Full Judgment Text
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PETITIONER:
COMMISSIONER OF INCOME-TAX, TRIVANDRUM
Vs.
RESPONDENT:
RELISH GOODS
DATE OF JUDGMENT: 11/03/1999
BENCH:
S.P.Bharucha, S.S.M. Quadri
JUDGMENT:
S.P. Bharucha, J.
The only question with which we are concerned in this
appeal by the Revenue, relating to the Assessment Year
1977-78, reads thus :
"Whether, on the facts and in the circumstances of the
case :-
i) the assessee’s business involves ’production’ ?
ii) the assessee is entitled to exemption under
Section 80HH of the 1.T. Act, 1961?"
The assessee claimed the allowance under Section 80HH
of the Income-Tax Act, 1961, on the ground that it was an
industrial undertaking that manufactured/produced articles.
It would appear from the judgment of the Tribunal that the
assessee bought shrimps, peeled them and froze them. There
is no other material on the record which indicates what was
done by the assessee and how it was done. The Income-Tax
Officer negatived the claim. The Commissioner of Income-Tax
(Appeals) and the Tribunal upheld the claim.
From the order of the Tribunal the question
aforementioned was referred to the High Court for its
opinion. The High Court held that buying and processing of
shrimps involved production and, therefore, the assessee was
entitled to the allowance that it claimed. It followed its
judgment in Commissioner of Income-Tax v. Marwe II Sea.
Foods [(1987) 166 I.T.R. 624].
We find from the judgment of the Keraia High Court in
the case of Harwell Sea Foods (supra) that Harwell Sea Foods
had placed before the taxing authorities a detailed
description of the process by which prawns were prepared for
export and that the appellate authorities had understood the
various stages through which the prawns passed as processes
involving production or manufacture. The High Court was of
the view that the Tribunal having affirmed the finding of
the A.A.C., it should be extremely slow to doubt the
correctness of the finding unless it was perverse.
As has been pointed out, there is upon the record
before us no detailed description of what the assessee does
to the shrimps it buys, other than the bald statement that
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it peels and freezes them. We cannot accept the statement
at the Bar that the process to which the assessee puts the
shrimps is the process that Harwell Sea Foods used in regard
to its prawns.
Apart therefrom, there is the judgment of this Court
in Sterling Foods v. The State of Karnataka a.nd Another,
[(1986) 63 S.T.C. 239, where it has b°en held that
processed or frozen shrimps and prawns are commercial ly
regarded as the same commodity as raw shrimps and prawns.
When raw shrimps and prawns are subjected to the process of
cutting of heads 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
known as shrimps and prawns. This judgment in Sterling
Foods (supra) has been rightly applied by the Bombay High
Court, in the case of Commissioner of Income-Tax v.
Sterling Foods (Goa) [(1995) 213 I.T.R. 8513, to a claim
under Section 80HH of the Income-Tax Act and it has been
held that the activity of processing of prawns is not an
activity of manufacture or production.
We are of the view that the judgment of this Court
aforementioned in Sterling Foods (supra) is apposite to the
question that we have to decide and, upon the material that
is before us, we must reverse the view taken by the High
Court in the judgment under appeal.
Learned counsel for the assessee submitted that the
matter should be remanded to the appropriate authority to
enable the assessee to lay before it evidence in detail of
what the purchased shrimps were subjected to. We think it
is far too late in the day for the assessee to do that in
relation to the assessment year with which we are concerned.
The appeal is, therefore, allowed. The judgment and
order under appeal is set aside to the extent it deals with
the said question. The said question is answered in the
negative in relation to both its parts and in favour of the
Revenue.
No order as to costs.