I~ A

COMMISSIONER OF INCOME-TAX TRIVANDRUM .....

RELISH GOODS

MARCH 11, 1999 ( B

[S.P. BHARUCHA, S.S. MOHAMMED QUADRI

AND R.C. LAHOTI, JJ.)

Income Tax Act, 1961 : c S. 80HH-Peeling and freezing of shrimps-Held, does not involve production-Assessee not ellfitled to allowance.

The respondent-assessee was engaged in the business of shrimps.

The assessee, after buying shrimps, peeled and froze them. In the assess-

D ment year 1977-78, the assessee claimed the allowance under Section 80HH of the Income Tax Act, 1961 on the ground that it was an industrial undertaking engaged in manufacture/production. The Income-Tax Officer negatived the claim but the Commissioner of Income Tax (Appeals) and the Income Tax appellate Tribunal held in favour of the assessee. Aggrieved, Revenue filed the present appeal.

E Allowing the appeal, this Court

HELD : 1.1. There is nothing on record indicating the description of what the assessee does to the shrimps it buys, except the bald statement

F that it peels and freezes them. The High Court was, therefore, not rigt.t in holding that buying and processing of shrimps by the assessee involved

production to entitle the assessee to the allowance that it claimed.

[994-D; 993-H] .___

Sterling Foods v. The State of Kamataka and Another, (1986} 63 S.T.C.

G 239, relied on.

Commissioner of Income-Tax v. Sterling Foods (Goa), (1995) 213 I.T.R. 851, approved.

,(_ r Commissioner of Income-Tax v. Marwell Sea Foods, (1987) 166 I.T.R.

H 624, distinguished. 992 L

.... 1.2. As regards assessee's submission that the matter should be A remanded to appropriate authority to enable the assessee to lay before it evidence in detail of what the purchased shrimps were subjected to, it is too late for the assessee to do that in relation to the relevant assessment year, viz. 1977-78. [995-A]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3255 of B 1995.

From the Judgment and Order dated 16.3.89 of the Kerala High Court in l.T.R. No. 310 of 1982.

B. Krishna Prasad for the Appellant.

E.M.S. Anam for the Respondent.

The Judgment of the Court was delivered by

S.P. BHARUCHA, J. The only question with which we are concerned D in this appeal by the Revenue, relating to the Assessment Year 1977-78, reads thus:

"Whether, on the facts and in the circumstances of the case :-

i) the assessee's business involves 'production' ?

ii) the assessee is entitled to exemption under Section 80HH of the l.T. Act, 1961 ?"

The assessee claimed the allowance under Section 80HH of the Income-Tax Act, 1961, on the ground that it was an industrial undertaking F that manufactured/produced articles. It would appear from the judgment of the Tribunal that the assessee bought shrimps, peeled them and froze them. There is. no other material on the record which indicates what was done by the assessee and how it was done. The Income-Tax Officer negatived the ciaim. The Commissioner of Income-Tax (Appeals) and the G Tribunal upheld the claim.

From the order of the Tribunal the question aforementioned was referred to the High Court for its opinion. The High Court held that bu)'.ing and processing of shrimps involved production and, therefore, the assessee was entitled to the allowance that it claimed. It followed its judgment in H

SUPREME COURT REPORTS

(1999] 1 S.C.R.

A Commissioner of Income-Tax v. Marwe 11 Sea Foods ((1987) 166 I.T.R. 624].

We find from the judgment of the Kerala High Court in the case of Maiwell Sea Foods (supra) that Harwell Sea Foods had placed before the B taxing authorities a detailed description of the process by which prawns were prepared for export and that the appellate authorities had understood the various stages through which the prawns passed as processes involving production or manufacture. The High Court was of the view that the Tribunal having affirmed the finding of the A.AC., it should be extremely slow to doubt the correctness of the finding unless it was perverse. c

As has been pointed out, there is upon the record before us no detailed description of what the assessee does to the shrimps it buys, other than the bald statement that it peels and freezes them. We cannot accept the statement at the Bar that the process to which the assessee puts the D shrimps is the process that Marwell Sea Foods used in regard to its prawns.

Apart therefrom, there is the judgment of this Court in Sterling Foods

v. The State of Kamataka and Another, (1986) 63 S.T.C. 239, where it has been held that processed or frozen shrimps and prawns are commercial E ly regarded as the same commodity as raw shrimps and prawns. When raw shrimps and prawns are subjected to the process of cutting 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 F processed or frozen shrimps and prawns. In common parlance they remain known as shrimps and prawns. This judgment in Sterling Foods

(supra) has been rightly applied by the Bombay High Court, in the case of Commissioner of Income- Tax v. Sterling Foods (Goa), [1995) 213 l.T.R. 851, to a claim u_nder Section 80HH of the Income-Tax Act and it has been held that the activity of processing of prawns is not an activity of manufac- G ture or production.

We are of the view that the judgment of this Court aforementioned in Sterling Foods (supra) is apposite to the question that we have to decide and, upon the material that is before us, we must reverse the view taken H by the High Court in the judgment under appeal.

Learned counsel for the assessee submitted that the matter should A be remanded to the appropriate authority to enable the assessee to lay before it evidence in detail of what the purchased shrimps were subjected to. We think it is far too late in the day for the assessee to do that in relation to the assessment year with which we are concerned.

The appeal is, therefore, allowed. The judgment and order under appeal is set aside to the extent it deals with the said question. The said question is answered in the negative in relation to both its parts and in favour of the Revenue.

No order as to costs.

R.P.

Appeal allowed.