STANDARD TEA PROCESSING CO.LTD vs. DY.C.I.T. (ASSTT.)

Facts

The assessee, Standard Tea Processing Co. Ltd., filed its return of income for Assessment Year 1992-93 on 30.12.1992, showing a total income of Rs. 64,66,310/-. The return was processed under Section 143(1)(a) on 22.3.1993. Following assessment proceedings, the assessee appealed to the CIT(A), which was partly allowed. A further appeal to the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench “C”, in ITA No. 4332/Ahd/1995, was also partly allowed. The present Tax Appeal is filed by the assessee against the ITAT's order dated 8.1.2002.

Held

The High Court held that the process of blending tea does not produce an article or thing within the meaning of Section 80I of the Income Tax Act, 1961, so as to bring into existence an article or thing which is a different commercial commodity. The Court's reasoning was based on the decision of the Apex Court in Commissioner of Income-tax vs. Tara Agencies, reported in 292 ITR 444. The Court found that this issue was governed by the Apex Court's ruling, which was not disputed by the assessee's counsel. Consequently, the substantial question of law was answered in favour of the Revenue and against the assessee. The Tax Appeal was dismissed.

Key Issues

1. Whether the process of blending tea produces an article or thing within the meaning of Section 80I of the Income Tax Act, 1961, resulting in a commercially different commodity? (Question of law) Assessee's Contention: The assessee contended that the blending of tea results in a new article or thing, qualifying for deduction under Section 80I. (No specific authorities or precedents were recorded as relied upon by the assessee in the judgment). Revenue's Contention: The Revenue relied on the decision of the Apex Court in Commissioner of Income-tax vs. Tara Agencies, reported in 292 ITR 444, to argue that the process of blending tea does not produce a new article or thing for the purpose of Section 80I.