TaxTMI 
TaxTMI 
2021 (5) TMI 152
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....arried out in scientific manner, with use and aid of sophisticated plant and machinery and whether the transformation brought about an entirely new product in the name of LPG and whether such activity is a manufacturing activity so that the assessee is eligible to claim additional depreciation u/s 32(1)(iiia) of the Act. This issue is no more res-integra. 2.1. The Hon'ble Supreme Court in the case of Commissioner of Income-tax-1, Mum. vs. Hindustan Petroleum Corpn. Ltd. reported in [2017] 84 taxmann.com 215 (SC) held as follows: "Section 80-I, read with sections 80-IA and 80HH, of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings, etc., after certain dates (Manufacture) - Whether process of bottling of gas into cylinders for domestic use by complex technical process undertaken in plant with machinery amounts to production or manufacture of gas cylinders for purposes of deduction under sections 80-I, 80-IA and 80HH - Held, yes [Paras 17 & 18] [In favour of assessee]" 2.2. This Bench of the Tribunal in the case of D.C.I.T, Cir-10(1), Kolkata vs. M/s. Indian Oil Petronas Pvt. Ltd. in ITA No.1930/Kol/2016 order dated 15.03.2019 on the....
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....n it does not appeal to logic that the same activity does not amount to manufacture under the Income-tax Act. 1961. 20. We note that raw materials, butane & propane have different chemical compositions and the end uses for butane & propane are much different from the LPG. Butane / Propane are primarily used as a source of energy for industrial purpose whereas blended LPG facts primarily as fuel for operating commercial vehicles or used as cooking gas. We note that both in terms of chemical composition as also with regard to its commercial use and application as also as a commercial product: propane, butane & LPG are regarded as different & distinct products. Merely because all the three products in themselves are considered as source of energy or power and these are consumed by different end users for providing energy, such fact in itself does not lead to conclusion that all three products are one and the same. Had that been the case then both scientifically as well as commercially these three products would have been known by three distinct & different names or chemical terminologies. The question as to whether the blending of two different gases i.e. propane & butane for....
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....aw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjected to that the manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connect with the ultimate production of goods that but for that process processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture. 8. The aforesaid aspects were highlighted in Kores India Ltd. v. CCE [2005] 1 SCC 385 in the background of Central Excise Act, 1944 (in short the Excise Act) and Central Excise Rules, 1944 (in short the 'Excise Rules') and Central Excise Tariff Act, 1985 (in short the 'TariffAct). The stand of the revenue was that it amounted to "manufacture ", contrary to what has been pleaded in these cases. This Court held that it amounted to manufacture. 9. The matter can be looked at from another angle. In CIT v. Sesa Goa Ltd [2004J 271 ITR 3311, this Court considered the meaning of word 'production. The issue in that case was whether the ex....
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.... has a wider connotation than the word 'manufacture'. While every manufacture can be characterised as production, every production need not amount to manufacture .... The word 'production' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process which mayor may not amount to manufacture. It also takes in all the by-products, intermediate products and reside rodeos which emerge in the course of manufacture of goods. " 21. We also note that the assessee's process of production of LPG is subjected to levy of Central Excise Duty and the Excise Department which also falls under the Department of Revenue collects substantial amount of excise duty on the footing that the assessee is engaged in manufacture of an article or product. In the context as to whether the definition of 'manufacture or production' employed for levy of Central Excise should also be employed under the Income-tax Act. 1961, as it was examined by the Supreme Court in the case of ITO Vs Arihant Tiles & Marbles Ltd (320 ITR 79). We note that in the process of blending of butane & propane which ....
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....e to the assessee and hence this Cross Objection was filed with delay. As this was not claimed before the lower authorities, these additional grounds were filed in the Cross Objections by the assessee. He has submitted that these additional grounds in Cross Objections are purely legal grounds and do not require enquiry to the facts and prayed that the same be admitted by relying on the decision of the Hon'ble Supreme Court of India in the case of National Thermal Power Co. Ltd. vs. CIT reported in (1998) 229 ITR 383 (SC). 6. After considering rival submissions, we condone the delay of 424 days for the reason that the assessee became aware of its rights to claim for deduction, consequent to pronouncement of judgement of these issues by the ITAT. The legal position is that such legal claims can be made by the assessee at any stage of proceedings. The entire exercise of assessments and appeals should ultimately result in determining the correct taxable income of the assessee. Thus we admit the additional ground raised in the Cross Objections. 7. We have heard rival contentions on these additional grounds on merits. On careful consideration of the facts and circumstances of the c....
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....tax including the additional income tax should be charged at the rate specified in the Act or DTAA, whichever is more beneficial to the assessee. 8.6. In the instant case, the dividend, being an income in the hands of non-resident shareholders in respect of which the incidence of tax is borne by the resident company paying dividend. The rate of tax as specified in the DTAA, being more beneficial to the assessee, would be applicable over the rate specified in section 115-O of the Act. 8.7. We now consider the principles emanating from Supreme Court ruling in the case of Tata Tea Limited. The Hon'ble Supreme Court in the case of Tata Tea reported in 398 ITR 260 (SC) has overruled the relevant decision of the Hon'ble Calcutta High Court and held that DDT is leviable on the entire amount of dividend, even if it is distributed partly out of agricultural income. Following points emerge on an analysis of the Supreme Court ruling. The Hon'ble Supreme Court referred to its earlier decision in the case of Bacha Guzdar to hold that dividend distributed by a company is not impressed with the character of its own income. Thus, the levy of DDT by the Parliament on the entirety of the divid....
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....he recipient of a certain sum of money or its equivalent; and not the payer thereof. The term 'income' cannot be reconciled qua the payer. vii) It may be a different matter altogether that the incidence of tax on 'dividend income' has been fixed on the payer of dividend under the relevant scheme of the Act. However, the fact remains that the dividend income is taxed in the form of DDT under section 115-O of the Act, which can only be autopsied for the purposes of calculating the rate of tax thereon from the perspective of the recipient shareholder, though the quantum of tax, once decided, is to be borne by the payer of dividend. Thus, though optically appearing to run counter to the subsequent ruling in the case of Tata Tea, the earlier ruling in the case of Godrej Boyce does not actually or in substance, convey any contrary or contradictory view, as expressed by the Hon'ble Supreme Court in the case of Tata Tea in the context of the issue on hand. viii) Further, another interesting point to note is that both the rulings, as above, were rendered by coterminous benches (two judges) of the Supreme Court, with one judge, namely Hon'ble Mr. Justice Ashok Bhushan, bein....