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2008 (6) TMI 303 - AT - Income TaxDeduction u/s 80-I and 80HHA - process amounting to manufacture/production or not - new goods coming into existence or not? - Whether the process of pasteurization of milk amounts to process of manufacture/production? - Assessee contended that the activities of the assessee firm has been accepted as manufacture/production for the AY 1985-86 and the proposal to withdraw the benefit of investment allowance for the AY's 1980-81 and 1981-82 - It is independent from raw milk and therefore there is a manufacture of new product. HELD THAT:- In the case of Sesa Goa Ltd. [2004 (11) TMI 14 - SUPREME COURT], the Hon'ble Supreme Court held that extraction and processing of iron ore amounts to manufacture or production of an article or thing. The Court held: "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 byproducts, intermediate products and residual products which emerge in the course of manufacture of goods. The Hon'ble Supreme Court in the case of Idandas v. Anant Ramchandra Phadke [1981 (11) TMI 185 - SUPREME COURT], has laid down three tests as to what constitutes manufacture. They are - (i) a certain commodity should have been produced; (ii) the process of production must involve either labour or machinery; and (iii) the end product should have a distinct character, name and used. The complete pasteurize steps, are purification, boiling and standardization. It does not go beyond the stages of 'processing' and by this processing it has become little more 'clean' and 'more fit' for consumption. But the milk in its raw stage was also fit for consumption. Assessee do processing. But all processing does not amount to production of an article or thing. If the assessee markets curd, ghee or other products after processing, that amounts to 'manufacture or production of an article or thing'. Pasteurization and standardization does not amount to production. Therefore, we hold that the process of standardization and pasteurization of milk amounts to processing but does not amount to manufacture/production for the purpose of claiming deduction under sections 80-I and 80HHA of the Act. In the result, appeals by the assessee are rejected and appeals by the revenue are allowed.
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