TaxTMI 
TaxTMI 
2012 (10) TMI 620
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.... questions of law:- "(1). Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that chilling of milk by keeping with ice to keep it at low temperature involve manufacturing process? (2). Whether on the facts and in the circumstances of the case, the Tribunal is legally correct in holding that the assessee carrying on dairy business in an Industrial Undertaking.? (3). Whether the Tribunal was legally correct in holding that the assessee in an 'Industrial Undertaking' entitled to deduction under Section 80 HHA and under Section 80-I of the I.T. Act 1961? 3. The Income Tax Appeal No. 378 of 2007 under Section 260-A of is directed against the judgment dated 30.10.2001 passed by the I....
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....hether the Tribunal was legally correct in directing the AO to allow deductions under Section 32- A, 80-HHA and 80-I of the Act to the assessee in A.Y. 1985-86 to 1990-91 and under Section 32 AB in A.Y. 1989-90?" 4. Brief facts giving rise to these appeals are that the assessee claimed deductions under Section 80 HHA and under Section 80-I, for having established manufacturing process of milk in rural areas. The AO denied deductions for the reasons stated as follows :-. "Claim u/s 80 HHA and 80-I During the year under consideration, the assessee has claimed deduction of Rs.2,08,077/- u/s 80 HHA and similar amount u/s 80 I, since the assessee carries on the business of purchase and sale of milk. The assessee has not carried out any ....
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....h named as dairy milk. Chilling treatment, it is a manufacturing unit which change the situation of milk. It is clear from the assesee's statement that no manufacturing activities has been carried out, simply by changing name as a dairy milk does not resulted into manufacturing activitiy. The Milk remains milk giving after chilling treatment. There is as such no change in its physical and chemical constitution. Chilling used to be done to avoid spoiles of the milk, which is necessary in the trade of the milk. In view of these facts and past history of the assessee on these points and finding given by the CIT (Appeals) in the assessment year 1987-88, I hereby disallow the claim of the assessee u/s 80 HHA and 80 I." 5. In Appeal filed b....
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....sing surface milk chillers which improved odour and provided a taste, free from undesirable falavour. Low temperature also prevents undesirable fermentation and provides better palatability to milk. High viscosity results in restricted microbial grown and inactivation of enzymes. The next process is blending, which results in preservation of vitamins and nutrients with standard uniform contents of fat. This also improves flavour of original milk. All these processes result in change in the physical as well as chemical properties of the milk which can be consumed directly without further processing. Not only this, the assessee has also engaged himself in extracting cream of the milk for which separate process altogether is required to be car....
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....reement from parties from outside, and that the assessee could not prove that for the relevant year, the cream was extracted from the plant. He submits that so far as chilling treatment is concerned, it does not change the composition of milk. No manufacturing activity can be said to be carried out by simply chilling the milk, and labelling it as diary milk. The chilling is carried out, to avoid the milk being spoiled. He has relied on CIT Vs. Budho Raja [(1993) 204 ITR 413]; CIT Vs. Venkateshwara Hatcheries Ltd [(1999) 237 ITR 179]; CIT Vs. Johnson & Co. [(2006) 253) ITR 175] and Lucky Minmot Pvt Ltd Vs CIT Jaipur [(2001) 9 SCC 669]. In all these cases, the Court explained the meaning of manufacturing activity and held that unless a new co....