TMI Blog2014 (3) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... ell within the competence of the legislature to define a word for specific purposes or object or section and not for general connotation where ever these words occur in the I.T. Act. Relying upon CIT Vs. Venkateswara Hatcheries (P) Ltd. [1999 (3) TMI 12 - SUPREME Court] - the word "Manufacture" and "produce" has not been defined in section 80-IA and there is no specific mention in it that the definition of these words as given in Section 10-A and 10-B will apply to section 80-IA, the Dictionary Meaning and understanding of common parlance has been taken/construed to be the logical/reasonable meaning/interpretation/definition - by means of continuous and regular action or succession of action taking place or carried on in a definite manner and leading to the accomplishment of some result then only some benefits could be conferred in favour of the assessee. The definition of processing would not be applicable especially in the background that the transformer oil has been purchased by the assessee from market and centrifuging had been done by centrifugal machine in order to make it usable in Transformer, but in substance no new substance or articles or things has been emerged fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. I have seen the calculation of deduction u/s. 80IA of the Act. I find that deduction u/s. 80IA has been claimed on the transformer oil, scrap as well as the labour charges for the sale of scrap. I agree that the transformer oil as such was not sold, but was a part of assembly of transformer and therefore, deduction u/s. 80IA is allowable on it. But certainly, no deduction u/s. 80IA of the Act is allowable on scrap and the labour charges for the sale of scrap. I, therefore, direct the A.O. to allow deduction u/s. 80IA on the transformer oil and withdraw the deduction u/s. 80IA of the Act on the scrap and the labour charges for sale of scrap. The grounds of appeal directed by the Revenue are partly allowed. Against which the appellant filed an appeal before this Hon'ble Court, which was admitted on the following question of law:- 1. Whether on the facts and circumstances of the case, is the Tribunal legally correct in its view that the assessee's business is an industrial undertaking within the meaning of Section 80IA of the I.T. Act, 1961. 2. Whether on the facts and circumstances of the case, was the ITAT legally correct in holding that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the appellant. Dr. V. Gauri Shankar, Senior Advocate (Rajiv Tyagi, B. V. Balaram Das and Ms. Sushma Suri, Advocates, with him), for the respondent. ORDER We have heard learned counsel for the appellant. There is no merit in the appeals. The civil appeals are dismissed with costs. Sri Shambhu Chopra, learned counsel for the Revenue has also placed reliance in the judgement of Hon'ble Apex Court, Aspinwall and Co. Ltd. V. Commissioner of Income Tax dated 05.09.2001, reported in (2001) 251 ITR 323 (SC). By the said judgement he has tried to place the process of manufacturing coffee beans from the raw berries amount to manufacturing activities and coffee beans produced from berries for distinct activities and for new commodities and the assessee is rightly held to be entitled the benefit under Section 32A of the Act. He has also placed that the word manufacture has not been defined in the Income-tax Act. In the absence of a definition, the word manufacture has to be given a meaning as is understood in common parlance. It is also contended that it is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the process of curing the coffee. The word manufacture has not been defined in the Act. In the absence of a definition of the word manufacture it has to be given a meaning as is understood in common parlance. It is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. If the change made in the article results in a new and different article then it would amount to a manufacturing activity. This Court while determining as to what would amount to a manufacturing activity held in Deputy Commissioner of Sales Tax v. M/s. Pio Food Packers, 1980 Supp. SCC 174: that the test for determination whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity, but is recognized in the trade as a new and distinct commodity. It was observed (page 65): Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and against the revenue. He has also placed reliance in the judgement of Hon'ble Apex Court in the case of Commissioner of Income Tax v. Relish Foods dated 11.03.1999, reported in (1999) Vol. 237 ITR 59 (SC). The relevant portion of the judgement is being quoted below:- The only question with which we are concerned in this appeal by the Revenue, relating to the Assessment Year 1977-78, reads thus : Whether, on the facts and in the circumstances of the case :- i) the assessee's business involves 'production' ? ii) the assessee is entitled to exemption under Section 80HH of the 1.T. Act, 1961? The assessee claimed the allowance under Section 80HH of the Income-Tax Act, 1961, on the ground that it was an industrial undertaking that manufactured/produced articles. It would appear from the judgment of the Tribunal that the assessee bought shrimps, peeled them and froze them. There is no other material on the record which indicates what was done by the assessee and how it was done. The Income-Tax Officer negatived the claim. The Commissioner of Income-Tax (Appeals) and the Tribunal upheld the claim. From the order of the Tribunal the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to decide and, upon the material that is before us, we must reverse the view taken by the High Court in the judgment under appeal. Learned counsel for the assessee submitted that the matter should be remanded to the appropriate authority to enable the assessee to lay before it evidence in detail of what the purchased shrimps were subjected to. We think it is far too late in the day for the assessee to do that in relation to the assessment year with which we are concerned. The appeal is, therefore, allowed. The judgment and order under appeal is set aside to the extent it deals with the said question. The said question is answered in the negative in relation to both its parts and in favour of the Revenue. No order as to costs. The Hon'ble Apex Court while considering special deduction under section 80HH in Sterling Foods v. State of Karnataka and Another, [1986] 63 S.T.C. 239, has observed as follows:- ...where it has been held that 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, cleanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brief facts of the case arise out of the present appeal are as follows:- The assessee is a Private Ltd. Company and same is repairing and manufacturing transformers. The business as its first transaction started taking place since 03.11.1994. The assessee return of income showing as nil was filed on 30.11.1997 by claiming 100% deduction under section 80 IA (2)(iv)(c) of the I.T. Act, 1961. The Deputy Commissioner of Income Tax Circle-I, Gorakhpur had completed the assessment under section 143(3) of the I.T. Act 1961 on an income of Rs. 3,72,156/- against the nil income. The assessing officer stated that company had been engaged in repairing of old transformer and it did not manufacture new transformer, the assessee had wrongly and incorrectly mentioned in column 3 and part 4 of the income tax return that its nature of business or profession of repairing and manufacturing of transformer . The assessee had put his case before the assessment officer that the company has been manufacturing aluminium HT/LT Leg Coils which are used in old burnt transformers and on the basis of the said manufacturing the assessee had claimed 100% deduction under section 80IA(2)(iv)(c) of the I.T. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) of the Act, 1961, as applicable at relevant point of time, which is as under:- in the case of an industrial undertaking located in such industrially backward district as the Central Government may, having regard to the prescribed guidelines, by notification in the official Gazette, Specify in this behalf, (as an industrially backward district of Category or an Industrially backward district of Category B and) it begins to manufacture or produce articles or things or to operate its cold storage plant or plants at any time during the period beginning on the Ist day of October, 1994 and ending on the 31st day of March, (2000) As per the provision of the section 80IA of the Act, 1961, the same would be applicable to a company, which manufacture or produce any article or things. In the present matter, the assessee company perform work in the nature of business for repairing and manufacturing of transformer. It has also been contended by the assessee that the company has been manufacturing aluminium HT/LT Leg Coils, which were used in old burnt transformers and in this regard, it had also submitted in detail before the assessing authority. The company did not manufacture or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limb For the purpose of this section and, therefore, it can not be reasonably construed that this inclusive definition of Manufacture or Produce as enuciated and elaborated in Section 10-A and 10-B of the I.T. Act is applicable to provisions of section 80-I or section 80-IA because these words have been defined with a particular purpose or with reference to the limited/particular context i.e. free trade Zone and 100% Export Oriented Undertakings. Although prima-facie, there appears to be a discrimination yet this is a reasonable/discrimination because it is well within the competence of the legislature to define a word for specific purposes or object or section and not for general connotation where ever these words occur in the I.T. Act. Had this been the intention or object of the legislature/Parliament, the word Manufacture world also have been defined in section 80-I or 80IA in the same manner or a reference must have been made in section 10-A or 10-B of the I.T. Act because these sections are on the stature for the last 7-8 years or even some more years with certain new charges. The Hon'ble Apex Court has also considered the same dispute in the case of CIT Vs. V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees was brodly divisible into seven different operations; such as dressing, washing, ore handling, screening and blending it etc. See Chowgule and Co. (P) Ltd. Vs. UOI-AIR 1981 SC 1014. 25. Galvanizing of metals was held as an act or process of galvinizing or coating iron or steel with zink to protect it from rust. CIT Hindustan Metal Refining works (P) Ltd. (1981) 128 ITR 472 (Cal). The Commissioner as well as learned Tribunal have given much emphasis on processing and held that the assessee, industrial undertaking does processing of goods and entitled for benefit under section 80IA, just to appreciate the processing, it would be appropriate to place few more meanings of the processing even though the processing has not been defined in the Act. According to Webster Dictionary; it defines 'process' as - Process means subject to some special process or treatment, to subject, especially, raw material to a process of manufacture, 28-2 In Webster Third New International Dictionary process means, To subject to a particular method, system or technique or preparation, handling or other treatment to effect a particular result put through a special process. 2 ..... 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