COMMISSIONER OF INCOME TAX Vs. POYILAKKADA FISHERIES P LTD
LAWS(KER)-2003-3-35
HIGH COURT OF KERALA
Decided on March 14,2003

COMMISSIONER OF INCOME TAX Appellant
VERSUS
Poyilakkada Fisheries P Ltd Respondents

JUDGEMENT

G.SIVARAJAN,J. - (1.) THE following three questions are referred to this court under section 256(1) of the Income Tax Act, 1961 at the instance of the Commissioner, Thiruvananthapuram: '1. Whether, on the facts and in the circumstances of the case and also in the light of the decisions of the Supreme Court in Sterling Foods v. State of Karnataka : 1986(26)ELT3(SC) and of the Bombay High Court in CIT v. Sterling Foods (Goa) : [1995]213ITR851(Bom) is the assessee, who buys prawns and processes the same and exports engaged in production and is entitled to exemption under section 80HH of the Income Tax Act? 2. Whether, on the facts and in the circumstances of the case and also in the light of the decision of the Supreme Court in Sterling Foods v. State of Karnataka (supra) and of the Bombay High Court in Sterling Foods (Goa) (supra) is the assessee who buys prawns and processes the same and exports engaged in production and is entitled to exemption under section 80 -I of the Income Tax Act? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and in fact in holding and in directing : (a) In a case where the tax burden or tax exemption is reserved for the assessee under the contract, it is the assessee is entitled to claim deduction under section 80HHC with reference to the value of export covered by such contract? (b) In a case where the contract is silent on whom the benefit should fall if the export house files disclaimer certificate, the benefit should go to the assessee?'
(2.) THE first two questions are referred in R.A. No. 184 (Coch.)/1995 filed against I.T.A. No. 120 (Coch.)/1991 and the 3rd question is referred in R.A. No. 185 (Coch.)/1995 arising out of I.T.A. No. 121 (Coch.)/1991. Since it is submitted by the counsel on either side that all the questions are covered by the decisions of the Supreme Court and of this court we are not going into the factual details. The first two questions relate to the claim for deduction under sections 80HH and 80 -I of the Income Tax Act. The said relief can be granted only if there is a manufacturing process involved in the conversion of prawns. The Supreme Court in Sterling Foods v. State of Karnataka (supra) in the context of the claim for exemption under section 5(3) of the Central Sales Tax Act held that the raw prawns purchased and the shrimps exported remained substantially the same commodity. This court in CIT v. Poyilakada Fisheries (P) Ltd. : [1999]240ITR445(Ker) and in CIT v. Povilakada Fisheries (P.) Ltd. : [2000]241ITR195(Ker) in the case of the assessee itself has held that since no manufacturing process is involved the assessee is not entitled to relief under sections 80HH and 80 -I of the Act. In view of the said decisions we answer question Nos. 1 and 2 above in the negative, i.e. in favour of the revenue and against the assessee. Question No. 3 relates to the claim for deduction under section 80HHC in respect of exports made by the assessee through export house. The deduction was not granted since the assessee did not produce the disclaimer certificate provided in the said section. This question is also covered by the decision of the Supreme Court in Sea Pearl Industries v. CIT (2001) 247 ITR 578 (SC) in favour of the revenue and against the assessee. Hence we answer both the limbs of 3rd question in the negative, i.e. in favour of the revenue and against the assessee. The income -tax referred cases are disposed of as above.;


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