http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 2  

PETITIONER: COMMISSIONER OF INCOME-TAX, TRIVANDRUM

       Vs.

RESPONDENT: RELISH GOODS

DATE OF JUDGMENT:       11/03/1999

BENCH: S.P.Bharucha, S.S.M. Quadri

JUDGMENT:

S.P.  Bharucha, J.

     The  only question with which we are concerned in this appeal  by  the  Revenue, relating to  the  Assessment  Year 1977-78, reads thus :

     "Whether, on the facts and in the circumstances of the case :-

     i) the assessee’s business involves ’production’ ?

     ii)  the  assessee  is  entitled  to  exemption  under Section 80HH of the 1.T.  Act, 1961?"

     The  assessee claimed the allowance under Section 80HH of  the  Income-Tax Act, 1961, on the ground that it was  an industrial  undertaking that manufactured/produced articles. It  would appear from the judgment of the Tribunal that  the assessee  bought shrimps, peeled them and froze them.  There is  no other material on the record which indicates what was done  by  the assessee and how it was done.  The  Income-Tax Officer negatived the claim.  The Commissioner of Income-Tax (Appeals) and the Tribunal upheld the claim.

     From   the   order  of   the  Tribunal  the   question aforementioned  was  referred  to  the High  Court  for  its opinion.   The High Court held that buying and processing of shrimps involved production and, therefore, the assessee was entitled  to the allowance that it claimed.  It followed its judgment  in  Commissioner of Income-Tax v.  Marwe  II  Sea. Foods [(1987) 166 I.T.R.  624].

     We  find from the judgment of the Keraia High Court in the case of Harwell Sea Foods (supra) that Harwell Sea Foods had   placed  before  the   taxing  authorities  a  detailed description of the process by which prawns were prepared for export and that the appellate authorities had understood the various  stages through which the prawns passed as processes involving  production or manufacture.  The High Court was of the  view  that the Tribunal having affirmed the finding  of the  A.A.C.,  it  should  be extremely  slow  to  doubt  the correctness of the finding unless it was perverse.

     As  has  been  pointed out, there is upon  the  record before  us no detailed description of what the assessee does to  the shrimps it buys, other than the bald statement  that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 2  

it  peels and freezes them.  We cannot accept the  statement at  the Bar that the process to which the assessee puts  the shrimps is the process that Harwell Sea Foods used in regard to its prawns.

     Apart  therefrom, there is the judgment of this  Court in  Sterling Foods v.  The State of Karnataka a.nd  Another, [(1986)  63  S.T.C.   239,  where  it  has  b°en  held that processed  or  frozen shrimps and prawns are  commercial  ly regarded  as  the same commodity as raw shrimps and  prawns. When  raw shrimps and prawns are subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing  they  do  not cease to be shrimps and  prawns  and become  other  distinct commodities.  There is no  essential difference  between raw shrimps and prawns and processed  or frozen  shrimps and prawns.  In common parlance they  remain known  as  shrimps  and prawns.  This judgment  in  Sterling Foods  (supra)  has been rightly applied by the Bombay  High Court,  in  the  case  of   Commissioner  of  Income-Tax  v. Sterling  Foods  (Goa) [(1995) 213 I.T.R.  8513, to a  claim under  Section  80HH of the Income-Tax Act and it  has  been held  that  the activity of processing of prawns is  not  an activity of manufacture or production.

     We  are  of the view that the judgment of  this  Court aforementioned  in Sterling Foods (supra) is apposite to the question  that we have to decide and, upon the material that is  before  us, we must reverse the view taken by  the  High Court in the judgment under appeal.

     Learned  counsel  for the assessee submitted that  the matter  should  be remanded to the appropriate authority  to enable  the assessee to lay before it evidence in detail  of what  the purchased shrimps were subjected to.  We think  it is  far  too late in the day for the assessee to do that  in relation to the assessment year with which we are concerned.

     The  appeal is, therefore, allowed.  The judgment  and order  under appeal is set aside to the extent it deals with the  said  question.  The said question is answered  in  the negative  in relation to both its parts and in favour of the Revenue.

     No order as to costs.