TaxTMI 
TaxTMI 
2011 (2) TMI 282
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.... amounts to manfacturing or production of any article or thing so as to be eligible for deduction under section 80-IB ?" 7. With the consent of parties, we have finally heard the appeal. 8. The assessee is engaged in manufacturing of tinned fish and mutton. It has been filing returns and claiming deductions under section 80-IB of the Income-tax Act (hereinafter referred to as "the Act") for the assessment years 1996-97 to 2003-04. It is only during the assessment year 2004-05 that its case came to be examined by the Additional Commissioner of Income-tax by exercising his powers conferred upon him under section 144A of the Act. Pursuant to the directions given by the Additional Commissioner of Income-tax under section 144A, the Assessing Officer completed the assessment under section 143(3) on December 27, 2006 and disallowed the deduction amount to Rs. 54,83,360 claimed by the assessee under section 80-IB of the Act. 9. Aggrieved by this, the assessee preferred an appeal before Commissioner of Income-tax (Appeals), who vide order dated February 6, 2008 allowed the appeal holding that the processes undertaken by the assessee amounted to "manufacture". Consequently, the Comm....
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....is not found to be allowable." 11. The Commissioner of Income-tax (Appeals) after going into the minute details of the processes involved in different commodities and also the judgments of different High Courts and the Supreme Court regarding those commodities held the activities involved in conversion of raw fish into tinned fish as "manufacturing" and thus the assessee was held to be entitled to deduction under section 80-IB. The Tribunal recorded its agreement with the Commissioner of Income-tax (Appeals) in the following manner : "Moreover, the claim of the assessee for deduction under section 80-IB was allowed by the Assessing Officer in the initial year and the same having not been admittedly withdrawn, we hold that the claim of the assessee for such deduction could not be denied for the subsequent years as held inter alia in the case of CIT v. Paul Brothers [1995] 216 ITR 548 (Bom) cited by the learned counsel for the assessee. Furthermore the entire process involved in conversion of raw fish into tinned fish was examined by the learned Commissioner of Income-tax (Appeals) and after having considered the different stages involved in the said process as well as the natu....
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....and processed or frozen shrimps and prawns. In common parlance they remain known as shrimps and prawns." 15. The case of Aspinwall and Co. Ltd. [2001] 251 ITR 323 (SC) related to manufacture of coffee beans from coffee berries. The process involved plucking or receiving the raw coffee berries and putting them to undergo nine processes to give them the shape of coffee beans. It was held that (page 328) "The process is a manufacturing process when it brings out a complete transformation in the original article so as to produce a commercially different article or commodity. That process itself may consist of several processes. The different processes are integrally connected which results in the production of a commercially different article. If a commercially different article or commodity results after processing then it would be a manufacturing activity. The assessee after processing the raw berries converts them into coffee beans which is a commercially different commodity. Conversion of the raw berry into coffee beans would be a manufacturing activity." 16. In the case of CIT v. Jalna Seeds Processing and Refrigeration Co. Ltd. [2000] 246 ITR 156 (Bom), processing of ....
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.... another distinct commodity. In common parlance it continues to be known as fish and, therefore, the assessee-company cannot be said to be an industrial undertaking engaged in the manufacture or production of an article to be entitled to any relief under section 80J of the Act. The view we have taken finds support from the decision of the Supreme Court in Sterling Foods v. State of Karnataka [1986] 63 STC 239, wherein it has been held that the processed or frozen shrimps and prawns are commercially regarded as the same commodity as raw shrimps and prawns. When raw shrimps and prawns are subjected to the process of cutting off of heads and tails, peeling, deveining, cleaning and freezing they do not cease to be shrimps and prawns and become other distinct commodities. There is no essential difference between raw shrimps and prawns and processed or frozen shrimps and prawns. In common parlance they remain to be known as shrimps and prawns. Following the said judgment, in a recent decision in CIT v. Relish Foods [1999] 237 ITR 59, the apex court has affirmed the decision of the Bombay High Court in CIT v. Sterling Foods (Goa) [1995] 213 ITR 851, wherein it was held that the activit....
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.... in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end-result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity . . . In the present case, there is no essential difference between the pineapple fruit and the canned pineapple slices. The dealer and ....