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Issues Involved:
1. Allowability of deduction for contributions to an unrecognized executive staff provident fund. 2. Whether the activity of curing coffee amounts to manufacturing, entitling the assessee to relief under section 32A of the Income-tax Act. Issue-wise Detailed Analysis: 1. Allowability of Deduction for Contributions to an Unrecognized Executive Staff Provident Fund: The court addressed whether the amount contributed by the assessee to an unrecognized executive staff provident fund is an allowable deduction. The respondent/assessee, a public limited company engaged in coffee curing, claimed a deduction of Rs. 47,549 for the assessment year 1978-79. The Income-tax Officer disallowed this deduction because the fund was not recognized. However, the Commissioner of Income-tax (Appeals) directed the allowance of the deduction, a decision upheld by the Appellate Tribunal based on its previous ruling for the same assessee for the year 1977-78. The court noted that the answer to this question is governed by its earlier decision in CIT v. Aspinwall and Co. (Travancore) Ltd. [1992] 194 ITR 739, which allowed such deductions. Therefore, the court answered question No. 1 in the affirmative, against the Revenue and in favor of the assessee. 2. Whether the Activity of Curing Coffee Amounts to Manufacturing: The second issue was whether the assessee's activity of curing coffee qualifies as manufacturing, thereby entitling the assessee to investment allowance under section 32A of the Income-tax Act. The Income-tax Officer had disallowed the investment allowance, arguing that curing coffee does not constitute manufacturing or production. However, the Commissioner of Income-tax (Appeals) and the Appellate Tribunal ruled in favor of the assessee, with the Tribunal referencing its decision in Bharathi Coffee Curing Works and stating that curing coffee involves processes such as removing foreign matter, peeling, and grading, which amount to manufacturing. The court reviewed various precedents and legal interpretations of "manufacture" from cases under different legislations, including the Central Excises and Salt Act and Sales Tax Act. Key judgments cited included Union of India v. Delhi Cloth and General Mills Co. Ltd., Empire Industries Ltd. v. Union of India, and Ujagar Prints v. Union of India, which discussed the transformation of a commodity into a new and distinct article as a criterion for manufacturing. The court noted that the Appellate Tribunal's decision was largely influenced by the Bangalore Bench's ruling in Bharathi Coffee Curing Works without independently verifying whether the processes involved in curing coffee met the criteria for manufacturing. The Tribunal had not sufficiently detailed the specific activities and machinery involved in the assessee's coffee curing process. Given the lack of detailed factual analysis and the reliance on another Tribunal's decision without independent verification, the court found the Tribunal's order to be perfunctory and not in accordance with law. Consequently, the court declined to answer question No. 2 and directed the Appellate Tribunal to re-examine the matter, allowing both parties to present relevant materials. Conclusion: The court affirmed the allowability of the deduction for contributions to the unrecognized executive staff provident fund. However, it remanded the issue of whether curing coffee constitutes manufacturing back to the Appellate Tribunal for a detailed and proper examination, emphasizing the need for a thorough analysis of the facts and processes involved.
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