COMMISSIONER OF INCOME TAX, KERALA vs. M/S. TARA AGENCIES

CIVIL APPEAL No. 3568/2001Supreme Court[2007] 8 S.C.R. 13609 July 2007Bench: 2 JudgesAuthor: ASHOK BHAN, DALVEER BHANDARI COMMISSIONER OF23 pages
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court allowed the appeal, setting aside the impugned judgment. The Court held that the assessee's activity of blending tea amounted only to "processing" and did not constitute "production" or "manufacture". The Court emphasized that the term "processing" was specifically omitted from Section 35-B(1A) of the Income Tax Act, 1961, while "manufacture" and "production" were included. Therefore, the assessee was not entitled to the weighted deduction under Section 35-B(1A) as the statute did not include "processing" within its scope. The Court distinguished the present case from 'Nilgiri's case' and 'Chowgule's case' where "processing" was included in the respective statutes, making those decisions inapplicable here. The Court reiterated that it is the duty of the court to interpret the statute as it is and not to read words into it that the legislature has deliberately omitted. The ratio is that the benefit of weighted deduction under Section 35-B(1A) is only available for activities amounting to "manufacture" or "production", and not merely "processing", as the latter term is not included in the section.

What were the facts?

The assessee, a registered firm, was engaged in the business of exporting tea. For Assessment Year 1979-80, it claimed a weighted deduction under Section 35-B(1A) of the Income Tax Act, 1961, for expenditure incurred on exports. The assessee purchased tea of diverse grades and brands, blended them by mixing, and then exported the blended tea. The Assessing Officer disallowed the claim, holding that the assessee's activity did not constitute "manufacture". The Tribunal allowed the assessee's appeal, considering it a small-scale industrial unit based on a certificate from the Directorate of Industries. The High Court upheld the Tribunal's decision. The Revenue appealed to the Supreme Court.

What were the issues?

1. Whether the assessee, engaged in purchasing different qualities of tea and blending them for export, is entitled to weighted deduction under Section 35-B(1A) of the Income Tax Act, 1961, for export expenditure for AY 1979-80? Assessee's Contention: The judgment does not explicitly record the assessee's arguments before the Supreme Court. However, it notes that the Tribunal allowed the appeal based on the assessee being a small-scale industrial unit and the High Court endorsed this view. Revenue's Contention: The Revenue argued that the assessee's activity of blending tea did not amount to "manufacture" and therefore, the weighted deduction under Section 35-B(1A) was not admissible.

Which sections of the Income-tax Act were involved?

Section 35-B(1A)

AI-generated summary — verify with the full judgment below

Cited by 84 judgments on BharatTax

See all citing judgments →

Counted from the text of the judgments hosted here. Most recent first.

A COMMISSIONER OF INCOME TAX, KERALA v. MIS. TARA AGENCIES JULY 9, 2007 B [ASHO~ BHAN AND DAL VEER BHANDARI, JJ.] Income Tax Act, 1961: Section 35-B(JA)-Profits and gains from business-Permissible C deduction-Export market development allowance-Weighted deduction- AY 1979-80-Assessee engaged in purchase of tea of diverse grades and brands and blending the same by mixing different kinds of tea for the purpose of export-Assessee,s claim for weighted deduction being a small-scale exporter under S. 35-B(JA) for the expendJture incurred for its export was D disallowed by Assessing Officer on the ground that the activity of the assessee did not amount to manufacture-Assessee 's appeal allowed by Tribunal on the ground that it was a small-scale industrial unit in the light of certificate of registration granted to it by the Directorate of Industries-High Court endorsed the decisio~orrectness of-Held: The assessee 's activity amounted to "Processing" only and the activity did not amount to either "production" E or "manufacture"-The term "processing" has not been included in S. 35B(J A) and, therefore, the assessee was not entitled to weighted deduction under S. 35B(JA)

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.

Recent GST High Court judgments

Search GST case law →