DCIT Vs Dodla Dairy Limited (ITAT Hyderabad)
Chilling Plants Qualify for Section 80IB(11A): Processing, Preservation Packaging of Milk Need Not Be End-to-End — ITAT Hyderabad Upholds Deduction
The Hyderabad ‘B’ Bench of the Income Tax Appellate Tribunal, Hyderabad Bench dismissed the Revenue’s appeals for AYs 2012-13 to 2014-15, 2016-17 and 2017-18 and upheld the allowability of deduction under section 80IB(11A) to Dodla Dairy Limited in respect of its chilling plants.
The core dispute was whether chilling plants, which undertake collection, testing, chilling and storage of raw milk before transferring it to other units for further processing and sale, could be said to be engaged in the business of “processing, preservation and packaging” of dairy products. The AO denied the deduction on the ground that all three activities must be carried out in an integrated manner within the same unit and that chilling amounted only to cooling, not processing or packaging.
The Tribunal rejected the Revenue’s narrow interpretation. It held that chilling is a scientific and technical preservation process that substantially alters the shelf life of milk and prevents spoilage, and therefore squarely falls within “processing” and “preservation”. Activities such as grading, weighing, filtering, laboratory testing, adulteration checks and microbial tests were found to be integral to processing. Storage of milk at controlled temperatures in insulated tanks constituted preservation, while use of containers and reservoirs for safe movement of milk to other units satisfied the requirement of packaging.
The ITAT further clarified that, unlike food grains where the statute expressly uses the phrase “integrated business of handling, storage and transportation”, section 80IB(11A) for dairy products only requires processing, preservation and packaging — not end-to-end integration up to retail sale. Legislative intent behind the 2009 amendment was to incentivise infrastructure that prevents wastage of perishable dairy products, and denying the benefit to chilling plants would defeat that objective.
Since the assessee maintained separate books of account for each chilling unit and furnished audit reports in Form 10CCB, all statutory conditions were satisfied. The Tribunal therefore upheld the CIT(A)’s order allowing deduction under section 80IB(11A) and dismissed all Revenue appeals.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
