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

C.A. No.-003568-003568 - 2001Supreme Court09 July 200716 pages
For Petitioner: SUSHMA SURIFor Respondent: BHARGAVA V. DESAI
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that the assessee's activity of blending tea amounts to 'processing' only and does not qualify as 'production' or 'manufacture' under Section 35B(1A). Since the term 'processing' was omitted from the section, the assessee is not entitled to the weighted deduction.

What were the facts?

The assessee, a firm engaged in exporting tea, purchased, blended, and exported different qualities of tea. The Revenue disallowed weighted deduction under Section 35B(1A) of the Income Tax Act, arguing that blending is processing, not manufacturing or production.

What were the issues?

Whether the blending of tea by the assessee constitutes 'manufacture' or 'production' for the purpose of claiming weighted deduction under Section 35B(1A) of the Income Tax Act, or if it is merely 'processing'.

Which sections of the Income-tax Act were involved?

Section 35B(1A)

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 16 CASE NO.: Appeal (civil) 3568 of 2001 PETITIONER: Commissioner of Income Tax, Kerala RESPONDENT: M/s Tara Agencies DATE OF JUDGMENT: 09/07/2007 BENCH: Ashok Bhan & Dalveer Bhandari

JUDGMENT: J U D G M E N T Dalveer Bhandari, J.

1.

This appeal is directed against the judgment dated 18th January, 2000 passed in ITR No. 10 of 1996 by the High Court of Kerala at Ernakulam.

2.

The short question which arises for adjudication by this court is whether the respondent assessee who is engaged in purchase of different qualities of tea and blending the same for the purpose of export is entitled to weighted deduction under section 35B (1A) of the Income Tax Act, 1961 (hereinafter referred to as \023the Act\024) in respect of expenditure incurred for its export for the assessment year 1979-80. 3. Brief facts which are necessary to dispose of this appeal are as under: The assessee is a registered firm engaged in the business of export of tea. The respondent assessee purchases tea of diverse grades and brands and blends the same by mixing different kinds of tea. In this appeal, we are called upon t

The order continues below.

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