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TMI Blog2013 (9) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... producer of tea for the purpose of claiming exemption u/s. 10A of the Act – Examination of facts in the case of Madhu Jayanti International Ltd. is done, and found that there is blending of tea and consequently assessee is eligible for exemption u/s. 10B of the Act as prayed for. There appeal for the AY 2004-05 is allowed. - I.T.A. No. 2089/Kol/2007, 218 and 1007/Kol/2009 and 1005/Kol/2011 - - - Dated:- 21-6-2013 - N.S. Saini and Mahavir Singh, JJ. For the Appellant : S.K. Tulsiyan, AR For the Respondent : Subrat Mishra, CIT-DR ORDER:- These are four appeals by assessee are arising out of different orders of Commissioner of Income-tax (Appeals), Siliguri ('CIT(A)' for short) in appeals No. 294, 151, 148 and 48/CIT(A)/Slg/06-07,07-08, 08-09 and 09-10 all dated i.e., 25-01-2007, 30-01-2008, 30-01-2009 and 25-01-2010. All the assessments were framed u/s.143(3), 143(3)(ii) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') by JCIT, Range-3, DCIT/ACIT, Circle-3, Siliguri vide their different orders dated 29-12-2006, 28-12-2007, 24-12-2008 and 31-12-2009 for assessment years (AY) 2004-05 to 2007-08. All the appeals are heard together and are being di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he laboratory for check in and standard matching. Thereafter, the teas are packed and sealed or made in to Tea Bags. 4.20 Blending of different grades of tea may on blending result in bringing the tea of a particular specification but it can not be held to involve the process of manufacture, because there is no change or transformation of one commodity into another. Moreover, the tea, which is derived, as a result of the blending activity cannot be regarded as a commercially new commodity. What is produced as a result of blending is commercially the same article, namely, tea, though with different combinations than those which are blended, hence, it cannot be said that any process of manufacture is involved in blending of tea. Consequently, the resultant commodity emerging out of the process does not have a distinct name, character or use. Thus, the process merely results in changes of colour, infusion brightness, strength and leaf quality and it does not result in bringing into existence a new commodity having a distinct identity. 4.21 Tea trade has three different stages. First is the producing of tea leaves by the owner of the garden, second stage is manufacture of tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing or producing of tea. As already noticed the assessee-company was not engaged in growing tea, so that he might be called producer of tea, nor he was engaged in manufacturing of potable tea from green leaves, which could not be use as otherwise potable drink. In such event, a conclusion can be reached that assessee-company is engaged merely in processing and not manufacture or production of tea. 4.24 In view of the afore discussed, blending of different teas by a trader of tea who has purchased the tea from different parties does amount to processing of tea but falls short of manufacturing process and it does not amount to manufacturing or producing any article or thing within the meaning of section 10A of the I.T. Act, 1961. Consequently, the assessee-company could not be held to have fulfilled the condition for availing the benefit of exemption under section 10A of the I.T. Act, 1961" 4. Further, Assessing Officer decided the issue that blending of different tea by assessee, which has produced the tea from different variety and processing of tea but not manufacturing or producing the tea. The relevant finding of u/s. 10A of the Act is recorded in para-4.27 of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment as well as during the hearing of this appeal, the Ld. A/R of the assessee explained that the activities of the Assessee Company is that tea of various qualities are selected with different attributes which contributes a different characteristics to the final products. The attribute includes strength of liquor, leaf quality, infusion brightness, colour etc., These attributes are selected after various testing of drawn samples. Various tea have different attributes, when blended together these should have each attribute in a manner which confirm to the final character of the product which the buyer requires. These are sorted together as per the requirement of the blend and then cleaned for removal of various fibres, iron particles and various other foreign bodies like string, wool, stalk etc., After the tea are sorted and cleaned, these are put into a hopper which then sends them to a conveyor. From the conveyor, these are sent to the tower blending system which blends the tea. This results in the changing of character of the tea to the buyer specification. If required, these are re-sorted. Tea, when finally blended are checked for their strength, leaf quality, infu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of assessee by the decision of Special Bench of this Tribunal in ITA No.1463/Kol/2007 AY 2004-05 in the case of Madhu Jayanti International Ltd. V. DCIT dated 20-07-2012, wherein the Special Bench after considering all the case laws has decided this issue vide paras 35 to 37, which is reproduced as under:- "35. We find from the above facts and circumstances and case laws relied on by both the sides that the assessee was exclusively engaged in blending packaging and export of tea bags, tea packets and bulk tea packs. The assessee's division enjoys recognition as a 100% EOU, which is granted by the Development Commissioner, Ministry of Commerce and Industry, Govt. of India. The assessee claimed exemption u/s. 10B of the Act for AYs 2000-01 onwards, which was granted upto the AY 2003-044. However, for the AY 2004-05, exemption was declined for the reasons that by the Finance Act 2000, the definition of 'manufacture' which included 'processing' contained in section 10B of the Act was deleted w.e.f. 01.04.2001. The argu9emnt of the department is that manufacture or production had liberal meaning under the definition clause contained in section 10B of the Act until its del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries (supra) and Tata Tea Limited (supra), we hold that the assessee is entitled for exemption under Section 10B of the Act on account of blending of tea. Similarly, in our view, the industrial units engaged in the very same activity i.e., blending packing and export of tea in the free trade zone shall also be entitled to enjoy tax exemption under Section 10A of the Act. 37. Accordingly, we answer the question referred in favour of the assessee by holding that the assessee who are in the business of blending and processing of tea and export thereof in 1000% EOUs are manufacturer / producer of the tea for the purpose of claiming exemption u/s. 10B of the Act. Further, assessee who are in the business of blending and processing of tea in respect of undertakings in free trade zones are manufacture / producer of tea for the purpose of claiming exemption u/s. 10A of the Act. We have examined and discussed the facts in the case of Madhu Jayanti International Ltd., and found that there is blending of tea and consequently assessee is eligible for exemption u/s. 10B of the Act as prayed for. There appeal for the AY 2004-05 is allowed. As regards other appeals and that of the intervener ..... X X X X Extracts X X X X X X X X Extracts X X X X
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