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TMI Blog2011 (7) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... estates and blended those with the tea manufactured by it. According to the appellant, in order to get the appropriate blend, samples of different varieties of tea are mixed in appropriate proportions and tasted. As a consequence of such blending of different varieties of tea, the appellant claims, there is a qualitative change and the blended tea is transformed into a different quality from the tea which was blended. According to the appellants, such blended tea is exported by the appellant. 3. For the relevant assessment year, the contention of the appellant was that the appellant was entitled to the benefit provided in sub-section 3(a) of Section 80HHC as blending of tea amounts to processing within the meaning of said provision. 4. The Assessing Officer, however, turned down the said plea and held tha the case of the appellant came within the purview of sub-section 3(b) of the Act as the activity of the appellant related to the one provided in the definition of "trading" of tea. 5. Being dissatisfied, the appellant preferred two appeals before the Commissioner of Income-tax (Appeals) in respect of those two years but the said authority dismissed the appeals. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...... "2................ "3. For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured [or processed] by the assessee, the profits derived from such export shall be the amount which bears to the profits of the business, the same, proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; (b) where the export out of India is of trading goods, the profits derived from such export shall be the export turnover in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export; (c) where the export out of India is of goods or merchandise manufactured [or processed] by the assessee and of trading goods, the profits derived from such export shall,- (i) in respect of the goods or merchandise manufactured [or processed]by the assessee, be the amount which bears to the adjusted profits of the business, the same proportion as the adjusted export turnover in respect of such goods bears to the adjusted total turnover of the business carried on by the assessee; and (ii) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the authorities below committed substantial error of law in holding that blending of tea did not come within the purview of processing so as to get the benefit of 80HHC (3a) of the Act. 13. Mr. Nizzamuddin, the learned Counsel appearing on behalf of the Revenue, supported the views taken by authorities below including the Tribunal. 14. After hearing the learned Counsel for the parties and after going through the decisions of the Supreme Court in the cases of CIT Vs. Tara Agencies and Chowgule and company (p) Ltd. (supra), we find that the point involved herein is covered by those decisions. 15. In the case of Nilgiri Ceylon Tea Supplying Co. vs. State of Bomabay (supra), the Bombay High Court took the view that blending of different qualities to tea did not amount to processing. The said decision came up for consideration in the case of Chowgule and Company (supra) before the Supreme Court. The Apex Court made the following observations regarding the legality of the aforesaid view taken by the Bombay High Court: "The Revenue however relied on the decision of the Bombay High Court in Nilgiri Ceylon Tea Supplying Co. v. State of Bombay, (1959) 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure." 16. The aforesaid view of the Supreme Court has been reiterated in a recent decision of the Supreme Court in the case of CIT Vs. Tara Agencies (supra), where the Court did not dispute the proposition of law laid down in the case of Chowgule and Company as would appear from the following observations: "It may be pertinent to mention that reference of Chowgule's case acquires greater significance because, in that case, this Court dealt with a Division Bench judgment of the Bombay High Court in the case of Nilgiri Ceylon Tea Supplying Co. v. State of Bombay (1959) 10 STC 500. This Court observed that the judgment of the Bombay High Court did not lay down the correct law because it held that the activity of the assessee did not amount to processing. AIR 1981 SC 1014 33. Details of relevant Statute are as under: Section 8 of the Bombay Sales Tax Act, 1953, so far as is "subject to the provisions of section 7, there shall be levied a sales tax on the turnover of sales of goods specified in column I of Schedule B at the rate, if any, specified against them in column 2 of the said Schedule, after deducting from such turnover- (a) sales of goods- (i) which hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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