TaxTMI 
TaxTMI 
2014 (3) TMI 858
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....(Appeals), which was decided by the Commissioner on 23.05.2003, allowing the assessee's appeal with following observation:- "The definition of the word Industrial Undertaking to which Section 80IA applies, includes 'processing of goods' also. Therefore, I hold that even processing of goods can be considered alongwith manufacture or production of goods while allowing deduction in respect of profits of the industrial undertaking u/s 80IA of the I.T. Act, 61. Therefore, I direct the A.O. to allow deduction with reference to the entire profits assessed in the assessment order." Aggrieved with the order dated 23.05.2003 the Revenue had filed an appeal before the Income Tax Appellate Tribunal, S.M.C. Bench, Allahabad. The Tribunal vide judgement and order dated 28.05.2005 had partly allowed the appeal, with following observation:- "I have considered the rival submissions. I have seen the calculation of deduction u/s. 80IA of the Act. I find that deduction u/s. 80IA has been claimed on the transformer oil, scrap as well as the labour charges for the sale of scrap. I agree that the transformer oil as such was not sold, but was a part of assembly of transformer and ther....
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....and distinct commodity cannot be said to have come into existence as a result of retreading, and, therefore, the business of retreading of tyres did not amount to production of a new article entitling the assessee to the relief under sections 80J and 80HH, appeals were preferred by the assessee to the Supreme Court. The Supreme Court dismissed the appeals. Decision of the Madras High Court in CIT v. Madurai Pandian Engineering Corporation Ltd. [1999] 239 ITR 375 affirmed. Civil Appeals Nos. 4383 and 4384 of 1999. Appeals by Special leave from the judgment and order dated March 2, 1998, of the Madras High Court in T.C. Nos. 1820 and 1821 of 1986. The judgment of the High Court is reported as CIT v. Madurai Pandian Engineering Corporation Ltd. [1999] 239 ITR 375(Mad). R. Venkataraman, Senior Advocate (V. Prabhakar and Ms. Revathy Raghavan, Advocates, with him), for the appellant. Dr. V. Gauri Shankar, Senior Advocate (Rajiv Tyagi, B. V. Balaram Das and Ms. Sushma Suri, Advocates, with him), for the respondent. ORDER We have heard learned counsel for the appellant. There is no merit in the appeals. The civil appeals are dismissed with costs." Sri Shambhu Chopra....
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....t, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee: Provided that no deduction shall be allowed under this section in respect of -... (2) The ship or aircraft or machinery or plant referred to in sub-section (1) shall be the following, namely:-........ (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule.). The short point for consideration is whether the High Court was right in coming to the conclusion that the assessee was not involved in any manufacturing or production activity in the process of curing the coffee. The word "manufacture" has not been defined in the Act. In the absence of a definition of the word "manufacture" it has to be given a meaning as is understood in common parlance. It is to be understood as meaning the production of articles for use from raw or prepared materia....
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....rcially 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 commercially different commodity. Conversion of the raw berry into coffee beans would be a manufacturing activity. For the reasons stated above, we are of the opinion that the High Court was wrong in its opinion that the processing of the raw berries into coffee beans ready for consumption would not be a manufacturing activity disentitling the assessee to the investment allowance provided under Section 32A of the Act. Accordingly, the appeals are allowed with costs. The impugned order/judgment of the High Court is set aside and that of the Tribunal is restored. The question of law is answered in the affirmative i.e. in favour of the assessee and against the revenue." He has also placed reliance in the judgement of Hon'ble Apex Court in the case of Commissioner of Income Tax v. Relish Foods dated 11.03.1999, reported in (1999) Vol. 237 ITR 59 (SC). The relevant portion of the judgement is being quoted below:- "The only question with whic....
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.... as raw shrimps and prawns. When raw shrimps and prawns are subjected to the process of cutting 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 known as shrimps and prawns. This judgment in Sterling Foods (supra) has been rightly applied by the Bombay High Court, in the case of Commissioner of Income-Tax v. Sterling Foods (Goa) [(1995) 213 I.T.R. 8513, to a claim under Section 80HH of the Income-Tax Act and it has been held that the activity of processing of prawns is not an activity of manufacture or production. We are of the view that the judgment of this Court aforementioned in Sterling Foods (supra) is apposite to the question that we have to decide and, upon the material that is before us, we must reverse the view taken by the High Court in the judgment under appeal. Learned counsel for the assessee submitted that the matter should be remanded to the appropriate authority to enable the assessee to lay before it evidence in detail of what th....
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....m of power or in the construction of ships or in the manufacture or processing of goods or in mining." Sri Nitin Kesharwani, learned counsel appearing for the assessee has contended that Commissioner has rightly held that the definition of the word Industrial Undertaking to which section 80IA applies, includes 'processing of goods' also and rightly held that the processing of goods can be considered alongwith manufacture or production of goods while allowing deduction in respect of profits of the industrial undertaking under section 80IA of the I.T. Act, 1961 and the same has rightly appreciated by the Tribunal and the Revenue has no case and the assessing officer had wrongly interpreted the provisions of section 80IA of the I.T. Act while not according 100% benefit to the assessee. We have heard the rival submissions of the parties and perused the record. Brief facts of the case arise out of the present appeal are as follows:- The assessee is a Private Ltd. Company and same is repairing and manufacturing transformers. The business as its first transaction started taking place since 03.11.1994. The assessee return of income showing as nil was filed on 30.11.1997....
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....acture or production of goods, while allowing deduction in respect of profit of industrial undertaking under section 80IA of the Act, 1961 had allowed the deduction to the entire profit assessed in the assessment order. The Revenue had filed I.T.A.No.390/ALLD/03 before the Tribunal and the Tribunal also taking the same view as taken by the Commissioner has allowed the appeal in part and held that deduction under section 80 IA was allowed to the transformer oil, as such was not sale, but was a part of assembly of transformer, therefore, the same, was under the purview of section 80IA disallowed deduction under section 80IA of the Act 1961 on scrap and the labour charges for the sale of scrap. We have heard the rival submissions advanced by both the learned counsels just to appreciate the correct facts. It is necessary to reproduce the provisions of section 80IA (2)(iv)(c) of the Act, 1961, as applicable at relevant point of time, which is as under:- "in the case of an industrial undertaking located in such industrially backward district as the Central Government may, having regard to the prescribed guidelines, by notification in the official Gazette, Specify in this behalf,....
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....A(8) and clause (iii) & (iv) of Expl. Below Section 10-B(7) of the I.T. Act, while discussing the deductions under the said sections in relation to the "Newly established Industrial Undertakings in Free Trade Zones" and "newly established 100% Export Oriented Undertakings" respectively. On this analogy, it has been argued that processing of articles or things done by assessee should be treated as "Manufacture" of new article or thing. Let us examine the inclusive definition of manufacture. "Manufacture" includes any:- (a) Process, OR (b) assembling or (c) recording of programme on any disc, take perforated madia or other information storage device; X X X "Produce" in relation to any article or thing referred to in clause (I) of sub-section (2) includes production of computer programmes. The explanation of both the above sections begins with the opending limb "For the purpose of this section" and, therefore, it can not be reasonably construed that this inclusive definition of "Manufacture" or "Produce" as enuciated and elaborated in Section 10-A and 10-B of the I.T. Act is applicable to provisions of section 80-I or section 80-IA because these words have been de....
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....nary (Sixth Edition) at P. 665, Manufacture, has been defined as under: "Manufacture "(Noun)-making of articles by physical labour or machinery especially on large scale; "Manufacture" (Verb)-bring (Material) into from fit for use; produce (articles) by labour esp. by machinery on large scale. 23. In CIT Vs. Tax Locomotive and Engg. Co. (1968) 68ITR 325, assembling of automotive bus or truck chassis from component parts, so as to convert into an automobile has been held to amount to manufacture. 24. Blending of different kinds of ore possessing different chemicals and physical composition, in order to produce ore of a particular specification has not been considered/held as a "Manufacture" operation because commercially no new and distinct commodity from the original ore of different specification has been produced/manufactured although the entire activity of the assessees was brodly divisible into seven different operations; such as dressing, washing, ore handling, screening and blending it etc. See Chowgule and Co. (P) Ltd. Vs. UOI-AIR 1981 SC 1014. 25. Galvanizing of metals was held as an act or process of galvinizing or coating iron or steel with zink to protect it ....