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TMI Blog2015 (11) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... the aloevera leaves with the help of machines and men and the end product is aloevera juice, which is outcome of various processes, therefore, whole activity of the assessee routs through various processes, thus, certainly amounts to manufacturing. The case of the assessee further find support from the decision in the case of Ramit Kumar Sharma vs DIT (IT) (2009 (1) TMI 12 - AUTHORITY FOR ADVANCE RULINGS ) wherein the assessee intend to start a tractor manufacturing industry in the state of Himachal Pradesh, wherein, the primary job was to provide, milling, tooling and grinding of surface of rear cover etc, which are important part of tractor, it was held that the activities amounts to manufacture or production of an article difference from raw castings, thus, entitled to deduction u/s 80IC of the Act. As mentioned earlier in Mrs. Delna Rustom Boyce (2009 (10) TMI 23 - AUTHORITY FOR ADVANCE RULINGS) processing, packaging and packing of fruits and vegetables were held to be eligible for deduction u/s 80IB of the Act, therefore, it can be concluded that the end product is commercially known differently, therefore, the assessee is involved in manufacturing - Decided in favour of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2. On appeal before the ld. Commissioner of Income Tax (Appeals), the claim of the assessee was allowed and the whole process was held to be manufacturing, against which the Revenue is aggrieved and is in appeal before this Tribunal. Since, identical issues are involved in both the appeals, therefore, these can be disposed off by this common and consolidated order. Before coming to any conclusion, we are expected to analyze the process adopted by the assessee, which is reproduced/summarized hereunder:- The above process of the assessee needs analysis which is further elaborated as under:- 1) Naturamore Protein supplement (Vanilla Flavour) These materials are charged in the ribbon blender and mixed thoroughly for about 30 minutes to get a uniform Premix. Excipients like maltodextrin, soya protein isolate, premix, sugar are weighed using blalance, as per the formula. Weighed Excipients are charged in the blender and mixed thoroughly, 15 minutes in each direction (total 30 minutes). Sieved blend is then sent to packaging line where it is filled manually in pouches and weighed as per requirement. 2) Gayatri 's Aloevera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er formula Weighed Excipients and the premix are charged in the blender and mixed thoroughly, 15 minutes in each direction (total 30 minutes). The final resultant blend is then collected in storage vessel and sent Jor sieving to eliminating any foreign particles. Sieved blend is then sent to packaging line where it is filled manually in printed pouches and weighed as per requirement. The pouches are then put in shipper cartons which are finally strapped with nylon tapes and bopp tapes manually 7. The appellant in response to this disallowance has filed detailed submissions on the manufacturing process undertaken by him. Extracts of the submissions are reproduced as under- Input- Manufacturing Process- Output After setting up the manufacturing unit as aforesaid, the assessee actually carried out manufacture/production of items by employing a process which is given in detail (summarized above) Note on Manufacturing Activities 1. The above mentioned finished products are scientifically well balanced formulations and have been widely accepted by several customers as branded products as they have shown excellent results. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved. c) The resultant blend is sieved or filtered using sieving plates or filter cloth to remove unwanted particles. d) The resultant blend is then packed in pouches, bottles, and jars, labeled appropriately and finally packed in shipper cartons. If the whole process is analyzed, we find that the end product is outcome of combination of employment of man and machine and definitely the end product is different from raw material. The raw material which is in a specified percentage of quantity is mixed thoroughly for a specified period with a homogenizer and after adding, the dried aloevera extract, the composition is stirred well again for a specified period and then filled up in the required pouches/bottles and heat sealing labeling is done. The assessee is paying electricity charges for the whole process though some of the processes are done manually also. So far as, the contention of the ld. DR that the assessee is merely mixing various ingredients, is concerned, it is not a mixing simplicitor rather the raw material goes through various processes and the end product is known commercially different article/thing/product. Thus, it can be safely concluded that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id order is reproduced hereunder for ready reference:- 3.5 For claiming deduction u/s 80IB of the Act, as per subsection (2), the any industrial undertaking has to fulfil the conditions mentioned in the section. As per sub-clause (iii) the article so manufactured should not be in the list of the Eleventh Schedule and the product should be from a small scale industrial undertaking or an industrial undertaking referred to in subsection (4). On Perusal of record, undisputedly, from the inception stage itself, the assessee was registered as a small scale industry by the Director of Industries on 26.6.1995 (page 32 of the paper book) and continued as such as is evident from acknowledgment dated 15.4.2010 (paper book page 52), therefore, this condition of the section is also satisfied by the assessee. 3.6 The dictionary meaning of the two terms i.e. soaps and detergent are also different items. There is a generic unity in these terms and the distinct genus or category present in these terms in their application. Therefore, it can be said that soaps and detergent are two different items and more so detergent is not included in Schedule 11, consequently, deduction should not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing. xi. Hon ble Allahabad High Court in CIT vs Shiv Oil Dal Mill 153 taxman 127 held that refining of oil amounts to manufacturing. xii. Even, buying tendu lives and tobacco and thereafter making bidi amounts to manufacturing (CIT vs Prabhudas Kishoredas Tobacco Products) 154 taxman 404 (Guj.). xiii. Tobacco curing was held to be manufacturing in CIT vs Premier Tobacco Packers Pvt. Ltd. 284 ITR 222 (Mad.). xiv. Hon ble Madras High Court in CIT vs P Damodaran (2006) 282 ITR 466 (Mad.) held that cable joining kit is manufacturing. xv. Hon ble Apex Court in Vijay Ship Breaking Corporation vs CIT 175 taxman 77 held that even ship breaking activity would entitle to deduction u/s 80 HH 80IA of the Act. xvi. The Hon ble Karnataka High Court in CIT vs Darshak Ltd. 247 ITR 489 held that conversion of plain glass ware into decorative glass ware amounts to manufacture. xvii. Hon ble Calcutta High Court in Addl. CIT vs A Mukherjee Company Ltd.113 ITR 718 even held that book publishing activity amounts to manufacturing. xviii. In CIT vs Tata Locomotive and Engineering Company Ltd. (1968) 68 ITR 325 (Bom.) held that assembling works amounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an.com 261 (Del.) held that converting raw fish into tinned fish does not amount to manufacturing. j) Likewise preparation of food stuffs/food packet by hotel does not amount to manufacture in India Hotels Company Ltd. vs ITO 245 ITR 538 (SC). k) Likewise conversion of Chicory Roots into Chicory powder was held to be not manufacturing in Sacs Eagles Chicory vs CIT 255 ITR 178 (SC). If the aforementioned judicial pronouncements and the facts available on record are kept in juxtaposition and analyzed with the processing activity done by the assessee, we find that the resultant end product is commercially known differently in the trading world, therefore, certainly it can be said that the activity of the assessee amounts to manufacture, consequently, entitled to deduction u/s 80IC of the Act, because, mixing various ingredients in a specified manner and the net result come into nutritional food supplement, agro products and veterinary food supplement amounts, which is used by the public at large for different purposes and is commercially known differently, therefore, it amounts to manufacturing. The resultant end product is outcome of combination of efforts with the h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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