THE COMMISSIONER OF INCOME TAX vs. JINDAL SEEDS CO. PVT. LTD.

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ITA/10/2012HC BombayHCBM03041444201118 October 2013Bench: HON'BLE SHRI JUSTICE B.P. DHARMADHIKARI,HON'BLE SHRI JUSTICE RAVINDRA V. GHUGE3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the first question of law, concerning whether the assessee's activity amounts to manufacture, cannot arise from the order of the ITAT. This is because the CIT(Appeals) and the ITAT had concurrently found, as a matter of fact, that the assessee undertook all seven stages of the seed processing into a marketable lot fit for cultivation. The Revenue failed to demonstrate that these concurrent findings of fact were erroneous or perverse. In the absence of a proper challenge to these factual findings, the High Court concluded that no substantial question of law was raised. Consequently, the appeal was dismissed. The second question regarding the entitlement to benefits under Section 80IA was not decided on merits.

What were the facts?

The appeal was filed by the Commissioner of Income Tax (Revenue) against an order of the Income Tax Appellate Tribunal (ITAT). The assessee, Jindal Seeds Company Pvt. Ltd., was engaged in purchasing hybrid seeds, grading them, and selling them as a final product. The Revenue contended that the assessee's activity involved only three stages. However, the Commissioner of Income Tax (Appeals) and the ITAT concurrently found that the assessee undertook all seven stages of the manufacturing process as identified by the Bombay High Court in a previous case. The ITAT held that this process constituted manufacture.

What were the issues?

1. Whether the activity of the assessee, which involves purchasing hybrid seeds, grading them, and selling them as a final product, amounts to manufacture under the Income Tax Act? The Revenue argued that the activity involved only three stages. The assessee, relying on the findings of the CIT(Appeals) and the ITAT, contended that all seven stages of the manufacturing process, as defined by the Bombay High Court in CIT Vs. Jalna Seeds Processing & Refrigeration Co. Ltd., were undertaken. 2. Whether the assessee is entitled to claim benefits under Section 80IA of the Act? The judgment does not record specific arguments from either side on this issue, but it is framed as a substantial question of law. The appeal is dismissed on the first question, rendering the second question moot.

Which sections of the Income-tax Act were involved?

Section 80IA

AI-generated summary — verify with the full judgment below

(1) IN THE HIGH COURT OF JUDICATURE AT BOMBAY, AURANGABAD BENCH, AT AURANGABAD.

Income Tax Appeal No. 10 of 2012

The Commissioner of Income Tax, Aayakar Bhavan, Near Holy Cross School, Cantonment, Aurangabad. .. Appellant.

versus Jindal Seeds Company Pvt. Ltd., 29, New Mondha, Bus Stand Road, Jalna. .. Respondent. ......................... Mr. Alok Sharma, Assistant Solicitor General, for the appellant. Mr. R.R. Chandak, Advocate, for the respondent. ..........................

CORAM : B.P. DHARMADHIKARI & RAVINDRA V. GHUGE, JJ.

DATE : 18TH OCTOBER 2013

COURT'S ORDER (Per B.P. Dharmadhikari, J.) : 1. Heard learned ASGI Mr. Alok Sharma for the appellant, and Adv. Mr. R.R. Chandak for the respondent.

(2) 2. Following two questions are placed before us as substantial questions of law :- [1] Whether the activity of the assessee of purchasing Hybrid seeds (non-edible seeds) and after grading, selling the seeds as a final product amounts to manufacture ? [2] Whether the assessee is / was entitled to claim the benefits under Section 80IA of the Act ? 3. Thus, present appeal is on assumption that activity of assessee is purchasing of Hybrid seeds (non-edible seeds) and after grading, to sell the same as final product i.e. of three stages. 4. Adv. Mr. Chandak has pointed out to us, a finding recorded by the Commissioner of Income Tax (Appeals) [For short, "CIT (Appeals)"], that the appellant undertakes all the stages of manufacturing process as identified by Bombay High Court in the case of CIT Vs. Jalna Seeds Processing & Refrigeration Co. Ltd. [(2000) 246 ITR 156 (Bombay)]. The CIT (Appeals) has on facts found that the assessee undertakes all seven stages. Hence, assumption of appellant - Department that activity of assessee is of three stages only is not supported. 5. The Revenue approached the Income Tax Appellate Tribunal [For short, "ITAT"]. The ITAT has specifically concluded that in the case before it, assessee is undertaking all seven stages noted by this High Court to process the seeds into marketable lot fit for cultivation and, therefore, concluded that the said process constitutes manufacture. It did not accept

(3) contention of revenue on nature of activity of assessee. 6. These concurrent findings are not shown to be erroneous or perverse. In the face of these findings, only three stages are being pressed into service as undertaken by assessee. 7. In the absence of a proper challenge to a finding of fact answered to concurrently by the CIT (Appeals) and ITAT, it is apparent that Question No.1 raised supra cannot arise from the order of ITAT. No substantial question of law is, therefore, raised. Hence, Appeal is dismissed. No costs.

( RAVINDRA V. GHUGE ) ( B.P. DHARMADHIKARI )

JUDGE JUDGE ................................ bgp/ita10

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