Tc/104/2008 Of Commissioner Of Income Tax v. Shri Swasan Chemicals (M) Pvt

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.02.2008 CORAM: THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANANDTHE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN Tax Case(Appeal) No.104 of 2008 Commissioner of Income Tax,Chennai Chennai.. Appellant -vs-Shri Swasan Chemicals (M) Pvt. Ltd39 Hunters RoadChennai 600 112...Respondent TAX CASE APPEAL filed under Section 260 A of the Income Tax Act, 1961against the order of the Income Tax Appellate Appellate Tribunal, Madras'C' Bench, dated 06.07.2007 in ITA No.2511/Mds/2005 against the order ofthe commissioner of Income Tax (Appeals) V, Chennai in ITA 300/03-04dated 26.3.05 and against the order of the Asst. Commissioner of IncomeTax, company circle VI (2), Chennai dated 31.10.03 in PAN/GIR No. AABCS 4990 D. For Appellant : Mrs.Pushya Sitaraman J U D G M E N T K.RAVIRAJA PANDIAN,J) The Assessee Company is engaged in manufacturing plastic powderout of plastic granules. During the relevant assessment year is 2002-03, the assessee company claimed deduction under section 80IB of theIncome Tax Act, 1961, on the premise that the goods produced by theAssessee company is a product of manufacturing activities, which wasrejected by the Assessing Officer on the ground that the activitiesundertaken by the Assessee in producing the plastic powder would notamount to manufacture. On appeal, the Commissioner of Income TaxAppeals, after elaborately considering the process carried out by theassessee/appellant in producing the end product plastic Alloy powder hasheld that the assessee is entitled to the benefit of Sec.80IA as thegoods produced by the assessee/appellant is the outcome of themanufacturing process. The appeal filed by the Revenue before theTribunal is ended in dismissal. The correctness of the same is nowhttps://hcservices.ecourts.gov.in/hcservices/canvassed before this Court on formulating the following question oflaw:- "Whether in the facts and circumstances of thecase, the Tribunal was right in holding thatconversion of polymer granules into powder amounts tomanufacture entitling the assessee to the benefit ofSec.80IB?" 2. We heard the Senior Standing Counsel for the Revenue. "Whether in the facts and circumstances of thecase, the Tribunal was right in holding thatconversion of polymer granules into powder amounts tomanufacture entitling the assessee to the benefit ofSec.80IB?" 2. We heard the Senior Standing Counsel for the Revenue. 3. The ultimate fact finding authority, the Tribunal has recorded afinding that the assessee is manufacturing various products of polymerpowders. The polymer powders were manufactured using the combination ofvarious polymers like LDPE, LLDPE, HDPE, EVA of different technicalparameters viz., Melting point, MFI (Specific gravity etc.) along withspeciality chemicals. The products manufactured by the assessee are notplastic powders, but they are specialised polymer alloys in powder form.The manufactured polymer alloys has been used in different industries.Each product is different in nature, character and use and technicallydifferent and could be used only in a specific application. The rawmaterials used for the above product were of different grades,specifications and are having different melting point, specific gravityetc. The raw materials used could not be characterised as a singleproduct as plastic granules. Plastic granules were generic term andonly imply the form of the material. The assessee used various polymersas their raw material with specialised chemicals for producing thepolymer alloy powder. In manufacturing process, different materials indifferent ratios and proportions, based on the scientific formulationsand specifications, requirement, usage and application were put tomanufacture along with special chemicals. The manufacturing process ofeach product is designed to avoid agglomeration and also to maintaintechnical parameters required for the finished products like bulkdensity, moisture content, micron size etc. Pulverising is only one ofthe many processes of manufacture. The products pass through mechanicalmeshes and seivers which are provided based on the end use for which theproduct is required. The finished products are completely differentfrom the raw materials. The technical aspects viz., basic polymer,melting point, MFI, Specific gravity, etc., of the finished products aredifferent from that of the raw material. The product range itself iswide and the products carry different technical nomenclature and even incommon parlance, they bear different names like fishing powder, microdot powder, scatter powder, low profile additives, upfilter filtrationmedia. The process employed is a complex one and not merely limited topulverisation or crushing. Having regard to the process employed andthe finished product which is stated to be completely a different onethan the raw material and after taking the aid of the Supreme Courtdecisions right from the case of CIT VS. N.C.Budharaja and Co. AndAnother (204 ITR 412), Bongaigaon Refinery and Petrochemicals vs. CIT(251 ITR 323) to that of Aspinwall and Co. Ltd. vs. CIT (2001) 251 ITR323 and the decisions of this Court in the case of CIT VS. Taj FireWorks Industries (2007) reported in 288 ITR 92 (Mad.) and in the caseof CIT VS. Premier Tobacco Packers P. Ltd., reported in 284 ITR 222 hasheld in favour of the assessee.https://hcservices.ecourts.gov.in/hcservices/ 4. From the facts narrated, we find that the Tribunal has come tothe correct conclusion which regards no interference in this appeal andas such the appeal is dismissed. Sd/Asst. Registrar/true copy/Sub Asst.RegistrarrgTo1. The Asst.Registrar, Income Tax Appellate Tribunel, Madras 'C' Bench, III Floor, Rajaji Bhavan, Besant Nagar, Chennai.2. The Commissioner of Income Tax, Chennai.3. The Asst.Commissioner of Income Tax, Company Circle VI (2), Chennai.+1 cc to M/s.Pushya Sitaraman, Advocate, SR.No.10783.Kgk (Co)krd / 12.03.08T.C(A)No.104 of 2008