TaxTMI 
TaxTMI 
2009 (10) TMI 23
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....t up and promote a unit near Ahmedabad in the name of "Pioneer Fruit International" to produce fruit based drink mixes/concentrates derived from fruit juice through the various processes which are given in the Flow Chart appended to the application. The process involves various steps such as peeling, extraction of fruit oil, fruit pulping, screening, emulsifying, homogenizing, spray drying, addition of preservatives, colour and sweetness and packaging. The learned authorized representative of the applicant stated at the time of hearing that three products will be produced in the proposed plant : (1) fruit juice - either obtained from one or more than variety of fruits (normally packed in pouches for ready consumption) (2) Concentrates of ju....
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....eservatives. 4. Fruit Powder: The fruit concentrate obtained as above is subjected to the process of spray drying which converts it to fruit powder, which is blended with food acid, food colour, flavour, stabilizer, sweeteners and vitamins." 3. The applicant seeks advance ruling under Section 245Q of the Income Tax Act, 1961 on the following question : "1. Whether the profit of the proposed undertaking of the assessee derived from its business of squeezing of juice from fruits and vegetables; extracting oil, emulsifying, homogenizing and / or spray drying it; adding preservatives and other additives to it and packaging it in compatible packs, is profit from the business of processing, preservation and packing of fruits or vegetable....
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....ry or plant previously used for any purpose; (iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India : Provided that the condition in this clause shall, in relation to a small-scale industrial undertaking or an industrial undertaking referred to in sub-section (4) shall apply as if the words "not being any article or thing specified in the list in the Eleventh Schedule" had been omitted. Explanation 1 : xx xx xx xx Explanation 2: xx ....
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.... deduction can be claimed are specified in sub-section (2) of Section 80IB. 6. The question is whether the business of the proposed undertaking is one of processing, preservation and packaging of fruits. In my view, the answer should be plainly in the affirmative. The integrated activities of processing, preservation and packaging of fruits or vegetables are embraced within the scope of sub-section (11A) of Section 80IB. The only aspect which needs some elaboration is whether the ingredient of processing is satisfied. Is it a business of processing (including preservation) of fruits? Whether the series of steps taken to produce fruit based drink mixes or concentrates or fruit powder amount to processing of fruits or do they cross the bou....
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.... to the act of processing. Another case which deserve reference is the case of Chowgule & Co P. Ltd. vs. Union of India [1981, 47 STC pg.124]. The three-judge Bench of Supreme Court held that the blending of iron-ore in the course of loading through the mechanical ore handling plant amounted to processing of ore within the meaning of Section 8(3)(b) of the Central Sales Tax Act and the mechanical ore handling plant fell within the description of machinery, plant, equipment used in the processing of ore for sale. The following pertinent observations were made while explaining the connotation of the word 'processing' : "The nature and extent of processing may vary from case to case; in one case the processing may be slight and in another i....
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....lending would amount to "processing" of ore within the meaning of Section 8(3)(b) and Rule 13." Earlier, it was observed that the blending of different qualities of ore did not amount to manufacture. 8. In the case of Commissioner of Wealth Tax vs. Mohini Rai [1999, 240 ITR pg.636], the Gujarat High Court observed that in order to characterize an operation as processing, it is necessary that the commodity must, as a result of the operation, experience some change. 9. The principle that runs through the above decisions is that notwithstanding the extent of processing and the changes that occur to the original commodity by reason of series of operations, it could still amount to processing of that original commodity. 10. Processin....