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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 ..... appeal is at the instance of the assessee under Section 260A of the Income-tax ( Act ) and is directed against an order dated March 31, 2004 passed by the Income-tax Appellate Tribunal D Bench, Kolkata in ITA No.97 (Cal) of 2000 ITA No.1344 (Cal) 2001 disposing of those two appeals relating to Assessment Years 1997-97 and 1997-98 by a common judgment. The Appellant before us has paid double court fees as by a single appeal it has challenged order in respect of two assessment years. 2. The appellant is a public limited company and carries on business of growing and manufacturing tea. As part and parcel of its business, appellant purchased a small quantity of tea manufactured by other tea 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 appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter in this section referred to as an Export House or a Trading House, as the case may be,) issues a certificate referred to in clause (b) of sub-section (4A), that in respect of the amount of the export turnover specified therein, the deduction under this sub-section is to be allowed to a supporting manufacturer, then the amount of deduction in the case of the assessee shall be reduced by such amount which bears to the derived by the assessee from the export of trading goods, the same proportions as the amount of export turnover specified in the said certificate bears to the total export turnover of the assessee in respect of such trading goods. 1A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax Vs. Tara Agencies, reported in (2007) 292 ITR 444 and Chowgule and Company Pvt. Ltd. and Anr. Vs. Union of India, reported in (1981) 47 ITR 124 and contended that in those decisions the Supreme Court has disapproved the Division Bench decision of Bombay High Court in the case of Nilgiri Ceylon Tea Supplying Co. Vs. State of Bombay, reported in 1959 Vol.10 STC 500 where the Bombay High Court had held that blending of tea did not amount to processing of tea. 12. By relying upon those two decisions, Mr. Khaitan contended 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 Ceylo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying down the correct law. When different brands of tea were mixed by the assessees in Nilgiri's Tea Company's case for the purpose of producing a tea mixture of a different kind and quality according to a formula evolved by them, there was plainly and indubitably processing of the different brands of tea, because these brands of tea experienced, as a result of mixing, qualitative change, in that the tea mixture which came into existence was of different quality and flavour than the different brands of tea which went into the mixture. 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 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been specifically omitted in the statute. The activities of the assessees both in Nilgiri's and Chowgule's cases amount to processing. The activity of the respondent assessee in the present case also amounts to 'processing'. Section 35(1)(b) governing the instant case incorporated the terms 'manufacture' and 'production' and omitted the term 'processing'. Therefore, the respondent assessee cannot be extended the benefit of section 35(1)(B) of the Income Tax Act. AIR 1981 SC 1014 18. In the case before us, the word processed has been specifically mentioned in sub-section (3a) of Section 80HHC of the Act and thus, the decision of Chowgule and Company is squarely applicable. 19. We, therefore, find that the authorities below including the learned Tribunal committed a substantial error of law in refusing the benefit of subsection (3a) of Section 80HHC of the Act to the appellant notwithstanding the fact that the goods imported by the appellant is processed by it. 20. We, consequently, set aside the order impugned and direct the Assessing Officer to give relief to the appellant in terms sub-section (3a) of Section 80 HHC of the Act for the export of the blended tea by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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