TaxTMI 
TaxTMI 
1994 (3) TMI 165
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....ENDU LEAVE is a "forest produce", therefore, in regard to the income from this forest produce, prescription of section 44AC of the Income-tax Act, 1961 (hereinafter called the Act), should be followed, and accordingly tax on the said income should be charged @ 35% on presumptive basis as contemplated in the section. It as further stated that section 44AC begins with, non obstante clause, therefore, it has got overriding effect. Admittedly as per account books, the income is higher than the one computed in accordance with section 44AC. The rates of tax as contemplated under section 44AC were not applied in determining the tax liability of the assessee by the Assessing Officer on the ground that assessee is engaged in the business of processi....
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....the jurisdictional High Court in the case of Jugalkishore Badriprasad cannot be applied in the facts of the present case. According to the ld. D.R. High Court in the said case was concerned with the interpretation of word 'manufacture' under M.P. General Sales Tax Rules, 1959. Their Lordships held that processing of drying of Tendu Leaves and packing them in bundles does not involve any manufacturing process so as to come within the definition of "manufacture" in section 2(j) of the M.P. General Sales Tax Rules, 1958. Their Lordships held that in view of Rule 2(a) of M.P. General Sales Tax Rules, 1959, inserted in the rules w.e.f. 15-4-1968 clarifying the word "manufacture" in section 2(j) of the Act does not include "plucking, drying, curi....
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....pplicable in the case of traders of the specified goods. This provision will, therefore, not apply in cases where the goods purchased by a buyer are utilised for the purposes of manufacturing, processing or producing any article or thing. The mere fact that the income as per account books is higher than one computed in accordance with section 44AC, is not a material aliunde to which applicability of the prescription of section 44AC can be denied, C.B.D.T., vide letter F. No. 202/12/93-ITA.II, dated 8th April, 1993, clarified that even if an assessee declares income higher than that computed under the provisions of section 44AC, the assessment will have to be framed in accordance with the provisions of section 44AC. 6. Admittedly, the ass....
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....er connotation comparing to the term 'manufacture'. However, at some point, the concept of 'processing' and 'manufacturing' merges. Whenever 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 commodity. Whatever be the means which is applied for the purpose of carrying out the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitute processing. In other words, activities of a nature in regard to goods which may not amount to manufacture but it would result in the doing of something to the goods to change or alter their form may be taken in by the term 'processing'. S....
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.... (a) It must be changed in substance and different article must emerge having distinctive character and use from the raw material by the use of physical labour or by mechanical process; (b) The articles produced either by physical labour or mechanical process will be on large scale and will pass as a commercial commodity from hand to hand. 10. On appreciation of facts, Hon'ble jurisdictional High Court upheld the view of Board of Revenue and held that Tendu Leaves, remain the same; there was no alteration in the nature and character of the goods. The word 'manufacture' generally means the bringing into existence a new substance and does not mean merely to produce some changes in the substance, however, minor in consequence the chang....