LexM/S. ASPINWALL AND CO. LTD. versus THE COMMISSIONER OF INCOME-TAX, ERNAKULAM.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
M/S. ASPINWALL AND CO. LTD. A v. THE COMMISSIONER OF INCOME-TAX, ERNAKULAM. SEPTEMBER 5, 2001. [S.P. BHARUCHA, Y.K. SABHARWAL AND ASHOK BHAN, JJ.] B Income Tax Act, 1961: Section 32-/nvestment Allowance-Machinery installed for curing coffee-Assessee claiming investment allowance-Whether entitled-Held, C processing of raw berry into coffee beans amounts to manufacturing activity-- Assessee entitled to investment allowance under Section 32A--Section 256. Words & Phrases-'Manufacture '-Meaning of in common parlance. Appellant-assessee had claimed investment allowance under Section 32A D of the Income Tax Act, 1961 for machinery installed for curing of coffee in its coffee curing plants, for the assessment years 1980-81 and 1983-84 which was rejected by the Income Tax Officer but allowed in appeal by the Commissioner of Income Tax (Appeals). On further appeal by Revenue, Appellate Tribunal upheld the order of C.I.T. (Appeals) on the basis of its E own order in a similar issue involving the assessee and held that assessee was involved in the activity of manufacturing coffee beans from raw material plucked from plant. In a reference made under Section 256(1) of the Act, High Court held that assessee was not entitled to investment allowance under Section 32A of the Act in respect of machinery used for curing coffee and its sale as it was not involved in any manufacturing or production activity in the process of curing coffee. Hence this appeal by the assessee. Respondent-Revenue contended that assessee was doing only processing work and was not involved in manufacture and production of new article. Allowing the appeal, the Court HELD: 1. The word 'manufacture' has not been defined in the Income Tax Act, 1961. In the absence of a definition of the word 'manufacture' it F G 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 H 559 560 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R. A prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. The process is a manufacturing process when it brings out a complete transformation in the original article so as to produce a commercially different article or commodity. That process itself may consist of several processes. The different processes are integrally connected which results ii) the production of a commercially B different article. If a commercially different article or commodity results after proq:ssing then it would be a manufacturing activity. [546-F, GI c Deputy Commissioner a/Sales Tax v. Mis Pio Food Packers, [1980) Supp. sec 17 4, relied on. 2. The assessee after plucking or receiving the raw 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 a new and different article which is recognized in the trade as a new and distinct commodity. The coffee beans have an independent D identity distinct from material from which it was manufactured. A distinct change comes about in the finished product. The processing of the raw berries into coffee beans would be a manufacturing activity and the assessee is entitled to investment allowance provided under Section 32A of the Act. (565-D, G, H[ E CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 8832- 8833 of 1997. F G From the Judgment and Order dated 25.9.96 of the Kerala High Court in l.T.R. Nos. 43 and 44 of 1993. C.N. Sree Kumar for the Appellant. B.B. Ahuja, Rajiv Nanda, B.V. Bairam Das and Ms. Sushma Suri for the Respondent. The Judgment of the Court was delivered by ASHOK BHAN, J. Aggrieved by the judgment/order of the High Court, the assessee-appellant has come up in appeal. By the impugned judgment, the High Court in a reference made under Section 256(1) of the Income Tax Act, 1961 (for short, 'the Act') by the Income-Tax Appellate Tribunal, Cochin (for short 'the Tribunal') has answered. the following question of law in the H negative. ASPINWALL AND CO. LTD. v. C.l.T. [ASHOKBHAN,J.] 561 "Whether, on the facts and in the circumstances of the case, the A 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?" Le. against the assessee
Excerpt shown. Read the full judgment & AI analysis in Lexace.