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TMI Blog1996 (1) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee ? " Income-tax Reference No. 553 of 1985 relates to the assessment year 1965-66 and Income-tax Reference No. 554 of 1985 relates to the assessment year 1966-67, in respect of the same assessee. For the years 1965-66 and 1966-67, the Income-tax Officer while reopening the assessment, denied the rebate originally granted to the assessee under section 2(5)(a)(ii) on the ground that the assessee was not doing any manufacturing activity. On an appeal by the assessee, the Appellate Assistant Commissioner found that the assessee was entitled to the rebate which view was affirmed by the Tribunal on the appeal filed by the Revenue. The assessee is doing the business of processing fish and exporting the same. The fish is peeled, deveined and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he First Schedule to the Industries (Develop ment and Regulation) Act, 1951 (65 of 1951), and has, during the previous year, exported such articles out of India, he shall be entitled, in addition to the deduction of income-tax referred to in sub-clause (i), to a further deduction, from the amount of income-tax with which he is chargeable for the assessment year, of an amount equal to the income-tax calculated at the average rate of income-tax on an amount equal to two per cent. of the sale proceeds receivable by him in respect of such export." The word used in the section is "manufacture". So, according to the Revenue, unless the process carried on by the assessee would come within the meaning of "manufacture", he is not entitled to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 722 and CIT v. Poyilakkada Fisheries Pvt. Ltd. [1992] 197 ITR 85. Reliance was also placed on the decision in CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC). It is submitted that the activity carried on by the assessee would come within item 27 in Schedule I to the Industries (Development and Regulation) Act, 1951. We have no hesitation to reject the contention taken by the Revenue that the processed fish is not processed food, but only food stuff. Merely because the processed fish as such cannot be consumed, it cannot be contended that it is not food. A mere look at the item 27 of Schedule I to the Industries (Development and Regulation) Act, 1951, would make it clear. Item 27 reads as follows : " 27. Food processing industries : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [1995] 204 ITR 412. At page 423, it was observed as follows : " The words 'manufacture' and 'production' have received extensive judicial attention both under this Act as well as the Central Excises Act and the various sales tax laws. The word 'production' has a wider connotation than the word 'manufacture'. While every manufacture can be characterised as production, every production need not amount to manufacture." In Sterling Foods' case [1986] 63 STC 239 (SC), while considering the applicability of section 5(3) of the Central Sales Tax Act, 1956, the Supreme Court took the view that when raw shrimps, prawn and lobsters are subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing, they do not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long storage, scientific examination might indicate loss of moisture content, that is not sufficient for holding that the stored articles have undergone a process within the meaning of section 2(7)(c), Finance Act, 1973." In CIT v. Sterling Foods (Goa) [1995] 213 ITR 851, the Bombay High Court, while considering the provision contained under section 80HH of the Income-tax Act, 1961, took the view that by the subjecting of prawns to processing for the purpose of export, they do not lose their original character. No new commodity or article emerges as a result of such processing. The processed prawns retain their identity as prawns. No manufacture, therefore, can be said to take place as a result of such processing. That being the position, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods [1989] 180 ITR 454 (Ker). Thereafter, while considering the entitlement to special deduction under section 80J of the Income-tax Act, 1961, the same principle was followed by this court in CIT v. Poyilakada Fisheries Pvt. Ltd. [1992] 196 ITR 722 and CIT v. Poyilakkada Fisheries Pvt. Ltd. [1992] 197 ITR 85. In the First Schedule under the Industries (Development and Regulation) Act, 1951, the title given is as follows : " Any industry engaged in the manufacture or production of any of the articles mentioned under each of the following headings or sub-headings, namely : " The assessee would contend that both the words "manufacture" and "production" are used in the First Schedule. Therefore, when we consider section 2(5)(a)(ii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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