TMI Blog1994 (11) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that the activity of processing of prawns before putting them for sale amounted to manufacture and production of articles within the meaning of the said section. The claim of the assessee was rejected by the Income-tax Officer as according to him the activity of processing prawns for the purpose of sale did not amount to manufacture or production of goods or articles within the meaning of section 80HH of the Act. The assessee appealed to the Commissioner of Income-tax (Appeals). The Commissioner of Income- tax (Appeals) accepted the contention of the assessee and held that the processing of prawns amounted to manufacture or production of goods or articles, On appeal by the Revenue, the Income-tax Appellate Tribunal ("the Tribunal") confirmed the order of the Commissioner of Income-tax (Appeals). Hence, the Revenue has come to this court by way of reference for opinion on the question whether "processing of prawns" amounts to "manufacture or production of goods or articles" within the meaning of section 80HH of the Act. There is no controversy in regard to the nature of the activity carried on by the assessee. The assessee purchases raw prawns, subjects the same to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpired before the 1st day of April, 1974 . . . ..." It is clear from the above that section 80HH applies to those industrial undertakings only which "manufacture or produce, articles". The manufacturing process mentioned in clause (iv) of sub-section (2) refers to the process undertaken to achieve the above object, i.e., "to manufacture or produce articles". Sub-section (4) also uses the same expression "begins to manufacture or produce articles". This section nowhere uses the expression "processes goods or articles". A similar expression has been used in section 80J of the Act which provides for deduction in respect of profits and gains from newly established industrial undertakings on fulfilment of the conditions specified therein. Here also, the benefit is available only to those industrial undertakings which "manufacture or produce" articles. As against this, we may refer to the provisions of section 33B of the Act which deal with grant of rehabilitation allowance to certain industrial undertakings. Under this section "industrial undertaking" has been defined to mean any undertaking which is mainly engaged, inter alia, "in the manufacture or processing of goods or in mining". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80HH, having confined the benefit of that section in explicit terms only to industrial undertakings which manufacture or produce articles, the said benefit cannot be extended to undertakings which do not manufacture or produce articles but merely process the same, by giving an artificially extended and unnatural meaning to the expression "manufacture or production". According to Mr. Jetly, "manufacturing" and "processing" are two different activities. Every act of manufacture may involve processing but every "process" does not tantamount to "manufacture". The submission of counsel is that the Legislature did not intend to extend the benefit of section 80HH to the industrial undertakings engaged in the processing of goods. Reliance is placed in support of this contention on the decisions of the Supreme Court in Chowgule and Co. P. Ltd. v. Union of India [1981] 47 STC 124 ; State of Maharashtra v. Shiv Datt and sons [1992] 84 STC 497 ; Sterling Foods v. State of Karnataka [1986] 63 STC 239 and Deputy Commr. of Sales Tax v. Pio Food Packers [1980] 46 STC 63. According to Mr. Jetly, the decisions of the Kerala, Calcutta. and Karnataka High Courts relied upon by learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute that the intention of the Legislature must be gathered, for the Legislature means no more and no less than what it says. It is not permissible for the court to speculate as to what the Legislature must have intended and then to twist or bend the language of the statute to make it accord with the presumed intention of the Legislature. The clear provision of the statute cannot be given an artificial extended meaning by resorting to the so-called principles of interpretation. The duty of the court always is to find out what the Legislature really meant by the expression which it has used. For that purpose, it may consider the context and any other parts of the Act which throw light upon the intention of the Legislature. It must not be forgotten that the duty of the court is to interpret the law made by the Legislature with a view to ascertaining its true intention and not to interpret it in a manner which may run counter to the legislative intent and purpose. In the instant case, on a careful reading of section 80HH of the Act in the light of scheme thereof and other provisions of the Act referred to above, it is clear that the Legislature intended to extend the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re handling plant can be said to undergo processing when it is blended. The Supreme Court discussed at length the various definitions of "processing" and held that the blending of ore in the course of loading through the mechanical' handling plant amounted to "processing" of ore. From the aforesaid discussion, it is clear that the true test for determining whether there is any manufacture is : whether the commodity subjected to the process of manufacture can no longer be regarded as the original commodity but is recognised in the trade as a new and distinct commodity. Manufacture, as observed by the Supreme Court in Dy. CST v. Pio Food Packers [1980] 46 STC 63, 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. As observed by the Supreme Court in CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412, the word "production" or "produce" when used in juxtaposition with the word "manufacture" takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. The position that emerges from the above discussion can be summed up thus : The three expressions "processing", "manufacture" and "production" used in various taxing statutes, are not interchangeable expressions. Though often used in juxtaposition, they convey different concepts and refer to different activities. "Processing" is a much wider concept. The nature and extent of processing may vary from case to case. Every process does not tantamount to "manufacture". It is only when the "process" results in the emergence of a new and different article having a distinctive name, character or use, that "manufacture" can be said to have taken place. Similarly, "production" is wider than "manufacture". As a result, every production need not amount to manufacture though every ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw shrimps, prawns and lobsters. When raw shrimps, prawns and lobsters are subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing, they do not cease to be shrimps, prawns and lobsters and become another distinct commodity. They are in common parlance known as shrimps, prawns and lobsters. There is no essential difference between raw shrimps, prawns and lobsters and processed or frozen shrimps, prawns and lobsters. The difference is that processed shrimps, prawns and lobsters are ready for the table while raw shrimps, prawns and lobsters are not, but still both are, in commercial parlance, shrimps, prawns and lobsters. It is undoubtedly true that processed shrimps, prawns and lobsters are the result of subjecting raw shrimps, prawns and lobsters to a certain degree of processing but even so they continue to possess their original character and, identity as shrimps, prawns and lobsters notwithstanding the removal of heads and tails, peeling, deveining and cleaning which are necessary for making them fit for the table. Equally it makes no difference in character or identity when shrimps, prawns and lobsters are frozen for the purpose of prese ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
