Case Law Details
CIT Vs M/s. Muthuramalingam Modern Rice Mill (Madras High Court)
Conclusion: Conversion of Paddy into Rice by the process of de-husking would amount to “maufacture” as not only the form underwent a change but also the value addition happened by such process as a different commercial article came into being and therefore, assessee was entitled to deduction under Section 80 IA/IB during the relevant assessment years.
Held: Department held that the process of dehusking of Paddy for obtaining Rice did not amount to ‘Manufacture’ and therefore, asseseee was not entitled to the said benefit under Section 80 IA/IB during the relevant assessment years. It was held when the Paddy in the husk was converted into Rice by the process of dehusking, by manual or mechanical process, there was transformation of article. A husked Paddy was not a de-husked Rice, and not only the form underwent a change but also the value addition happened by such process as a different commercial article came into being. Thus, the department was not justified in denying the deduction to assessee as Rice and Paddy were two different things having different value.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
The Revenue has filed these appeals under Section 260A of the Income Tax Act, 1961, (for short “the Act”) aggrieved by the order dated 18.07.2008 passed by the learned Income Tax Appellate Tribunal (for short “the Appellate Tribunal”) for the assessment years 1999-2000, 2000-2001, 2001-2002, 2002-2003 and 2003-2004. The learned Appellate Tribunal allowed the appeals of the Assessee and held that it is entitled to deduction under Section 80IA/80IB of the Act for the aforesaid assessment years.
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