TMI Blog2011 (2) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Excise Department even to the extent of asking for refund of excise duty, if it was so entitled to - Appeal is allowed - ITA No. 740 of 2010. - - - Dated:- 18-2-2011 - SIKRI A. K., MEHTA M. L. JJ JUDGMENT The judgment of the court was delivered by 1. M. L. Mehta J.-C. M. No. 11166 of 2010 (delay) 2. This is an application seeking condonation of delay of 151 days in refiling the appeal. 3. Upon hearing learned counsel for the parties and on a perusal of the application, the delay in refiling the appeal is condoned subject to payment of costs of Rs. 5,000 to the Delhi High Court Legal Services Committee. 4. Accordingly, the application stands disposed of. ITA No. 740 of 2010 5. Notice. Mr. Yadav enters appearance and accepts notice on behalf of the respondent. 6. Heard the counsel for the parties. The present appeal is admitted on the following substantial questions of law : "(i) Whether the Income-tax Appellate Tribunal was correct in law in allowing the deduction under section 80-IB of the Act to the assessee ? (ii) Whether the process undertaken by the assessee amounts to manfacturing or production of any article or thing so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. (iii) procuring of raw fish from fishing docks. (iv) pre-processing of fish. (v) cleaning, cutting of fish head, tail, fins, tips and removal of skin. (vi) pre-cooking and packaging of pre-cooked products in cans. (vii) creation of negative pressure for achieving long shelf life. (viii) sterilization of canned product and inactivation of microbial load. (ix) cooling of packed cans for further inactivation of microbial load. (x) final product tuna/mackerel fish. (xi) tinned fish kept in warehouse. 2.1.5 After going through the above stages through which the input raw material-fish is converted into tinned fish, it is clear that, as a result of processing undertaken by the assessee-company, no commercially different and distinct commodity has been produced and, hence, it is noticed that the processing undertaken by the assessee-company cannot be held to be amounting to manufacturing or production of an article or thing and, therefore, the basic condition for eligibility of 80-IB deduction is not found to have been fulfilled and, hence, the deduction claimed under section 80-IB is not found to be allowable." 11. The Commissioner of Income-tax (Appeals) af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated Marbles and Granite Industries [2011] 331 ITR 96 (Delhi) ; [2009] 225 CTR (Del) 410 and CIT v. Jalna Seeds Processing and Refrigeration Co. Ltd. [2000] 246 ITR 156 (Bom). 14. We may note that the decisions in the cases of CIT v. Marwell Sea Foods [1987] 166 ITR 624 (Ker) and CIT v. Bharath Sea Foods [1999] 237 ITR 46 (Ker) [FB] of the Kerala High Court related to prawns and fish respectively are no longer holding field on the subject in view of the judgment of the hon'ble Supreme Court in the case of CIT v. Relish Foods [1999] 237 ITR 59. In this case the under-mentioned findings of Sterling Foods v. State of Karnataka [1986] 63 STC 239 (SC), were applied by the Supreme Court that (page 61) : ". . . the processed or frozen shrimps and prawns are commercially regarded as the same commodity as raw shrimps and prawns. When raw shrimps and prawns are subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing they do not cease to be shrimps and prawns and become other distinct commodities. There is no essential difference between raw shrimps and prawns and processed or frozen shrimps and prawns. In common parlance they remain known as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject is that it is only when a change or series of changes take the commodity subjected to such processes to a point where it can no longer be regarded as the original commodity but is instead recognised as a new and a distinct article, that such a process can be said to have resulted in `manufacture' or `production' of an article. In other words, what is to be seen is whether the article claimed to be manufactured or produced is commercially a different from the commodity out of which the same has been produced. As noted above, in the present case, the Tribunal has found that the assessee's activity is restricted to catching of fish on the high seas, cleaning it from both the ends and then keeping it in the cold storage till the same is sold to various customers. So far as the process, the assessee puts the fish to, is concerned, the aforenoted finding, one of fact, is not sought to be challenged in the question referred to this court. Applying the above test to the facts found by the Tribunal, we are of the opinion that by mere cutting off of the head and tail of the fish, it does not become another distinct commodity. In common parlance it continues to be known as fish and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 445 (Mad) has held that the processing of shrimps does not amount to manufacture and, therefore, the assessee is not entitled to investment allowance under section 32A of the Act. That decision squarely applies here." 20. Recently, this court had the occasion to consider a similar issue in STR 12 of 2002 and STR 4 of 2003 decided on January 24, 2011 (Metalite Industries v. CST [2011] 38 VST 33 (Delhi)). In the said case, a reference was made to the case of Board of Revenue Taxes, Ernakulam v. Pio Foods Packers [1980] 46 STC 63 (SC). Though this case was under the Sales Tax Act, the question regarding manufacturing came to be considered. The case of Pio Foods Packers (supra) related to pineapple fruits which were processed into pineapple slices. It was held that though it has undergone a degree of processing, it must be regarded as still retaining its original identity. The principles laid down in this case by the Supreme Court are of wide importance, which are noted as under (pages 65 and 66 of 46 STC) : " . . . the generally prevalent test is whether the articles produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as discussed above, it is held that the assessee is engaged in processing and not manufacturing and as such is not eligible for deduction under section 80-IB. In view of the findings, we answer question (ii) in favour of the Revenue and against the assessee in the sense that the activities undertaken by the assessee did not amount to production or manufacturing and so is not eligible for deduction under section 80-IB. Consequently, question (i) is answered in the negative in favour of the Revenue and against the assessee. 22. To substantiate his submission that the Department has been accepting the returns filed by the assessee and allowing the deduction for the previous years and so was estopped from doing so on the principle of consistency, learned counsel has relied upon the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC), wherein it was observed as under (page 329) : We are aware of the fact that, strictly speaking, res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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