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TMI Blog2021 (8) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.02.2009 in I.A.T.No.2416 to 2418/Mds/2007 for the assessment years 2001-2002, 2002-2003 and 2003-2004. 2. All the Tax Case Appeals were admitted vide order dated 05.05.2009 on the following substantial questions of law: (i) whether on the facts and in the circumstances of the case the income Tax Appellate Tribunal is right in law in holding that the assessee is not entitled to deduction under Section 10 B of the Income Tax Act ? (ii) whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal is right in law in concluding that the activity of conversion of raw gherkins to bottled pickle does not amount to ' manufacture' ? 3. Heard Mr.G.Basker, learned counsel for the appellant and Mr.J.Naraya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the stage of defect removal, the gherkins are sliced. Thereafter a machine called the vibrator two speedy automatic pail filler packs the processed vegetable pieces in pails and covers the same with a solution. Then these pails are labeled with manufacturing dates and after a stipulated period they are filled into bottles and packed for distribution. Narrating all these process the appellant contended that the entire process of manufacture involves several stages of process as well as chemical transformation inorder to adheres the international hygiene norms. Hence the appellant contended that he has engaged in the business of manufacture and export of Agro products. So he is entitled for deduction of Income Tax under Section 10(B) of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure'. At this juncture, the learned counsel for the appellant relied upon a judgment of the Hon'ble Supreme Court in Income Tax Officer Vs. Arihant Tiles & Marbles (P) Ltd., vid. In (2009) 77 CCH 1098 ISCC wherein it has been held as follows: "Deduction under s.80-IA-Manufacture or production- Conversion of marble blocks into slabs and tiles-process undertaken by the assessee includes not only cutting of marble blocks into slabs but also the activity of polishing and ultimate conversion of blocks into polished slabs and tiles-blocks have to go through various stages before they become polished slabs and tiles-such activity would fall in the category of "manufacture" or "production" under s.80-IA - ...... ......Therefore, the activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contention, the learned Solicitor General referred to the decision of this Court in Sterling Foods, A Partnership Firm v. State of Karnataka (1986) 3 SCC 469. The court in tha case considered the question as to what happens when shrimps, prawna and lobsters purchased by the assessee (under the provisions of the Central Sales Tax Act, 1956) are subjected to the process of cutting heads and tails, peeling, deveining, cleaning and freezing before export. Do they cease to be original commodity and become commercially a new commodity or do they still retain their original identity as shrimps, prawns and lobsters? The court held that despite such processing they continue to possess their original character and identity and even though processi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, of the view that the decision rendered in New Taj Mahal Cafe Ltd., V. Inspector of Factories, AIR 1956 Mad 600, with reference to definition of "manufacturing process" occurring in s.2(k) of the Factories Act cannot be of much assistance to the assessee. Even otherwise, the expression construed in the said decision is "manufacturing process" which has been specifically defined in the Factories Act. We are, however, concerned with a slightly different expression "manufacture or processing of goods". Can we say that a hotel or a restaurant is engaged in the business of manufacturing of goods? As already stated, the Kerala High Court in CIT v. Casino (Pvt.) Ltd. MANU/KE/0107/1972: [1973] 91ITR289 (Ker) has taken the view that the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ickles, had the same identity as the original gherkins and it was not transformed into new commodity. Therefore, the authorities relied on by the respondent / Department are squarely applicable to the facts of the case and on the other hand, the authorities relied on by the appellant are not supporting his contentions rather it relates to the industrial activities, which is totally different from the facts of the instant case. The questions of law are answered accordingly. Therefore, we are of the view that the assessee is not entitled for the deduction under Section 10B of Income Tax Act and the findings given by the Income Tax Appellate Tribunal that the conversion of raw gherkins to bottle pickle, would not amount to 'manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X
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