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TMI Blog2011 (2) TMI 1396X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee amounts to manufacturing or production of any article or thing so as to be eligible for deduction under Section 80 IB? 3. With the consent of parties, we have finally heard the appeal. 4. The assessee is engaged in manufacturing of tinned fish and mutton. It has been filing returns and claiming deductions under section 80IB of the Income Tax Act (hereinafter referred to as the Act ) for the assessment years 1996-97 to 2003-2004. It is only during the assessment year 2004-2005 that its case came to be examined by the Additional C.I.T. by exercising his powers conferred upon him under Section 144A of the Act. Pursuant to the directions given by the Additional C.I.T. under Section 144A, the AO completed the assessment under Section 143(3) on 27th December, 2006 and disallowed the deduction amount to ₹ 54,83,360/- claimed by the assessee under Section 80IB of the Act. 5. Aggrieved by this, the assessee preferred an appeal before CIT(A), who vide order dated 6th February, 2008 allowed the appeal holding that the processes undertaken by the assessee amounted to manufacture . Consequently, CIT(A) held the assessee to be entitled for deduction under Section 80IB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Supreme Court regarding those commodities held the activities involved in conversion of raw fish into tinned fish as manufacturing‟ and thus the assessee was held to be entitled to deductions under Section 80IB. The Tribunal recorded its agreement with CIT(A) in the following manner:- Moreover, the claim of the assessee for deduction under Section 80IB was allowed by the Assessing Officer in the initial year and the same having not been admittedly withdrawn, we hold that the claim of the assessee for such deduction could not be denied for the subsequent years as held inter alia in the case of CIT vs. Paul Brothers 216 ITR 548 (Bombay) cited by the learned counsel for the assessee. Further more the entire process involved in conversion of raw fish into tinned fish was examined by the learned CIT(Appeals) and after having considered the different stages involved in the said process as well as the nature of input and output, the activity of the assessee company was held by him to be manufacturing activity eligible for deduction under Section 80IB, keeping in view the ratio of various judicial pronouncements discussed in the impugned order. 8. Learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nine processes to give it the shape of coffee beans. It was held that the process is manufacturing process when it brings out a complete transformation in the original article so as to produce a commercially different article or commodity. That process itself may consist of several processes. The different processes are integrally connected which results in the production of a commercially different article. If a commercially different article or commodity results after processing then it would be a manufacturing activity. The assessee after processing the raw berries converts them into coffee beans which is commercially different commodity. Conversion of the raw berry into coffee beans would be a manufacturing activity. 12. In the case of CIT v. Jalna Seeds Processing Refrigeration Co. Ltd. (supra), processing of raw seeds to make them suitable only for cultivation was held to be a manufacturing process. It was held that the raw seeds undergo various processes to make it marketable lot after which they are no longer edible and they can only be used for cultivation. The different commodity emerges after raw seeds undergo different stages and so the assessee can be said to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986] 63 STC 239, wherein it has been held that the processed or frozen shrimps and prawns are commercially regarded as the same commodity as raw shrimps and prawns. When raw shrimps and prawns are subjected to the process of cutting off of heads and tails, peeling, deveining, cleaning and freezing they do not cease to be shrimps and prawns and become other distinct commodities. There is no essential difference between raw shrimps and prawns and processed or frozen shrimps and prawns. In common parlance they remain known to be known as shrimps and prawns. Following the said judgment, in a recent decision in CIT v. Relish Foods [1999] 237 ITR 59, the apex court has affirmed the decision of the Bombay High Court in CIT v. Sterling Foods (Goa) [1995] 213 ITR 851, wherein it was held that the activity of processing of prawns is not an activity of manufacture or production. A similar view was taken earlier by the Bombay High Court in CIT v. Fazalbhoy Ibrahim and Co. P. Ltd. [1995] 214 ITR 239, wherein it was held that catching fish did not amount to manufacture or production of fish within the meaning of Section 80J. Both the decisions of the Bombay High Court are apposite to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anges, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity. In the present case, there is no essential difference between the pineapple fruit and the canned pineapple slices. The dealer and the consumer regard both as pineapple. The only difference is that the sliced pineapple is a presentation of fruit in a more convenient from and by reason of being canned it is capable of storage without spoiling. The additional sweetness in the canned pineapple arises from the sugar added as preservative. On a total impression, it seems to us, the pineapple slices must be held to possess the same identity as the original pineapple fruit. Referring to Anheuser-Bush Brqing Association v. United States, the Court said: Manufacture impl ..... 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