M/S.ASPINWALL & CO LTD vs. C.I.T., ERNAKULAM

C.A. No.-008832-008833 - 1997Supreme Court05 September 2001Bench: S.P. BHARUCHA Y.K. SABHARWAL ASHOK BHAN5 pages
For Petitioner: C. N. SREE KUMARFor Respondent: SUSHMA SURI
AI SummaryAllowed

What were the facts?

The assessee, M/s. Aspinwall & Co. Ltd., is a public limited company engaged in various businesses including coffee curing. For Assessment Years 1980-1981 and 1983-1984, the assessee claimed investment allowance under Section 32A of the Income Tax Act, 1961, for machinery used in coffee curing. The Income Tax Officer denied the claim, but the Commissioner of Income-Tax (Appeals) allowed it. The Income-Tax Appellate Tribunal upheld the CIT(A)'s order, following its own precedent. The Revenue appealed to the High Court, which, after examining the process of coffee curing and referring to the Encyclopedia Britannica, held that the activity did not amount to manufacturing and thus the assessee was not entitled to the allowance. The assessee then appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that the High Court was wrong in its conclusion. The Court defined 'manufacture' in the absence of a statutory definition as the production of articles for use from raw or prepared materials by giving them new forms, qualities, or combinations. It relied on the Supreme Court's decision in Deputy Commissioner of Sales Tax v. M/s. Pio Food Packers, which stated that manufacture occurs when a commodity subjected to a process can no longer be regarded as the original commodity but is recognized in the trade as a new and distinct commodity. The Court found that the assessee's nine processes transformed raw coffee berries into coffee beans, which have an independent identity distinct from the raw material and are recognized as a new and distinct commodity in the trade. Therefore, the activity amounted to manufacturing. The Court allowed the appeals, set aside the High Court's judgment, and restored the Tribunal's order, answering the question of law in favor of the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the assessee's activity of curing coffee amounts to manufacturing and the assessee is entitled to relief under Section 32A of the Income-tax Act? Assessee's contention: The assessee argued that its coffee curing activity, involving nine distinct processes including drying, hulling, polishing, grading, and bulking, transforms raw coffee berries into a new and distinct commodity recognized in trade as coffee beans, thus constituting manufacturing. The Tribunal, after inspecting the factory, found this to be the case. Revenue's contention: The Revenue contended that the assessee was merely performing processing work and not manufacturing or producing a new article. The High Court agreed with this view, opining that the nine stages did not result in a commercially different commodity and that in common parlance, coffee refers to coffee powder or a beverage, not the processed beans.

Which sections of the Income-tax Act were involved?

Section 32A,Section 256(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5 CASE NO.: Appeal (civil) 8832-8833 of 1997 PETITIONER: M/S. ASPINWALL & CO. LTD. Vs. RESPONDENT: THE COMMISSIONER OF INCOME-TAX, ERNAKULAM DATE OF JUDGMENT: 05/09/2001 BENCH: S.P. Bharucha, Y.K. Sabharwal & Ashok Bhan

JUDGMENT: Ashok Bhan, J.

Aggrieved by the judgment/order of the High Court, the assessee- appellant has come up in appeal. By the impugned judgment, the High Court in a reference made under Section 256(1) of the Income Tax Act, 1961 (for short, the Act) by the Income-Tax Appellate Tribunal, Cochin (for short the Tribunal) has answered the following question of law in the negative.

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the assessees activity of curing coffee amounts to manufacturing and the assessee is entitled to relief under Section 32A of the Income- tax Act? i.e. against the assessee and in favour of the Revenue.

The High Court opined that the assessee is not entitled to the investment allowance under Section 32A of the Act in respect of the machinery used for curing coffee and its sale.

The relevant facts giv

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 32A

All 84 judgments and leading authorities on Section 32A →

Recent GST High Court judgments

Search GST case law →