2008 (9) TMI 879

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ction 80-IB. 2. Briefly stated, the facts of the case are that the assessee for the relevant year was engaged in business of masala. The assessee had claimed deduction under section 80IB treating the business as industrial undertaking for manufacture and sale of masala. The Assessing Officer however noted that the assessee was only purchasing raw material in the form of different spices which were grinded and mixed and filled in pouches and then sold. This according to the Assessing Officer was only processing and not manufacture. He placed reliance on the judgment of Hon'ble Supreme Court in case of Appeejay (P.) Ltd. v. CIT [1994] 206 ITR 367 1 in which it was held that buying different types of tea from the market blending them in dif....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....3 4 in which it was held that plucking or receiving raw coffee barriers, making them undergo 9 processes to give them the shape of coffee beans amounted to manufacture as changes made in the material resulted into new and different articles which was recognised as different product. The assessee also referred to several decision of the Mumbai Bench of Tribunal such as in case of Pankaj Jain v. ITO [2007] 104 ITD 1552 (Asr.) and in case of Comet Foods & Metals Ltd. v. ITO [2005] 4 SOT 173 (Mum.). CIT(A) being satisfied with the explanation given by the assessee, agreed that the end product in this case was completely different from the raw material and therefore the case of the assessee was manufacture and not processing. He also observed th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....machine will amount to manufacture if the final product is different from the input and is known as a commercially different product in the business parlance. The assessee in this case is using different spices as inputs which are roasted, fried, polished, mixed in different proportions. Thereafter further processes such as drying boiling, pulping grinding etc., are applied with the help of machineries and the end product which is made is then packed and sold in the market. The assessee is producing different variety of masala such as chewda masala, pickle masala etc., which are commercially known products in the market and these products are different from the different spices used in the process. Thus in our view will amount to manufactur....