TMI Blog1995 (3) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee on the ground that the process involved did not amount to manufacture as it was merely preparing the food preparations in support of his conclusion, he relied on the decision of the Kerala High Court in the case of CIT v. Casino P. Ltd [1973] 91 ITR 289. This order of the Assessing Officer has been confirmed by the CIT(A). Aggrieved by this order, assessee is in appeal before us. 3. Mr. J.D. Mistry, the learned counsel for the assessee, drew our attention to various processes involved in making potato chips which, inter alia, include cleaning, peeling, cutting, slicing, washing, drying, frying and salting, etc. The bone of contention of the assessee is that the process involved is the manufacturing process as the ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, it was a case of manufacturing of goods and assessee was entitled to investment allowance under section 32A of the Act. 4. On the other hand, Mr. A.P. Pawar, the learned Departmental Representative, argued that the assessee was just preparing the food articles and, therefore, the undertaking of the assessee could not be described as an industrial undertaking for the purpose of section 32A. In support of his contention, he heavily relied on the decision of the Kerala High Court in the case of Casino (P.) Ltd and the judgment of the Bombay High Court in the cases of CIT v. Berry's Hotels (P.) Ltd [1994] 207 ITR 615, Fariyas Hotels (P.) Ltd v. CIT [1995] 211 ITR 390 and also the judgment of the Karnataka High Court in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng more is necessary and, there must be transformation ; a new and different article must emerge having a distinctive name, character or use." Their Lordships of the Supreme Court in an another case of Dy. CST v. Pio Food Packers [1980] 45 STC 63 (sic) had to consider this question again. In that case, the assessee used to purchase pineapples and then various processes were involved such as, washing then removing of inedible portions and skin slicing and adding some preservatives and finally packing the finished product. The question before their Lordships was whether the pineapple fruit was consumed in the manufacture of pineapple slices. Their Lordships at page 65 held as under : "Commonly manufacture is the end result of one or more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 179 ITR 317. Their Lordships approved the earlier judgment in the case of Empire Indst. Ltd. after considering the various Supreme Court judgments including the one already referred by us. 6. From the above judgments it is clear that a process can be said to be manufacturing process provided there is a transformation of the raw material into a new and distinct commodity. If there is no essential difference in the identity between the original commodity and the processed article, then it is difficult to say that the process carried on by the assessee was a manufacturing process. If we apply these tests to the facts of the present case, we are of the view that the process carried on by the assessee amounted to manufacturing process. The rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Industrial company means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or any mine." Their Lordships were of the view that the question whether assessee was an industrial company or not within the meaning of the above definition was to be decided in the context of the definition. Their Lordships held that there was a distinction between the manufacturing concern and trading concern. It is the main object of the concern which is to be seen. If a concern is mainly a trading concern which may sometime engage in the production which is incidental to trading, then it cannot be called a manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st whether the main object of the undertaking was trading or manufacturing. Hotel industry was held to be a trading concern and conversion of raw material into foodstuff was only a process in trading. This was decided because the context required so as the definition of industrial company used the word "mainly". Their Lordships did not decide whether the process of preparing the food amounted to manufacture or not. On the contrary, it was observed by their Lordships at page 299 that the foodstuff produced in the hotels out of the raw material was commercially different. The following observations are noteworthy : "The assessee's contention that foodstuffs produced in its hotel using raw materials such as pulses, meat, wheat and the like a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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