The Tax Publishers2020 TaxPub(DT) 4040 (Del-Trib) : (2020) 208 TTJ 0137


Section 80-IB(11A)

Where the assessee was involved in 'integrated business of handling, storage and transportation of food grains' then the activities involving the cleaning, steaming, soaking, drying, polishing, grinding, etc., are covered by the expression 'handling' and the assessee was certainly conducting such activities which would entitle it to the benefit of deduction under section 80-IB(11A).

Deduction under section 80-IB(11A) - Allowability - Meaning and scope of word 'handling' -

Assessee company claimed to have been engaged in the 'integrated business of handling, storage and transportation of food grains'. For assessment year 2007-08, they have filed the return of income, after availing, inter alia deduction under section 80-IB. After scrutiny, assessment under section 153A was completed by AO denying deduction under section 80-IB(11A) and making addition under section 69. CIT(A) deleted the disallowance of the claim of the assessee for deduction under section 80-IB(11A). Revenue challenged the direction of CIT(A) to AO to allow deduction under section 80-IB(11A), on two counts, namely, stating that assessee was not engaged in the integrated business of handling, storage and transportation of the food grains under section 80-IB(11A) and also that the assessee put to use at Bahalgarh unit the plant and machinery containing more than 20% of the old plant and machinery and thereby violated the conditions stipulated in section 80-IB(2). According to assessee, assessee commenced the integrated business of processing, transporting, storage, handling and sale of food grains in Bahalgarh, Sonepat, Haryana in the previous year relevant to the assessment year 2003-04. Held: In plain English, handling includes any process not amounting to manufacture of the treatment of the product with a view to deal with the same to achieve a desired purpose. In a sense it includes all the activities preparatory and axillary in nature. Merely because the word 'processing' is occurring in section 80-IB(11A) in respect of the fruits or vegetables, it does not exclude all the processes from meaning of 'handling'. If one exclude the specific activities like storage and transport, all other activities which are preparatory, axillary and sundry in nature, but in furtherance of the avowed object of better grain management and minimizing the post-harvest losses to achieve food security would naturally fall within the category of handling otherwise, such an expression will remain redundant. It cannot be said that the intermediary processes undertaken by the assessee in clearing, steaming, soaking, drying, polishing and grinding besides de-husking the paddy would significantly enhance the life of the food grain, reduces the loss of food grain and contributes to the preservation of food grains. If those activities do not answer the description of handling, one wonders what would be handling. The word 'handling' had to be understood in its contextual sense and merely because the AO does not agree with the assessee to include the milling of the paddy is covered by 'handling', it does not take away the other activities from the meaning of handling, so long as such activities keep nexus with the objective for which the benefit is intended. The activities carried out by the assessee certainly Form part of the expression 'handling'. All the activities carried out by the assessee by creating infrastructure for handling, storage and transportation would entitle them to be covered by section 80-IB(11A). AO presumed that plant and machinery for Bahalgarh unit was used prior to 1-4-2001 and was transferred to Bahalgarh unit subsequently. Such unfounded observations of the AO cannot be one of the bases to deny the deduction under section 80-IB(11A). For the purpose of testing the eligibility under section 80-IB(11A) there was no need to look into section 80-IB(2), and non-fulfilment of condition stipulated vide clause (iii) thereof cannot be a ground for denying the deduction under section 80-IB(11A). The Tribunal, therefore, did not find any illegality were irregularity either in the reasoning or the conclusions reached by the CIT(A) on this aspect, and while confirming the same find the ground number of revenue's appeal devoid of merits and reliable to be dismissed.

REFERRED : Raja Provision Stores v. Appellate Tribunal (Sales Tax), Trivandrum 1999 1941 (SC), State of Karnataka v. B. Raghurama Shetty 1981 413 (SC), CGT v. NS Getti Chettiar (1971) 82 ITR 599 (SC) : 1971 TaxPub(DT) 390 (SC), Sole Trustee, Loka Shikshana Trust v. CIT, (1975) 101 ITR 234 (SC) : 1975 TaxPub(DT) 344 (SC), Smt. TarulataShyam v. CIT (1977) 108 ITR 345 (SC) : 1977 TaxPub(DT) 899 (SC). K.P. Varghese v. ITO (1981) 131 ITR 597 (SC) : (1981) 7 Taxman 13 (SC) : 1981 TaxPub(DT) 972 (SC), R&B Falcon (A) (P.) Ltd. v. CIT (2008) 301 ITR 309 (SC) : (2008) 169 Taxman 515 (SC) : 2008 TaxPub(DT) 1990 (SC), CIT v. Muthuramalingam Modern Rice Mill (2019) 105 39 (Mad-HC) : 2019 TaxPub(DT) 2400 (Mad-HC), CIT v. S. Mahalakshmi (2020) 117 621 (Mad-HC) : 2020 TaxPub(DT) 1172 (Mad-HC), Ganesh Trading Co. v. State of Haryana (1974) 3 SCC 620 (SC), Saurashtra Cement & Chemical Industries v. CIT (1980) 123 ITR 669 (Guj-HC) : 1980 TaxPub(DT) 545 (Guj-HC), CIT v. Paul Brothers (1995) 216 ITR 548 (Bom-HC) : 1995 TaxPub(DT) 140 (Bom-HC), CIT v Gujarat State Fertilizers Co. Ltd. (2001) 247 ITR 690 (Guj-HC) : 2001 TaxPub(DT) 586 (Guj-HC), CIT v Fateh Granite (P) Ltd. (2009) 314 ITR 32 (Bom-HC) : 2009 TaxPub(DT) 1512 (Bom-HC), CIT v. Western Outdoor Interactive Pvt. Ltd. (2012) 349 ITR 309 (Bom-HC) : 2012 TaxPub(DT) 3202 (Bom-HC), Direct Information Private Ltd. v. ITO (2012) 15 63 (Bom) : 2012 TaxPub(DT) 797 (Bom-HC), CIT v. Escorts Ltd. (2011) 338 ITR 435 (Del-HC) : 2011 TaxPub(DT) 894 (Del-HC), CIT v. Delhi Press Patra Prakashan Ltd. (No. 2) (2013) 355 ITR 14 (Del-HC) : 2013 TaxPub(DT) 1873 (Del-HC), CIT v. Tata Communications Internet Services Ltd. (2012) 251 CTR 290 (Del-HC) : 2012 TaxPub(DT) 789 (Del-HC), ITO v. Shankar K. Bhanage (2013) 25 310 (Mum-Trib) : 2013 TaxPub(DT) 23 (Mum-Trib) and Lakshmi Energy & Foods Ltd. v. Asstt. CIT (2014) 44 248 (Chd-Trib.).


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