THE COMMISSIONER OF INCOME TAX, THIRUVAN vs. SMT.PREETHA S.NAIR,

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ITA/159/2009HC KeralaKLHC01024920200909 July 2018Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises from the order of the Tribunal. The Court noted that the issue of whether processing of raw cashew nuts into cashew kernels, even if carried out in a factory not owned by the assessee, qualifies for deduction under Section 80IA as 'manufacture' has been settled by various decisions of the High Court and the Supreme Court. Specifically, the Court referred to its own decision in the assessee's own case for another assessment year (ITA No.90 of 2008 dated 30.09.2008), which had allowed such a claim. The Court also took note of earlier decisions like CIT v. Rajmohan Cashews (P) Ltd. and Chillies Exports House Ltd. v. CIT, which dealt with the definition of an 'industrial company' and processing activities. Consequently, the appeal filed by the Revenue was rejected. No specific issue was left undecided.

What were the facts?

This case involves an appeal by the Commissioner of Income Tax, Thiruvananthapuram, against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The appeal concerns the assessment year(s) not explicitly stated but implied to be related to the orders under challenge. The core issue revolves around the assessee, Smt. Preetha S. Nair, claiming deduction under Section 80IA of the Income Tax Act, 1961, for processing raw cashew nuts into cashew kernels in a factory not owned by her. The Assessing Officer passed an order under Section 143(3) on 22.03.2002. The Commissioner of Income-Tax (Appeals) passed orders on 20.08.2004 and 22.03.2007. The ITAT's order dated 27.08.2008 is under challenge. The amount in dispute is not specified.

What were the issues?

1. Whether the assessee is entitled to a deduction under Section 80IA of the Income Tax Act, 1961, for the processing of raw cashew nuts into cashew kernels carried on in a factory not owned by her, qualifying as 'manufacture' under the said section? The Assessee's contentions are not explicitly recorded in the judgment. However, the Tribunal's decision implies the assessee claimed the deduction. The Revenue's contention is that the processing carried out in a factory not owned by the assessee does not qualify for deduction under Section 80IA as 'manufacture'. The Revenue relies on the context of Section 80IA and the interpretation of 'manufacture' in relation to the ownership of the factory. The judgment refers to previous decisions of the High Court and Supreme Court that have dealt with similar issues concerning industrial companies and processing activities, including cases like Commissioner of Income Tax v. Indian Resins and Polymers and CIT v. Rajmohan Cashews (P) Ltd.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 80HH,Section 80J

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT:

THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

& THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY, THE 9TH DAY OF JULY 2018 / 18TH ASHADHA, 1940

ITA.No. 159 of 2009 AGAINST THE ORDER OF THE ITAT, COCHIN BENCH IN ITA NO.709/2007 DATED 27.08.2008 APPELLANT(S)/APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV.SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): SMT.PREETHA.S.NAIR, P/O M/S NUT PRODUCTS CO.,, KOCHUPILAMOODU, KOLLAM. R, BY ADV. SRI.E.K.NANDAKUMAR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 09-07-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA.No. 159 of 2009 APPENDIX APPELLANTS EXHIBITS: ANNEXURE A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER U/S143(3) OF INCOME TAX ACT DATED 22.03.2002. ANNEXURE B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DTD 20.08.2004 ANNEXURE C TRUE COPY OF THE PROCEEDINGS OF THE ASSESSING OFFICER DATED 7.12.2006 ANNEXURE D TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) DATED 22.03.2007. ANNEXURE E TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 27.08.2008 RESPONDENTS EXHIBITS: NIL // TRUE COPY // P.A TO JUDGE SB

K. VINOD CHANDRAN & ASHOK MENON, JJ ================================ I.T.Appeal No.159 of 2009 ============================= Dated this the 09th day of July, 2018 J U D G M E N T K. Vinod Chandran, J The question of law raised in the above case is, whether the assessee is entitled to the deduction claimed for processing of raw cashew nuts from cashew kernels, carried on in a factory, not owned by it; entitled for a manufacture, under Section 80IA of the Income Tax Act, 1961. The question was considered in the context of sections 80HH and 80J as reported in Commissioner of Income Tax v. Indian Resins and Polymers [(1999) 235 ITR (5)]. The Court took note of the decision reported in CIT v. Rajmohan Cashews (P) Ltd., [(1990) 185 ITR 472], in which another Division Bench had taken a view that, even if the processing is carried on by outside agencies, it would come within the definition of an “industrial company” under Section 2(6)(c) of the Finance Act, 1972. The view is found to have been affirmed in Chillies

2 I.T.Appeal No.159 of 2009 Exports House Ltd. v. CIT [(1997) 225 ITR 814] and in Vijaya-laxmi Cashew Co. v. Deputy CTO, [(1996) 100 STC 571]. 2. In the assessee's own case for another assessment year, yet another Division Bench of this Court had allowed the claim as seen from the decision in ITA No.90 of 2008 dated 30.09.2008. Hence, we are of the opinion that no question of law arises from the order of the Tribunal, which has been settled in the various decisions of this Court and the Hon'ble Supreme Court. We, hence reject the appeal, leaving the parties to suffer their respective costs. Sd/- K. VINOD CHANDRAN, JUDGE Sd/- ASHOK MENON, JUDGE SB/11/07/2018 // true copy // P.A to Judge

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