MAYUR INDUSTRIES vs. A.C.I.T.

O/TAXAP/174/2003 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 174 of 2003 With TAX APPEAL NO. 175 of 2003

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ MAYUR INDUSTRIES....Appellant(s) Versus A.C.I.T.....Opponent(s) ================================================================ Appearance: MR SN DIVATIA, ADVOCATE for the Appellant(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER

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O/TAXAP/174/2003 JUDGMENT Date : 03/12/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned orders passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘B’ (hereinafter referred to as ‘the Tribunal’) dated 04.10.2002 in ITA Nos. 4724/Ahd/1995 & 4725/Ahd/1995 for the Assessment Years 1992-93 & 1993-94 respectively, the revenue has preferred the present Tax Appeals. 1.1 The following substantial question of law was raised while admitting the appeals on 17.07.2003 : Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that the assessee’s activity of converting chana into dal/besan did not amount to manufacturing activity and as such the assessee was not entitled to deduction u/s. 80-I of the I.T. Act? 2. The assessee filed its return of income for the assessment years in question and claimed deduction u/s 80-I in respect of profit and gain from industrial undertakings on the ground that production of dal and besan from gram is a manufacturing activity. The Assessing Officer rejected the same on the ground that production of dal and besan is nothing but conversion of gram into dal and besan. On appeal, the CIT (Appeals) dismissed the appeal and confirmed the findings of A.O. Page 2 of 5

O/TAXAP/174/2003 JUDGMENT 3. On appeal before the Tribunal by the assessee, by orders, Tribunal dismissed the appeals and upheld the findings of CIT(A). Being aggrieved and dissatisfied with the impugned orders passed by the Tribunal, the assessee has preferred the present Tax Appeals for consideration of the aforesaid substantial question of law. 4. Mr. S.N. Divatia, learned advocate appearing for the assessee submitted that the authorities below erred in holding that the conversion of gram into dal and besan by undergoing various processes did not amount to manufacturing activity for the purpose of grant of deduction u/s 80-I of the Act. He submitted that in fact the appellant is engaged in the business of manufacturing dal and besan. He submitted that earlier the claim was rejected by the assessing officer on the ground that audit report in the prescribed form had not been submitted along with the return. 5. Mr. Manish Bhatt, learned Senior Counsel appearing with Ms. Mauna Bhatt, learned advocate for the revenue supported the impugned orders and submitted that the same having been passed in accordance with law does not call for any interference. Mr. Bhatt submitted that no claims have been allowed in this regard in the past and that for the assessment year 1991-92, the claim made by the assessee was rejected by the A.O and the same was confirmed by CIT(A). He submitted that the assessee had accepted the decision of CIT(A) and had not preferred any further appeal before the Tribunal. He has relied upon the decision of this Court in the case of Saurashtra Cement & Chemical Industries Ltd vs. Commissioner of Income-Tax, Gujarat – V reported in Page 3 of 5

O/TAXAP/174/2003 JUDGMENT [1980] 123 ITR 669. 5.1. In the aforesaid decision this Court held that without disturbing the relief granted in the initial year, the ITO cannot examine the question again and decide to withhold or withdraw the relief already granted. 6. Having heard learned advocates appearing on behalf of the parties and the question posed for consideration before us reproduced hereinabove and considering the decision of this Court in the case of Saurastra Cement (supra), the question, which is raised in the present appeals is required to be answered in favour of the revenue. We are in complete agreement with the concurrent finding of facts by the authorities below. The Tribunal in para 4 of the impugned order has observed that manufacture involves bringing into existence a new product which may have a different physical or chemical composition and is understood as such in common and commercial parlance. The Tribunal has considered the decision of the Apex Court in the case of CIT vs. Sacs Eagles Chicory reported in 241 IT 319 wherein it is held that the conversion of chicory root into chicory powder by roasting and powdering does not amount to a manufacturing activity. Even otherwise, earlier claim was rejected by the Tribunal and against the same the assessee had not filed any appeal. Therefore the assessee is not entitled to raise the same issue in the subsequent year. Accordingly, question raised in the present appeals are answered in favour of revenue and against the assessee. Appeals are dismissed accordingly. Page 4 of 5

O/TAXAP/174/2003 JUDGMENT (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 5 of 5