Case: Delhi Cold Storage Private Limited Vs. Commissioner of Income Tax, Delhi-I, New Delhi I.N. Delhi

the Oxford Dictionary, Webster’s New International Dictionary, Words and Phrases Legally Defined Vol. 4 and in Encyclopedia Britannica Vol. 9. The High Court was impressed by the statement in Encyclopedia Britannica, Vol. 9 where it was said: “The only method by which fresh foods may be preserved for a considerable period in the raw state is by subjecting them to as low a temperature as possible without causing damage by freezing. Storage at temperature above freezing, in the neighbour­hood of 35 F/2 C is known as cold storage. Storage at such tempera­ture makes possible the holding in good condition of many fresh foods for considerable periods and their shipment to distant markets to consumers.” The High Court proceeded to state: “The act of cold storage appears to us to be an act whereby foods or products stored in the cold store are prevented from their nature age decay. The potatoes which are kept in the cold storage are pre­served in the original state and their normal decay is prevented. That, in our opinion, would be processing the goods, that is to say, preser­vation applying a method to the goods whereby the goods are pre­vented from taking its normal course. Therefore, looking from a broad point of view, in the light of the definition provided in the several dictionaries to which we have referred, it appears to us, that in the context of the present statute, which has used the expression “processing” in contradistinction or differently from the expression “manufacture”, the assessee-company was engaged in the act of processing the goods in terms of the Finance Act at the relevant time”. 7. The Court referred with approval to a decision of the Allahabad High Court in Addl. Commissioner of Income tax, Kanpur v. Farrukhabad Cold Storage (P) Ltd., 107 ITR 816 . The Calcutta High Court’s view directly supports the appellant’s stand. 8. In the impugned judgment reported in P 56 ITR 97, after dealing with the cases of the Calcutta and Allahabad High Courts, reference was made to the decision of this Court in Chowgule and Co. Pvt. Ltd. and Anr. v. Union of India and Ors., (1981) 1 SCC 653 to find out the true meaning of the two words ‘manufacture’ and ‘processing’. After discussing some precedents this Court observed thus: “What is necessary in order to characterise an operation as “processing” is that the commodity must, as a result of the opera­tion, experience some change. Here, in the present case, diverse quantities of ore possessing different chemical and physical com­positions are blended together to produce ore of the requisite chemical and physical composition demanded by the foreign purchaser and obviously as a result of this blending, the quantities of ore mixed together in the course of loading through the mechanical ore handl­ing plant experience change in their respective chemical and physical compositions, because what is produced by such blending is ore of a different chemical and physical composition. When the chemical and physical composition of each kind of ore which goes into the blend­ing is changed, there can be no doubt that the operation of blending would amount to “processing” of ore within the meaning of Sec­tion 8(3)(c) and Rule 13. It is no doubt true that the blending of ore of diverse physical and chemical compositions is carried out by the simple act of physically mixing different quantities of such ore on the conveyor belt of the mechanical ore handling plant. But to our mind it is immaterial as to how the blending is done and what process is utilised for the purpose of blending. What is material to consider is whether the different quantities of ore which are blended together in the course of loading through the Mechanical ore handling plant undergo any change in their physical and chemical composition as a result of blending and so far as this aspect of the question is concerned, it is impossible to argue that they do not suffer any change in their respective chemical and physical compositions.” 9. The meaning given to the word ‘processing’ and the test laid down to find out whether the operation amounts to processing by the three-Judge Bench of this Court runs counter to the conclusions reached by the Allahabad and Calcutta High Courts. As we have already pointed out, the two direct decisions on the point are the cases from Allahabad and Calcutta. The other cases that have been cited in the Calcutta judgment or at the Bar are cases not relating to the meaning or ambit of the relevant expression in the defini­tion of Section 2(7)(c) of the Finance Act, 1973. 10. We have already noted that processing is a term of wide amplitude and has various aspects and meanings. 11. In common parlance ‘processing’ is understood as an action which brings forth some change or alteration of the goods or material which is subject­ed to the act of processing. The dictionary meaning of the term is not very different from this meaning in one sense while various other meanings of wider amplitude are also available. The view taken by Allahabad and Calcutta High Courts did not find favour with the three-Judge Bench of this Court and in clear terms the judgment indicates that processing involves bringing into existence a different substance from what the material was at the commence­ment of the process.12. In a cold storage, vegetables, fruits and several other articles which require preservation by refrigeration are stored. While as a result of 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) of the Finance Act, 1973. The three-Judge Bench decision must be taken to have overruled the view of the Allahabad High Court in Addl. Commissioner of Income tax, Kanpur v. Farrkhabad Cold Storage (P) Ltd. (supra) and that of the Calcutta High Court in Commissioner of Income tax v. Radha Nagar Cold Storage (P) Ltd. (supra),

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]9. The meaning given to the wordand the test laid down to find out whether the operation amounts to processing by the three-Judge Bench of this Court runs counter to the conclusions reached by the Allahabad and Calcutta High Courts. As we have already pointed out, the two direct decisions on the point are the cases from Allahabad and Calcutta. The other cases that have been cited in the Calcutta judgment or at the Bar are cases not relating to the meaning or ambit of the relevant expression in theof Section 2(7)(c) of the Finance Act, 1973.In common parlanceis understood as an action which brings forth some change or alteration of the goods or material which isto the act of processing. The dictionary meaning of the term is not very different from this meaning in one sense while various other meanings of wider amplitude are also available. The view taken by Allahabad and Calcutta High Courts did not find favour with the three-Judge Bench of this Court and in clear terms the judgment indicates that processing involves bringing into existence a different substance from what the material was at theof the process.12. In a cold storage, vegetables, fruits and several other articles which require preservation by refrigeration are stored. While as a result of 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 meaningof Section 2(7)(c) of the Finance Act, 1973.The Court referred with approval to a decision of the Allahabad High Court in Addl. Commissioner of Income tax, Kanpur v. Farrukhabad Cold Storage (P) Ltd., 107 ITR 816 . The Calcutta Highview directly supports the