Marine product processing is not manufacture or production without substantial transformation, so section 80HH deduction was denied.

Mere peeling, freezing and export of shrimps or marine products, without a detailed or substantial manufacturing process, does not amount to manufacture or production for tax incentive purposes. On the facts before the taxing authorities, the assessee's limited processing activity was held insufficient to qualify it as an industrial company or industrial undertaking under section 80HH of the Income-tax Act, 1961. The earlier view in Relish Foods had already been set aside, and the materials did not show processing comparable to Marwell Sea Foods. The claim for deduction was therefore rejected and the Revenue succeeded.

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Issues: Whether the assessee's activity of purchasing, peeling, freezing and exporting shrimps/marine products constituted manufacture or production so as to qualify as an industrial company and an industrial undertaking eligible for deduction under section 80HH of the Income-tax Act, 1961.

Analysis: The only substantive question decided was whether the assessee's limited processing of marine products amounted to production. The earlier view in Relish Foods had already been set aside by the Supreme Court, and the materials before the taxing authorities did not show any detailed or substantial process comparable to the case in Marwell Sea Foods. On the facts placed before the authorities, the activity was held not to amount to manufacture or production for the relevant tax benefit.

Conclusion: The question was answered in the negative and against the assessee; the assessee was not entitled to be treated as an industrial company on that basis for the purposes of the claimed deduction.

Final Conclusion: The appeals succeeded for the Revenue, and the assessee's claim based on processing marine products for export was rejected.

Ratio Decidendi: Mere peeling, freezing and export of shrimps, any demonstrated substantial manufacturing or production process, does not constitute manufacture or production for the purpose of industrial tax incentives.

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