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TMI Blog2001 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... t has come up in appeal. By the impugned judgment, the High Court, in a reference made under section 256(l) of the Income-tax Act, 1961 (for short, "the Act") by the Income tax Appellate Tribunal,. Cochin, (for short "the Tribunal"), has answered the fallowing question of law, in the negative : "Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the assessee's activity of curing coffee amounts to manufacturing and the assessee is entitled to relief under section 32A of the Income-tax Act ?" i.e., against the assessee and in favour of the Revenue. The High Court opined that the assessee is not entitled to the investment allowance under section 32A of the Act in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was taken on record. To appreciate as to what is understood by the word "coffee" as is gene rally known in the commercial parlance, the High Court referred to Encyclopaedia Britnnaica volume 6 (1972 edition), and concluded that "coffee" is a beverage made from roasted seeds (beans) of the coffee plant. The said beverage is consumed as either a hot or cold drink and is considered to be having an invigorating effect. Coffee is prepared by either a dry or a wash process. In the dry process, known as natural process, the coffee cherries are thoroughly rinsed in water and then spread out on cement patios in the open air and sun to dry. After drying, the coffee is repeatedly run through fanning and hulling machines to remove the bulls, dried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of coffee to the required standards prescribed by the coffee hoard in drying yards ; (4) Hulling/pealing/polishing (5) Grading of coffee mechanically (6) Colour sorting ; (7) Garbling and manual grading (8) Out-turning of garbled coffee and (9) Bulking". The Tribunal also found that to deal with the nine processes, the assessee has the factory area where godowns for storage of uncured/clean coffee, coffee drying yards, machine rooms, garbling sheds, etc., are located, Curing operations start with the drying of coffee in the drying yards in bright sunlight. Then comes the stage of hulling. It means, the outer husk of the coffee bean has to be carefully removed, if necessary, by mechanical operations to obtain coffee seeds which can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, (if a sum by way of investment allowance equal to twenty-five per cent. of the actual cost of the ship, aircraft, machinery or plant to the assessee : Provided that no deduction shall b@ allowed finder this section in respect of- . . . (2) The ship or aircraft or machinery or plant referred to in sub-section (1) shall be the followings namely :-. . . (iii) in any other industrial undertaking for the purposes of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to another and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place." Adverting to the facts of the present case, the assessee after plucking or receiving the raw coffee berries makes it undergo nine processes to give it the shape of coffee beans, The net product is absolutely different and separate from the input. The change made in the article results in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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