as by exposing it to room temperature, or otherwise, reverses the process. There is, further, no question of 'production' of water, i.e., by combining hydrogen and oxygen and, consequently, of ice. The basic condition 33 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) for deduction u/s. 80-IB, i.e., manufacture or production of an article or thing is, thus, not satisfied.
The assessee has not met any of the several decisions relied upon by the AO, as indeed by the ld. CIT(A), who also added to the said list. We have considered all the decisions, relying extensively on the abundant case law on the subject, besides also meeting the assesees' reliance of some case law.
We, accordingly, uphold the decision by the Revenue and the assessee fails.
6. The only other ground is toward unexplained investment (expenditure) of Rs.1.18 lacs (for AY 2006-07). The same was not pressed during hearing and, consequently, not responded to by the other side. The same is therefore dismissed as not pressed. In fact, as the impugned order reveals, the same was not pressed even before the first appellate authority, who therefore proceeded to decide the same on the basis of the material on record, finding no contention, much less evidence, advanced by the assessee in explanation of the cash of Rs.1.38 lacs deposited in his bank account (to meet the expenditure/repayment of loan), stated to be out of saving, and toward which the AO had accordingly allowed a benefit of Rs.20,000 as the assessee's personal saving. We, accordingly, decline interference.
7. The appeals also raise a ground challenging the initiation of penalty proceedings u/s. 271(1)(c). Penalty proceedings, it is trite law, are separate proceedings, satisfaction in respect of which is to be 34 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) though recorded in any proceedings under the Act (D.M. Manasvi v. CIT [1972] 86 ITR 557 (SC); CIT v. S.V. Angidi Chettiar [1962] 44 ITR 739 (SC)(also refer: CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC) and Mak Data Pvt. Ltd. v. CIT [2013] 358 ITR 593 (SC), affirming the decision by the Hon'ble Delhi High Court reported at 352 ITR 1). The action of the AO in recording his satisfaction in the course of assessment proceedings, thus, cannot be faulted with under the scheme of the provision. The same does not give rise to any legal challenge, which could only be in the ensuing penalty proceedings. The grounds are without merit. We decide accordingly.
8. In the result, the assessee's appeals are dismissed.
Order pronounced in the open court on June , 2019
-- Sd/- Dated 17/6/2019
(N. K. Choudhry) (Sanjay Arora)
Judicial Member Accountant Member
Date: .06.2019
/GP/Sr/ Ps.
Copy of the order forwarded to:
(1) The Appellant: Yash Raj Singh, M/s. Nav Bharat Steel, Pouni Chak, Jammu-180016 (2) The Respondent: ITO-1(3), Jammu (3) The CIT(Appeals), Jammu (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order 35 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA Nos. 84, 83 & 82(Asr)/2014 Asst.Years:2006-07, 2007-08 & 2008-09 Yas Raj Singh Prop. Vs. Income Tax Officer, 1(3), Nav Bharat Steel, Jammu Pouni Chak, Jammu [PAN:ACEPS 5319L] (Appellant) (Respondent) Appellant by: Sh. Joginder Singh (Ld. CA) Respondent by: Sh. Charan Dass (Ld. DR) Date of hearing: 03.04.2019 Date of pronouncement:
DISSENT ORDER PER N.K.CHOUDHRY, JM:
These three appeals have been preferred by the Assessee against the orders dated 06-12-2013, 29-11-2013 & 03-12-2013 relevant for the assessment years 2006-07, 2007-08 & 2008-09 respectively, passed by the Ld. CIT(A), Jammu u/s 250(6) of the Income Tax Act, 1961 (hereinafter called as the 'Act').
2. Although the Assessee has challenged the various additions affirmed by the Ld. CIT(A), however, at the time of hearing emphasized only on the sole ground qua disallowance of deduction u/s 80IB of the Act. As in all the three appeals, the issue relates to the disallowance of deduction u/s 80IB is involved, therefore, for the sake of brevity and convenience, the ITA No.84/Asr/2014 has been taken as lead case for adjudication 36 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) and the result of the same shall also be applicable mutatis mutandi to the other appeals i.e. ITAs No.83/Asr/2014 & 82/Asr/2014.
3. The brief facts of the case are that the assessee is running a factory in the name and style of M/s. Rightway Industries & M/s. Aditya Ice Factory. Pounichak, Jammu and had claimed deduction u/s 80IB qua 'Aditya Ice Factory' for manufacturing ice from water, which was denied by the Assessing Officer vide Assessment Order dated 24/12/2009 u/s 143(3) of the Act by concluding as under:
"Thus keeping in view the facts of the case and above judicial pronouncements, it is evident that conversion of water to ice does not amount to manufacture and, as such, is not entitled to deduction u/s 80IB of the I.T. Act, 1961. Accordingly, deduction u/s 80IB of the I.T. Act, 1961 of Rs.16,48,449/- claimed by the assessee is disallowed and an amount of Rs.16,48,449/- subjected to tax.
4. The Assessee in addition to other disallowances, challenged the said disallowance u/s 80IB of the Act, before the Ld. CIT(A) , who upheld the action of the Assessing Officer qua disallowance of deduction u/s 80IB by holding as under:
"3.3 I have considering the rival arguments above, first of all the definition of manufacture in section 2(29B) of Income Tax Act is to be considered.
""Manufacture" with its grammatical variations, means a change in a non living physical object or article or thing-37 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07)
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, character and use; or
b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure."
The essential element in the manufacture is transformation of object article or thing into a new distinct object or article or thing having different name, character and use or bringing into existence new and distinct object or article or thing with a different chemical composition or integral structure. Both above criteria are not satisfied in this case because there is no distinct new article came into existence when water is converted into ice. This is only a physical transformation when liquid form is converted into solid form and which is a reversible process because if kept at room temperature the changed solid from regains the original liquid form. Further, there is no change in chemical composition of ice vis. a vis. water. In conversion of water to ice no addition of any chemical is made. There is no distinct entity which has come into existence by the manufacturing process.
The ratio of following case law clarify the position.
"Production of Mineral Water - Though water is rendered free of impurities, minerals and micro-organisms and thus made more hygienic and suitable for human consumptions, it remains only as drinking water i.e. what it was at the raw material stage-its name, character and use is only of drinking water and is regarded as such by the buyers as well as those who deal in it Thus no new product comes into existence so as to qualify it as manufacturing process. Acqua Minerals (P) Ltd. Vs DCIT (ITAT, Ahd) 96 ITD 417"
Further the arguments that the specific gravity and melting point of ice and water are different has no bearing because it does not change the nature of substance. All matters in the universe can attain the three physical states i.e. solid, liquid and gas and all these three states have different specific gravity, melting point and boiling point.
38 ITA Nos.82 to 84 /Asr/2014(Asst. Years: 2008-09, 2007-08 & 2006-07) Manufacture implies a change, every change is not manufacture and yet every change of an article is the result of treatment labour and manipulation. This has been observed by the Hon'ble Supreme Court in the case of Delhi Cloth Mills Paragraph 14. Therefore, manufacturing is not merely change of form or change of one state to another. The change should be permanent and not temporary which can without the intervention of treatment, labour and manipulation regain its original form. The ice regains liquid state when kept at room temperature.
There is an argument from the appellant that there had been a value addition when water is converted into ice. This argument is not convincing because there is more value addition in the production of mineral water from ordinary water or de-mineralization of water from Municipal Corporations Chlorinated water, yet these cannot be considered as manufacture. This has been held in Acqua Minerals Pvt. Ltd Vs DCIT (2005) 279 ITR (AT) 106 (AHD). Similarly, it has been held that conversion of alcohol Indian made foreign liquor cannot be treated as manufacture for the purpose of section 80HH held by Tribunal SCOT Distilleries Pvt. Ltd. Vs ACIT(2002)255 ITR(AT) 14(Cal) (SB). The decision rested on the view that the end product in this case was not totally a new commercial commodity and that processing involved was only an addition of certain percentage of water, colour, essence and bottling for marketing. Similarly in pasteurization and standardization of milk no new commodities come into existence. There may be processing but it does not amount to manufacture or production of an article or thing so as to render the process eligible for relief u/s 80IB. It was decided in B.G. Chitale Vs DCIT (2008) 305 ITR (AT) 1 Pune (SB). It was found that milk after this production becomes cleaner more fit for consumption and nothing more. In coming to this conclusion tribunal reviewed a number of cases. The argument of the appellant was that pasteurization involved more than 15 processes with the help of costly equipment and skilled operators but it could not find favour with the tribunal.
It is very much clear that conversion of water into ice is not a manufacturing. Further the expression "Products" though taken in more liberal sense than manufacture, 39 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) nevertheless, the end product that is Ice is not a complete distinct object, which has different character and use though the name may be different. In the cold region of the country the water is frozen into ice by the nature. Does this mean that nature is manufacturing ice from water? These are different states of matter i.e. liquid, solid and gas whose characters and chemical composition remain the same.
In view of above discussion, I am of the considered opinion that the deduction claimed u/s 80IB is not admissible and I agree with the detailed reasoning and findings of the AO. The addition is thus confirmed.
5. Aggrieved against the affirmation of disallowance of deduction u/s 80IB as well as other disallowances, the assessee filed the instant appeals under consideration. The Assessee in support of its case, in addition of filing Assessment Order dated 23-03-2013 of A.Y. 2010-11, the balance sheets as well as various judgments, also filed copies of following certificates in order to establish the assessee firm is registered as 'manufacturing industry of ice'.
(i) Registration Certificate issued by the District Industries Center, Jammu
(ii) VAT Registration Certificate issued by VAT Registration Officer Jammu
(iii) Certificate Registration issued by Commercial Tax Officer, Circular "M" Jammu The assessee further submitted that more or less the case of the assessee is covered by the judgment passed by the Jurisdictional High Court of Jammu & Kashmir, in the case of Glacier Cold Storage Vs. Assessing Authority, Sales Tax, Jammu (Writ Petition Nos.93 & 99 of 1972) decided on 22nd 40 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) July, 1974. The assessee also relied upon other judgments and submitted that the assessee is entitled to get the benefit of Sec.80IB of the Act, because the assessee case is covered under the parameters of section 80IB and definition as prescribed in Sec.2(29BA) of the Act.
6. On the contrary, the Ld. DR vehemently supported the orders passed by the authorities below and reiterated that the authorities below in addition to considering the facts of the case, have also taken judicial note of the judgments referred in the orders and therefore the orders under challenge does not suffers from any perversity, illegality and/or impropriety and hence does not require any interference by this Court.
7. Having heard the parties at length and perused the material available on record. Though the Revenue Department while making the disallowance relied upon various judgments including of the Apex Court in the case of DCIT vs. PIO Food Packer [1980] 46 STC 63 (SC) wherein, it has been held that where there is no essential difference in the identity of original commodity and processed articles, it is not possible to show that one commodity has been consumed in the manufacture or another although it is undergone a degree of processing, it must be regarded as still retaining the original identity. In the case of State of Orissa vs. Titaghur Paper Mills Company Ltd. [1985] 60 STC 213 (SC) the Apex Court has held that merely because certain articles are known by different names, it does not mean that these are different commercial commodities, if in fact they are merely different forms of the same commodity. In the case 41 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) of CST vs. Dunken Coffee Manufacturing Co. [1975] 35 STC 493, wherein the Bombay High Court has held that mere change in the name of commodity will not amount to manufacture.
The Ld. CIT(A) held that the essential element in the manufacture is transformation of object article or thing into a new distinct object or article or thing having different name, character and use or bringing into existence new and distinct object or article or thing with a different chemical composition or integral structure. Both the above criteria are not satisfied in this case because there is no distinct new article came into existence when water is converted into ice. This is only a physical transformation when liquid form is converted into solid form and which is a reversible process because if kept at room temperature the changed solid from regains the original liquid form. Further, there is no change in chemical composition of ice vis. a vis. water. In conversion of water to ice no addition of any chemical is made. There is no distinct entity which has come into existence by the manufacturing process.
The Ld. CIT(A) further held that it is very much clear that conversion of water into ice is not a manufacturing. Further the expression "Products" though taken in more liberal sense than manufacture, nevertheless, the end product that is Ice is not a complete distinct object, which has different character and use though the name may be different. In the cold region of the country the water is frozen into ice by the nature. Does this mean that nature is manufacturing ice from water? These are different states of matter i.e. liquid, solid and gas whose characters and chemical composition remain the same.
42 ITA Nos.82 to 84 /Asr/2014(Asst. Years: 2008-09, 2007-08 & 2006-07) 7.1 The conclusion of the aforesaid judgments relied upon by the Revenue Department, and the observation of the authorities below is that where there is no essential difference in the identity of original commodity and processed articles and merely because certain articles are known by different names, does not mean that one commodity has been consumed in the manufacture or another, although the same has undergone a degree of processing, it must be regarded as still retaining the original identity.
7.2 Let us to reproduce the contents of Sec.2(29BA) which was inserted in the Act, by the Finance (No.2) Act, 2009 w.e.f. 1st April, 2009, relates to the definition of manufacturing.
"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, character and use; or
(b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure;
As per oxford dictionary, the definition of manufacture means " to make (something) on a large scale using machinery or to make or produce (something abstract) in a merely mechanical way"
In WIKIPEDIA, the definition of "manufacturing" has been given as: Manufacturing is the production of products for use or 43 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) sale using labour and machines, tools, chemical and biological processing, or formulation. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial design, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be sold to other manufacturers for the production of other, more complex products, such as aircraft, household appliances, furniture, sports equipment or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell them to end users and consumers.
Manufacturing engineering or manufacturing process are the steps through which raw materials are transformed into a final product. The manufacturing process begins with the product design, and materials specification from which the product is made. These materials are then modified through manufacturing processes to become the required part.
From the combined reading of definitions above, it reflects that the "manufacture", means a change or transformation of raw object or article or thing into final product in new and distinct form, different name, character and new use of ; or bringing into existence of a new and distinct final product with a different chemical composition or integral structure object or article or thing on a large scale using machinery or to make or produce (something abstract) in a mechanical way for use or sale, using labour and machines, tools, chemical and biological processing, or formulation, may include a range of human activity, from handicraft to high tech, in which raw materials are transformed into finished goods on a large scale.44 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07) 7.3 The assessee at the time of arguing the appeal demonstrated the manufacturing process of ICE (pages 1 to2 of PB), which for the sake of brevity is reproduced herein below.
Manufacturing Process:
Production Process Flow Cleaning of Sheet Steel Ice Containers Placing of Containers in water Tank Filling of Sheet Steel Ice Containers with water Temp Reduced to -17`C to -20`C Movement of Ice Blocks by hooks Delivery of Ice Blocks Extracting of Ice Blocks from Sheet Steel Movement of Ice Blocks by hooks Delivery of Ice Blocks 45 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) Ice cans are placed in can grids and moved to beneath the filling tank which automatically fills each can with proper level of pre-cooled water and then stop. Filtered water must be used to make ice intended for human consumption.
The cans are then hoisted mid carried to the brine tank and immersed inside. The brine, which is a calcium chloride solution kept at a temperature of -10 degree is constantly circulated by agitator in order to keep the temperature consistent throughout the tank.
Air is blown into the center of the can to induce a swirling motion. This causes any impurities and air bubbles in the water to be collected in the center of cans. Prior to finish freezing, this core is removed by a suction pump and replaced with fresh pre-cooled water.
The time required for the water to be frozen varies according to the size of cans being used. 150 Ibs, block requires 24 hours, 300 Ibs. Takes 48 hours.
When the ice has completely formed, the grids arc lifted op from the brine tank and moved to place in the thawing tank. Using the warm water, which heats the can until the ice allowed to be slid out. The block ice is then removed from the can by a can dumper.
The empty cans are returned to filling tank for next ice making cycle. The ice is moved to ice storage and stacked by an ice slacker, or it can be delivered to customer right away upon requested.46 ITA Nos.82 to 84 /Asr/2014
(Asst. Years: 2008-09, 2007-08 & 2006-07) From the manufacturing process, it reflects that while making ice from water various stages are required to be pass through and then only the water converts into ice such as cleaning of steel containers and thereafter placing of containers in water tank and filling of water in steel containers and thereafter reducing the temperature to -17°C to -20°C. During the processing of manufacturing of ice, the brine which is a calcium chloride solution is required to be kept at a temperature of -10°C degree and constantly circulated by the agitator for keeping the temperature consistent throughout the tank. Further the air is blown into the center of the CAN to induce a swirling motion which causes any impurities and air bubbles in the water, collected in the center of the cans and time of around 24 to 48 hours are required for converting the water to ice as per the size of can being used. When the ice has been completely formed, the grids are lifted up from the brine tank and moved to place in the thawing tank thereafter while using warm water in order to slid out the ice, the blow process remove from the can by a can dumper and the ice is moved to ice storage and stacked by an ice stacker and process of manufacturing of ice then completes.
The assessee had drawn our attention to the uses of water and ice, the water can be used for drinking, preparing food, bathing, washing, watering the yard & garden & irrigation purposes and for other incidental purposes whereas the ice is being used by food industries, preservation of fish and meats, in restaurants and hotels, ice-cream sellers and ice has distinct name, uses, structure and properties than the water and even the ice is being used as commercial commodity, whereas the 47 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) water is generally available free of costs and cannot serve the purpose of ice.
As per definition of "manufacturing" means a change in non-living physical objects or article or thing, resulting into transformation into a new and distinct object or article or thing having a different name, character and use. From the manufacturing process of ICE, it emerges, once the ice made from the water, it changes in non-living physical article and results into a new and distinct article, having different name, character and use, hence inference can be drawn that 'ice' is the final product of water which requires transformation of water (raw product) into final product (Ice), indisputably having a new and distinct form, name, character and use, and for bringing into final product such as to make or produce 'Ice', different chemical composition for change of integral structure on a large scale, a range of human activities, labour and use of machinery is being required by which raw material (Water) transformed into finished goods in order for use or sale.
7.4 The controversy involved in the instant case relates to treatment of ice as water by the revenue department, where the department is of the view that conversion of water into ice does not amount to manufacture and ice and water is the same, however on the contrary the assesse claimed that both are distinct in form and quality having distinct features, uses and value. It is undisputed fact that none of the judgments referred and relied upon by the revenue authorities against the claim of the assessee, dealt with the controversy qua manufacturing of 48 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) ICE, whereas the jurisdictional High Court in the case of Glacier Cold Storage & Ice Mills & Ors. Vs. Assessing Authority, Sales Tax, Jammu (supra) in para no.6 analyzed the definition of ice and differentiated the water and ice. Concluding part of the decision, for the sake of brevity and convenience, is reproduced herein below.
Page No.69 (PB) para-6..
"6. An analysis of this definition would clearly show that although ice derives its source or genus from water by being reduced to a solid state, yet water on solidification into ice completely changes its state and becomes a distinct entity: the specific gravity is changed, the melting point has a temperature of 0°C or 32°F and the substance which forms as ice has hexagonal crystals. In these circumstances, therefore, we are unable to agree with the contention of the petitioners that ice and water are the same things and when the notification includes water in the exemption list, it will include ice also. Furthermore, even assuming that the argument of the petitioners is correct, the Government was fully alive to the two forms of water, namely, water simpliciter and ice, and if the intention of the Government was to exempt ice also then either they should have mentioned this substance in item 37 of Schedule II or they should have added that water would be exempted in any form whatsoever. On the other hand, this well- knit distinction between water and ice was present in the mind of the Government when the notification was issued and despite this if ice was not specifically mentioned in the list of exemption, then the only inference would be that the notification did not exempt ice from the province of taxation. Lastly, water is of universal and common use and the Government did not want to make it costly by imposing taxation on its use or supply. On the other hand, ice is undoubtedly an article of luxury and is manufactured by persons who have to install a factory or machinery for the purpose of making it. The persons producing ice run a lucrative business and it would be against the very concept of sales tax that the Govt. should exempt ice from the operation of the tax to be imposed on various articles that are manufactured by various persons. For these reasons, therefore, we over-rule the main contention of the petitioners in this case, namely, that the word water in item 37 (Supra) includes ice. With respect we do not agree with the 49 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) personal opinion of the Excise and Taxation Commissioner, conveyed in his letter annexure A, particularly when his opinion is not based on any reasonable or rational consideration."
7.5 The Allahabad High Court in the case of Goel Industries Pvt. Ltd. vs. Commissioner of Sales Tax, decided on 12th July, 1971 [1971] 28 STC 729 (Allahabad), also analyzed the difference of Water & Ice and made the observation that the 'ice' and 'water' may have same composition, but in commercial and popular sense, they are different commodities. Further observed that though the chemical composition of ice and that of the water is the same but even then, ice cannot be regarded as water. It is a matter of common experience that while water is generally available free, ice is always sold in the market.
7.6 The Hon'ble MP High Court in the case of CIT vs. Everest Cold Storage [1966] 220 ITR 241 (MP) while dealing with the issue qua ice manufacturing plant, not only affirmed but also justified the view of the commissioner to the effect that ice plant is a manufacturing unit and is entitled to be given investment allowances u/s 32A of the Act.
7.7 Even our attention was drawn by the assessee to the assessment order dated 22/03/2013 passed u/s 143(3) of the Act relevant for the Asst. Year 2010-11, wherein the assessing officer has not only accepted 'Aditya Ice Factory', as engaged in the business of 'manufacturing of ice' and but also accepted the deduction of Rs.3,37,039/- which was claimed u/s 80IB of the Act by the assessee. I do not find any material by which the 50 ITA Nos.82 to 84 /Asr/2014 (Asst. Years: 2008-09, 2007-08 & 2006-07) definition of 'manufacturing' of ice can be read against the assessee's claim, nor even brought on record or cited by the Revenue Department against the analyzations qua 'ICE' and treatment of 'ICE' plant as a manufacturing unit, by the High Courts including jurisdictional and even otherwise to demolish the case of the assessee. It is cardinal principle of law and onerous duty of the Court to draw the interference if, any discernable from the peculiar facts and circumstances of the case and/or any judgment of the Higher Authority and/or of the Co- ordinate Bench and to apply the dictum appropriately for the ends of justice. The jurisdictional High Court in the case of Glacier Cold Storage & Ice Mills & Ors. Vs. Assessing Authority, Sales Tax, Jammu (supra), while dealing with the claim of assessee lodged under the Jammu and Kashmir Sales Tax Act, analyzed the definition of ice and clearly held that water on solidification into ice, completely changes its state and becomes a distinct entity and the specific gravity is changed, the melting point has a temperature of 0°C or 32°F and the substance which forms as ice has hexagonal crystals. Further held that water is of universal and common use and on the other hand, ice is undoubtedly an article of luxury and is manufactured by persons who have to install a factory or machinery for the purpose of making it. Further the Hon'ble MP High Court in the case of CIT vs. Everest Cold Storage (supra) also affirmed and justified the treatment of ice plant as a 'manufacturing unit' and therefore entitled to be given investment allowances u/s 32A of the Act.
51 ITA Nos.82 to 84 /Asr/2014(Asst. Years: 2008-09, 2007-08 & 2006-07) It is also not in dispute that assessee has been registered with the District Industries Center as M/s Adita Ice Factory and item and manufacture of activity recognized as activity as 'manufacture of ice', with the registering authority of Value Added Tax, Jammu as 'Aditya Ice Factory', with Registering Authority of Commercial Taxes Officer under Central Sales Tax (Registration and turn over) Rules 1957 as 'Aditya Ice Factory' for the business of 'manufacturing of ice'. The assessee also filed its VAT form No.53 wherein the nature of business has been mentioned as 'manufacture', further filed its annual value added tax returns and tax remission claim forms. Admittedly the Revenue Department has not refuted the claim of the assessee. Hence, while respectfully following the judgments of the jurisdictional High Court, Allahabad and Madhya Pradesh High Court and analyzing and considering the relevant corroborative material available on record such as the process of 'ICE' manufacturing as explained by the assessee and discernible from the definition as prescribed u/s 2(29BA) of the Act and the assessment order dated 22/03/2013 passed u/s 143(3) of the Act relevant for the Asst. Year 2010-11, wherein the assessing officer has accepted 'Aditya Ice Factory', as engaged in the business of manufacturing of ice and allowed the assessee u/s 80IB of the Act, I do not have any hesitation to hold that making of ice from water is a 'manufacturing' as per the Act and therefore the assessee is entitled to get the deduction as claimed u/s 80IB of the Act, consequently the disallowance of deduction is liable to be deleted, hence the same stands deleted. GROUND no. 2 stands allowed.
52 ITA Nos.82 to 84 /Asr/2014(Asst. Years: 2008-09, 2007-08 & 2006-07)
8. The assessee did not raise GROUND no. 3, specifically, and GROUND no. 1 & 4 are formal in nature, hence does not require adjudication in particular.
9. In the result, the appeal i.e. ITA Nos.84 (Asr)/2014 filed by the assessee stands partly allowed.
10. ITA Nos.82 (Asr)/2014 and 83/(Asr)/2014 In view of judgment in ITA Nos.84/(Asr)/20, the appeals i.e. ITA Nos. 82 & 83(Asr)/2014 also stands partly allowed.
Order pronounced in the open Court on ..................
Sd/- 5/07/19
(N.K.CHOUDHRY)
JUDICIAL MEMBER
Dated: .07.2019
/PK/ Ps.
Copy of the order forwarded to:
(1) Yas Raj Singh Prop., M/s. Rightway Industries & M/s. Aditya Ice Factory. Pouni-chak, Jammu (3) The CIT(A), Jammu (4) The CIT concerned (5) The SR DR, I.T.A.T., Amritsar True copy By order