Commissioner Of Income Tax v. Gandhi Spices Ltd.....opponent(S

O/TAXAP/1886/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1886 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus GANDHI SPICES LTD.....Opponent(s) ================================================================ Appearance: MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 13/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the appellant-revenue has challenged the judgment and order dated 27.6.2005 passed by the Income-tax Appellate Tribunal, Rajkot Bench in ITA No. 449/Rjt/2004 for the assessment year 2000-01. 2.While admitting this appeal on 2.8.2006, this Court has framed the following substantial questions of law: A)Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the process of production in the case of the assessee is required to be treated as “manufacturing” within the provisions of Sec. 80IA of the IT Act ? B)Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the assessee is engaged in manufacturing process and entitled to claim deduction u/s. 80-IA of the Act ? C)Whether on the facts and in the O/TAXAP/1886/2005 JUDGMENT circumstances of the case, the Appellate Tribunal is justified in holding that the amount of Rs. 2,52,326.00 disallowed by the A.O. u/s 40A(2)(b) of the Act is required to be deleted ? 3.The brief facts of thepresent case are that the assessee is involved in the manufacture of spices. It filed return for both the years under considerations, which were processed u/s. 143(3) and the Assessing Officer has disallowed the assessee’s claim of deduction of Rs. 2,67,750/- and Rs. 8,84,900 u/s. 80IA for the A.Y. 1998-99 and 2000-01 respectively. The assessee carried the matter before the CIT(A) and the CIT(A) directed the AO to allow the claim of deduction u/s. 80IA. Against the said order of CIT(A), the Revenue has preferred the present Tax Appeal. 4.We have heard the learned advocates appearing for the respective parties and considered the submissions. Mr. Pranav G. Desai learned advocate for the appellant has taken us through the various part of the order of CIT(A) as well as Appellate Tribunal and contended that it is not a manufacturing process as defined under sec. 80IA. It is further contended that the test or original ingredients remains the same, and therefore, the view taken by the Tribunal is required to be reversed. 5.Mr. Soparkar learned advocate appearing for the assessee has taken us through order of CIT(A) as well as Appellate Tribunal and has relied on para-4 of the order of Appellate Tribunal, which reads as under: 4.We have heard the learned advocates appearing for the respective parties and considered the submissions. Mr. Pranav G. Desai learned advocate for the appellant has taken us through the various part of the order of CIT(A) as well as Appellate Tribunal and contended that it is not a manufacturing process as defined under sec. 80IA. It is further contended that the test or original ingredients remains the same, and therefore, the view taken by the Tribunal is required to be reversed. 5.Mr. Soparkar learned advocate appearing for the assessee has taken us through order of CIT(A) as well as Appellate Tribunal and has relied on para-4 of the order of Appellate Tribunal, which reads as under: “The learned DR could not controvert the findings recorded by the CIT(A) so far as the process of manufacturing. Looking to the facts and circumstances of the case, we are of view that the learned CIT(A) has rightly allowed the claims of assessee in respect of deduction u/s. 80IA. This also finds support from the decision of ITAT, Amritsar Bench in the case of Dy. CIT v. Chaman Lal & Sons (93 TTJ (Asr) 132), wherein, it is held that deduction u/s. 80IA is allowable in respect of profits and gains derived from any business of an industrial undertaking, whether manufacturing, processing or otherwise. Thus, we do not find any merit in the appeal of the Department on this issue.” 6.Mr. Soparkar learned advocate has further contended that questions no. 1 & 2 involved in the present Tax Appeal are covered by the decision of this Court in the case of Saurashtra Cement & Chemical Industries Ltd. v. Commissioner of Income-tax, Gujarat-V, reported in 123 ITR O/TAXAP/1886/2005 JUDGMENT 669. He has further contended that the question no. 3 is also covered by the decision of the Supreme Court in the case of Aspinwall and Co. Ltd. v. Commissioner of Income Tax, reported in 251 ITR 323. In the case before Hon’ble Supreme Court, the assessee was doing process of manufacturing coffee beans from raw berries. In that view of the matter, we are in complete agreement in favour of the assessee and against the department even on interpretation of section. We are unable to take a different view than the one taken by the Appellate Tribunal. Hence, the questions are answered in favour of the assessee and against the Revenue. The present Tax Appeal is dismissed. (K.S.JHAVERI, J.) mandora (K.J.THAKER, J)