1996 (1) TMI 106 - HC - Income Tax

Summary

Issues:
Interpretation of the term "manufacture" under section 2(5)(a)(ii) of the Finance Act, 1966 for granting rebate to the assessee in the context of processing fish for export.

Analysis:
The case involved a dispute regarding the eligibility of the assessee for a rebate under section 2(5)(a)(ii) of the Finance Act, 1966 for processing fish for export. The Income-tax Officer denied the rebate, stating that the assessee was not engaged in manufacturing activity. However, the Appellate Assistant Commissioner and the Tribunal found the assessee entitled to the rebate, considering the processing activity as manufacturing.

The key contention was whether the processing of fish by the assessee constituted "manufacture" as per the statutory provision. The Revenue argued that the processed fish did not qualify as processed food and, therefore, did not meet the criteria for the rebate. They cited legal precedents to support their position.

On the other hand, the assessee argued that the term "manufacture" in the statute should be read in conjunction with "production" based on the Industries (Development and Regulation) Act, 1951. They relied on various court decisions to support their interpretation that the processing activity fell under the category of manufacturing.

The court analyzed the definitions of "manufacture" and "production" in relevant legal precedents. They emphasized that for an activity to be considered manufacturing, it must result in a new and distinct article different from the original commodity. The court rejected the assessee's argument that processing fish constituted manufacturing, stating that the Finance Act only applied to cases involving actual manufacturing activity.

Ultimately, the court ruled in favor of the Revenue, holding that the assessee was not engaged in manufacturing activity and, therefore, was not eligible for the rebate under section 2(5)(a)(ii) of the Finance Act, 1966. The judgment was delivered by the court in response to the question referred by the Income tax Appellate Tribunal, Cochin Bench.

This detailed analysis of the judgment highlights the interpretation of the term "manufacture" in the context of processing activities for export and the application of relevant legal provisions to determine the eligibility for a rebate under the Finance Act, 1966.