PCIT Vs Shalimar Pellet Feeds Ltd. (Calcutta High Court)
The Calcutta High Court considered an appeal filed by the Revenue under Section 260A of the Income-tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Kolkata Bench, for Assessment Years 2008-09, 2009-10, 2010-11, 2011-12 and 2013-14. The Revenue raised substantial questions of law concerning whether the assessee’s production of poultry feed amounted to “manufacture” under Section 2(29BA), eligibility for deduction under Sections 80IB(5) and 80IE, entitlement to additional depreciation on plant and machinery, deletion of an addition of ₹3,24,49,403 for Assessment Year 2009-10 relating to differences in sales and payments under Section 40A(2)(b), and allowance of 30% depreciation on lorries.
The Court noted that the first three substantial questions had already been decided in the assessee’s own earlier cases. Referring to its judgment dated 22.02.2022, the Court reiterated that the assessee had claimed deduction under Section 80IB on the basis that it was engaged in manufacturing poultry feed. The Assessing Officer had denied the deduction by treating the activity as mere mixing of ingredients. However, the Commissioner of Income Tax (Appeals) had examined the manufacturing process in detail, recording that the process involved steam cooking, conditioning, pelleting, cooling, crumbling, sieving, quality control and bagging, using boilers, insulated pipelines and pressure-reducing valves. The CIT(A) also recorded that the conditioning process gelatinised starch and destroyed bacteria before the product reached the final stage. The assessee had also furnished details of raw materials, micro ingredients, vitamins and minerals used in manufacturing poultry feed.
