TMI Blog1999 (9) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... of deep sea fishing, etc. The assessment year involved is 1980-81, for which the accounting period ended on June 30, 1979. For the relevant assessment year, the assessee claimed weighted deduction under section 35B(1)(b)(viii) in respect of the expenses incurred-on payment of charter fees for the fishing trawlers hired by it from one Southern Marine Services Company Limited of Thailand. However, while completing the assessment for the relevant assessment year, the Assessing Officer held that these expenses being hire charges for the trawlers hired by the assessee for catching fish in Indian waters pertained to the cost of the product which it was exporting and, thus, did not relate either to the supply of goods or performance of services outside India, as laid down under section 35B of the Act and, therefore, disallowed the claim. Aggrieved, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals), who concurred with the Assessing Officer. Being dissatisfied with the decision of the Commissioner of Income-tax (Appeals), the assessee took the matter in further appeal to the Tribunal. Before the Tribunal, the assessee's plea was that since the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the statement of the case, the Tribunal examined the case of the assessee from a different angle, namely, whether the assessee was manufacturing or producing any articles to qualify for relief under the said section. While upholding the disallowance of relief under the said section, the Tribunal held as follows : "In the present case, what the assessee had been doing and activity it urges to be proved as an activity of manufacturing and producing an article, was 'to catch fish on the high seas', to clean it from both ends and then to keep it in the cold storage till the customers come and the same was sold to them. This activity does not in our opinion constitute an act of manufacturing or producting an article, not even an act of processing fish." Distinguishing the decision of the Kerala High Court in Cochin Company v. CIT [1978] 114 ITR 822, relied upon by the assessee, the Tribunal further observed as follows : "In the case of Cochin Company v. CIT [1978] 114 ITR 822, the starting point for discussion was that 'the assessee-company was engaged solely in the business of processing and export of fish' (see page 832, second line of the second paragraph). In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the supply outside India of such goods, services or facilities". It is clear that not only the performance of services has to be outside India, only that expenditure will qualify for weighted deduction which has been incurred for performance of services outside India in connection with, or incidental to, the execution of any contract for the supply outside India of such goods, services or facilities. Inviting the attention of the court to clause 18 of the charter party agreement between the said Southern Marine Services Company Limited, Thailand, and the assessee, which provides for payment of hire charges by the assessee to the said Southern Marine Services Company for giving on hire fishing vessels for deep sea fishing operations at Port Blair, India, it was submitted by learned counsel for the assessee that since all payments were to be made in Thailand upon completion of each voyage and after realisation of the sale proceeds of the catch, the hire charges were being paid outside India for effecting supplies of goods outside India and, therefore, the claim for weighted deduction squarely fell within the ambit of sub-clause (viii). Having perused the terms of the aforenot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the manner specified in sub-section (1A) in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year) : . . . (4) This section applies to any industrial undertaking which fulfils all the following conditions, namely :--- . . . (iii) it manufactures or produces articles, or operates one or more cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of thirty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking ; . . ." From a bare reading of the abovenoted provisions, it is evident that the benefit of exemption under section 80J of the Act, facetiously styled as "tax holiday", is confined only to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to be known as shrimps and prawns. Following the said judgment, in a recent decision in CIT v. Relish Foods [1999] 237 ITR 59, the apex court has affirmed the decision of the Bombay High Court in CIT v. Sterling Foods (Goa) [1995] 213 ITR 851, wherein it was held that the activity of processing of prawns is not an activity of manufacture or production. A similar view was taken earlier by the Bombay High Court in CIT v. Fazalbhoy Ibrahim and Co. P. Ltd. [1995] 214 ITR 239, wherein it was held that "catching fish" did not amount to "manufacture" or "production" of fish within the meaning of section 80J. Both the decisions of the Bombay High Court are apposite to the question before us. In the light of the aforenoted judgments of the Supreme Court, with respect, we are unable to subscribe to the view taken by the Calcutta High Court in CIT v. Union Carbide India Ltd. [1987] 165 ITR 550, relied upon by learned coun ..... 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