Chillies Export House Ltd. vs Commissioner of Income Tax

Mishra, J.—In the case of the assessee, for the assessment year 1971-72, this court has found that the assessee''s activities are :

(i) sorting and grading of chillies as per the Agmark specifications and make them fit for export; and

(ii) before such export, clipping and stemming of chillies.

The court, on the said basis has held that, ""if this was to be held to fall within the definition of ''processing'', we are afraid any small activity done

by a trader would fall within that definition. That certainly could not be the object of this definition."" The instant reference is precisely on the same

grounds as this court considered in Additional Commissioner of Income Tax, Madras-1 Vs. Chillies Export House Ltd., . The question whether

the Tribunal was right in holding that the assessee is not a industrial company for the purposes of taxation has been answered mainly on the basis of

the definition of ""industrial company"" in section 2(6)(c) of the Finance (No. 2) Act of 1971. The said definition reads as follows :

''industrial company'' means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of

power or in the construction of ships or in the manufacture or processing of goods or in mining.

Learned counsel for the assessee, however, has brought to our notice a judgment of the Supreme Court in Empire Industries Limited and Others

Vs. Union of India and Others, . The judgment has taken into account the definition of the word ""manufacture"" in section 2, introduced

retrospectively by the Central Excise and Salt and Additional Duties of Excise (Amendment) Act, 1980, and opined, ""if a new substance is brought

into existence or if a new or different article having distinctive name, character or use results from particular process or processes, such process or

processes would amount to manufacture."" The court has, however, pointed out that processing and manufacture are distinguishable. Nothing has

been shown in this judgment of the Supreme Court, upon which we can persuade ourselves to take a different view from what is stated in

Additional Commissioner of Income Tax, Madras-1 Vs. Chillies Export House Ltd., , the earlier judgment of this court. The court has taken the

view that processing is a continuous and regular action or succession of actions leading to the accomplishment of some results. The court, on the

activities of the assessee, has posed the question in the case on hand. What is the result achieved? - and answered, in our view, none at all. We do

not have any reason to take a contrary view. The Tribunal has taken the correct view of law. The reference is answered accordingly.