Income Tax Appellate Tribunal - Delhi
Income-Tax Officer vs Anjaneya Cold Storage Ltd. on 6 April, 1994
Equivalent citations: [1994]50ITD51(DELHI)
ORDER
Vimal Gandhi, Judicial Member
1. These two appeals - one by the revenue for the assessment year 1989-90 and the other by the assessee for the year 1990-91 involve a common point - whether the assessee is a "Supporting Manufacturer" under Proviso to Sub-section (1) of Section 80 HHC.
2. For the assessment year 1989-90, the assessee claimed deduction of Rs. 1,94,44,205 in respect of sale of Rs. 7,48,83,580 made to export house for purposes of export. The 'supporting manufacturer' is defined as per Explanation to Sub-section (4A) of Section 80HHC as under:
Supporting manufacturer' means a person being an Indian company or a person (other than a company) resident in India. (Manufacturing goods) or merchandise and selling such goods or merchandise to an Export House or a Trading House, for the purposes of export.
2.1 The assessee rested its claim on the following submissions made before the Assessing Officer:
1. Various brokers bring live buffaloes/goats at the factory premises and after visual examination live animals are chosen for purchase. The animals are then killed, de-skinned and carcasses are brought for inspection and acceptance at area No. 1 where they are inspected by qualified veterinarians for organoleptical aspects as well as visual defects. Uncleaned pieces are immediately trimmed and washed. Non-confirming pieces are rejected and destroyed.
2. The accepted conforming carcasses are stored overnight in chilled rooms at 4 degrees centigrade for processing prior to the deboning operation. The chilled storage at controlled temperature also helps in reducing microbial count of the muscles and lower the PH factor.
3. The subsequent morning the chilled carcasses are removed to the beboning, the trimming section, where highly skilled and experienced butchers debone the carcasses in hygienic conditions following international mat cutting practices under the supervision of qualified food technologists. The carcasses after deboning and trimming is sent to inspection and prepacking section.
4. The resultant material obtained from deboning and trimming section is physically inspected for conformation of the specification to the packing requirements of different overseas markets. The materials are graded, weighed and packed in different polythene bags according to their individual characteristics and the rejected pieces are destroyed.
5. The resultant products from the deboning process after due sorting and inspection are transferred to the commuted meat production hall. Here the material is continuously transferred into high capacity, West German original grinding machines where the material is ground to various diameters. From the grinders the product is transferred to automatic vacuum filling machine of West German origin. These sophisticated computerised portion/filling machines weigh the resultant products by precise mechanical operation and pump themunder vacuum conditions to special polythene casings. These casings are thereafter clipped on both ends by automatic clipping machines.
6. The ordinary meat obtained after process Nos. 4 and 5 are transferred to holding chilled rooms where they are brought into stable conditions prior to deep freezing operations. Depending on the thickness of the product and the requirements of the various importing countries the products are transferred from holding chilled rooms to plate freezers or tunnel rooms/blast freezers.
7. In the plate freezer the product is stacked in right trays on the plates within the freezer cabinet thereafter under hydraulic pressure the meat product is compressed. Liquified ammonia which is flowing at temperatures below minus 40 degrees centrigrade within the specially designed plates absorb the heat from the product and results in creation of frozen meat.
8. In the tunnel room or blast freezer the freezing process is not by hydraulic compression but by blowing of high velocity low temperature air on the product which results in freezing of the product. The shape of the meat muscle is retained due to this method of freezing.
9. In result of abovementioned manufacturing procedure, a properly packed frozen meat product is made available for exclusive export market.
10. After completion of the freezing process the frozen meat is transferred to the final packing department. Here the frozen meat is inspected for confirmation to the required hardening. The frozen meat is then packed in strong sea-worthy corrogated kraft telescopic type boxes. The boxes are strapped with poly prophele strappings and thereafter the entire package are shrink wrapped to ensure that the product temperature does not fluctuate when exposed to non-refrigerator environment and also to guarantee factory seal of the product.
11. The shrink wrapped frozen meat, boxes are conveyed to deep freeze cold storage chambers where the temperature is constantly maintained below minus 18 degrees centrigrade for total duration until the shipment to the overseas market is due.
12. The manufacture of frozen meat for export is very specialised and regulated activity. It is a discipline which is perfected due to adherence and enforcement of the norms. The correct use of temperature and the efficient operations of the various machines coupled with the training and experience of the workmen results in the manufacture of quality packed frozen meat product suitable" for human consumption which can be stored/exported from live animals. Not only has the finished product got to confirm to the standards laid down by various Government of India departments and their relevant regulations but it is also subjected to the specific requirement of the importing nations veterinary and health departments and their regulations.
13. From the above it is clear that the assessee has manufactured a distinct new commercial article with a brand name, Le., Packed frozen meat for exclusive export market from live animals.
3. The assessee further contended that word "manufacturer" is not defined in Section 80HHC but should have the same meaning as given in Sections 10A and 10B of the Income-tax Act, 1961 as the above two sections and Section 80HHC were introduced to serve the same purpose, le., to encourage earning of foreign exchange. The assessee in this connection placed reliance on history notes and comments and speeches of Finance Minister relating to abovementioned provisions. For the purposes of Section 10B, the word "manufacturer" included a "process". The assessee further relied upon the decision of Hon'ble Supreme Court in the case of Suresh Chand v. Gulam Chisti AIR 1990 SC 897 (907) wherein it has been held that "ordinarily the rule of construction is that the same expression when it appears more than once in the same statute, more so in the same provision, must receive the same meaning unless the context suggests otherwise". The assessee also relied upon the decision of Hon'ble Calcutta High Court in the ease of CITv. Union Carbide India Ltd. [1987] 165 ITR 550 and also on the decision of Hon'ble Kerala High Court in the case of CITv. Mar well Sea Foods [1987] 166.ITR 624 to justify its claim that it is a supporting manufacturer.
4. The learned Assessing Officer rejected the above claim. She concluded that the assessee had purchased de-skinned carcasses from different persons and after deboning, cleaning, freezing and packing sold it to export house under different trade names. She further observed as follows:
The activities carried on by the assessee, as also stated by it in its reply, cannot be termed as manufacturing activities since manufacturing involves bringing into existence of a new product different from the raw material which is not so in the case of the assessee-company as no new substance has come into existence. Meat/mutton remains meat/mutton whether with bones or without bones, whether frozen or de-frozen.
4.1 She held that the assessee carried only "process" of meat and did not carry any manufacturing activity. In support of its claim, she relied upon commentary of Chaturvedi 6f. Pithisaria. She further relied upon the following decisions wherein the assessee was held to have carried no manufacturing activity as original identity of the commodity was not lost although it underwent some degree of change on account of the process carried:
1. CSTv. Harbtias Rai & Sons [1968] 21 STC 17 (SC), when bristles plucked from pigs, boiled, washed with soap and other chemicals and sorted out in bundles according to the their size and colour were regarded as remaining the same commercial commodity, Pigs bristles.
2. Dy. GSTv. Pio Food Packers [1980] 46 STC 63 (SC) where pineapple fruit processed into pine apple slices for the purposes of being sold in sealed cans, it was held that although a degree of processing was involved in preparing pine apple slices from the original fruit, the commodity continued to possess its original identity, notwithstanding the removal of inedible portions, etc. slicing and thereafter canning it on adding sugar to preserve it.
3. CSTv. Alsban Enterprises [1980] 45 STC 283 (All.) After purchasing mutton tallow from butcher, the assessee removing the dust, bone pieces, etc., thereafter and selling the same.
4. Processing has in one sense a wider meaning than the term manufacture.
4.2 In the aforesaid background, the deduction claimed by the assessee as supporting manufacturer was denied.
5. Similar claim made for the assessment year 1990-91 amounting to Rs. 88,10,572 was denied.
6. The assessee impugned the above disallowance in appeal before the CIT (Appeals) and made elaborate submissions regarding the process of manufacture carried on by the assessee. In support of its claim, the assessee relied upon booklet brought about by the Indian Standard on specification for beef and buffalo flesh. The assessee also submitted that it was registered with Agricultural and Processed Food Products Export Development Authority (APEDA) as a manufacturer exporter. It further filed certificate from above authority certifying that assessee-company was manufacturing and exporting frozen boneless buffalo meat. The claim was further sought to be supported by filing certificate from various Public Departments and organisations treating the assessee as a manufacturer. The assessee also relied upon definition of "manufacturer" in Sections 10A and 10B and on speech of the Finance Minister given while introducing Finance Bill, 1988 relating to above provision and Section 80HHC. For the proposition, that definition of manufacture in Sections 10A and 10B can be employed for purposes of Section 80HHC as the context and purpose of all these provisions was same, the assessee relied upon the decision of the Supreme Court in the case of Suresh Chand (supra). Some other decisions were also produced to show that the assessee was a supporting manufacturer. The learned CIT (Appeals) after taking note of certain decisions mentioned in para 26 of his order agreed and accepted the claim of the assessee with the following observations vide order dated 21-5-1991:
27. I find substantial force in the submissions made by the appellant which are based on the decisions of Supreme Court. I, therefore, hold that the definition of the word "manufacture" appearing in the Income-tax Act should be considered and not in any other Act while deciding the issue of allowability of the claim under Section 80HHC. It has also been submitted that it is a well established rule of interpretation that in the absence of a definition of a term in a particular section, the definition of the same term appearing at any other place on the same statute should be considered particularly when the context in which the term has been used in the same. It is a cardinal principal in the construction of enactments that, unless the context otherwise requires, the meaning of an expression contained in the Act should prevail throughout the Act as held in 174ITR 682 (A.P.). The appellant has also referred to the following observations of the Supreme Court in the case of Suresh Chand v. Ghulam Chlsti AIR 1990 SC 897: "ordinarily the rule of construction is that the same expression when it appears more than once in the same statute, more so in the same provision, must receive the same meaning unless the context suggests otherwise.
28. The Assessing Officer is of the view that the definition of the word "manufacture" appearing in Section 10A and Section 10B includes processing and since the inclusive definition that the manufacturing includes processing of goods for the purpose of Section 80HHC has been brought in the statute w.e.f. 1-4-1991 by Finance Act, 1990, therefore, the appellant can claim it in the subsequent year, i.e., assessment year 1991-92 and not in the year under consideration. The counsel of the appellant has argued that the amendment has been made in the explanation clause of the section and the term "supporting manufacturer" appearing in the main provisions of the Act has not been amended. Explaining the functions of an "Explanation" the Supreme Court in the case of S. Sundaram v. V.R. Pattabhtaman AIR 1985 SC 582 has observed as under:
It is now well settled that an explanation added to statutory provision is not substantive in any sense of the term but as the plain meaning of the itself shows if it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provisions.
29.1nviewofthe position of law explained by the Counsel of the appellant and also in view of the fact that the production of graded frozen boneless meat from live buffalo involve various complicated process with the application of sophisticated imported computerised machinery amounts to manufacturing activity, as such the appellant is entitled to the benefits of the provisions of Section 80HHC. The Assessing Officer is directed to allow deduction under Section 80HHC as a "supporting manufacture" to the appellant. The appeal succeeds on this point.
7. In appeal for the assessment year 1990-91, the assessee reiterated all the submissions made for the assessment year 1989-90. These have been noted by the learned CIT (Appeals). Without considering the reasons given by his predecessor the leamed. CIT (Appeals) confirmed the disallowance in the assessment year 1990-91. In following this approach, the learned CIT (Appeals) relied upon the amendment of definition of supporting manufacture by which the word "processing" was also included w.e.f. 1-4-1991. On consideration of notes and comments accompanying the Finance Bill. On above change, the learned CIT (Appeals) concluded that the intention of the Legislature extend benefit to processors only from the date specified in the amendment was more than clear. Having regard to the change made w.e.f. 1-4-1991, the learned CIT (Appeals) held that earlier to aforesaid date the assessee as a processor was not entitled to relief under Section 80HHCofthe Income-tax Act, 1961. The assessee has challenged the aforesaid finding of the learned CIT (Appeals) in the assessment year 1990-91. As the issue involved was common in both the cross appeals, we heard the appeal for the assessment year 1989-90 on 15-3-1994 and are disposing of the issue in both the years through this consolidated order.
8. Smt. Sinha, learned Sr. D.R., vehemently challenged the order of CIT (Appeals) for the assessment year 1989-90. She relied upon the orders of the Assessing Officer and of CIT (Appeals) for the assessment year 1990-91. Each of the findings recorded by the learned CIT (Appeals) in her order for the assessment year 1989-90 was contested. According to Smt. Sinha, there was lot of distinction between the provisions of Section 80HHC on one hand and those of Sections 10A and 10B of the Act on the other. These provisions were incorporated to serve different purposes and their context was also different. She drew and highlighted the following distinctions:
(1) That purpose of Section 10A was to encourage development of specific location like Santacruz, Kandla etc. by describing these areas as "Free Trade Zones".
(2) That for purposes of Sections 10A and 10B an Industrial Undertaking either manufacturing or producing article or thing was covered, whereas provisions of Section 80HHC only covered a manufacturer.
(3) The word "manufacture" was defined by inserting a definition clause in Explanation to Section 10A through Finance Act, 1987 with retrospective effect. But no such definition wag incorporated in Section 80HHC. This has been explained in the Circular of D.B.D.T. dated September 22, 1987. Thus legislative intention to that provisions differently was more than clear.
(4) That provision of Section 10B was only extension of provision of Section 10A.
8.1 The definition of "manufacture" from Sections 10A and 10B could not be incorporated in Section 80HHC as the contexts of two sections were different. Smt. Sinha further submitted that case of S. Mohan Lai v. R. Kondiah AIR 1979 SC 1132 in fact supported the case of the revenue if the separate context of provision was taken into account. The word "production" used in Section 10A/10B was much wider than the word "manufacture" specifically used in Section 80HHC. For this proposition she placed reliance on the decision of the Supreme Court in the case of CIT v. N.C. Budharaja & Co. [1993] 204 ITR 412. According to Smt. Sinha provisions of Section 80HHC were required to be strictly construed. For this proposition, Smt. Sinha relied upon commentary of "lyengar on Income-tax" 7th Edition, page 65. She also submitted that freezing process carried by the asscssee does not tantamount to manufacture and for this purpose Smt. Sinha relied upon decision in Sterling Foods v. State of Karnataka [1986] 53 STC 239 (SC) (sic). In addition to cases cited by the Assessing Officer in the assessment order Smt. Sinha relied upon the decision of the Supreme Court in the case of Choivgule & Co. (P.) Ltd. v. Union of India AIR 1981 SC 1014 wherein the Supreme Court held that blending of ore of different qualities for obtaining ore of requisite specifications tantamounts to processing but not manufacture as even after mixing the resultant ore is not commercially new and distinct commodity from the ores blended together.
9. Smt. Sinha maintained that assessee carried only processing of meat/ mutton, which was not transferred to any different commercial commodity through the freezing or other processes carried on by the assessee. In this connection, with reference to "purchase of raw materials" given at page 16 of the paper book, she pointed out that assessee correctly showed that sheep carcasses and mutton cubes were purchased and not live animals as claimed by the assessee. She further drew our attention to details of expenses claimed, which did not show any expenses except for removal of waste meat. Further with reference to balance-sheet and depreciation chart, she submitted that assessee mainly owned cold storage plant and generators. Generators cannot be treated as plant utilised for manufacturing activity. Thus details of assets held by the assessee further showed that no other process except freezing of meat was carried by the assessee. Smt. Sinha further submitted that buffaloes shown in the purchase bills were only meat of buffalo carcasses, which was clear from weight and other details given in the bills. Thus raw material and the end-product remained neat without any transformation. Smt. Sinha accordingly submitted that assessee was not entitled to any relief. Smt. Sinha also relied upon the decisions in the case of Delhi Cold Storage (P.) Ltd. v. CIT [1991] 191 ITR 656 (SC) and in the case of Koshy's (P.) Ltd. v. CJT [1985] 154 ITR 53 (Kar.).
10. Shri C.S. Aggarwal, learned Counsel for the assessee supported the impugned order of CIT (Appeals) for the assessment year 1989-90. He highlighted by filing a chart at page 65, different processes carried on by the assessee. He maintains that assessee had acquired live buffaloes, carried process of manufacture and then supplied packed meat for export to the exporting house. The assessee was, therefore, entitled to relief as supporting manufacturer. In particular, he drew our attention to licence granted to the assessee to slaughter animals for purposes of export. Our attention was further drawn to health certificates issued by the Slaughter House, Municipal Corporation, Delhi wherein it was specifically certified that slaughter was carried for export for the assessee. Shri Aggarwal drew our attention to the slaughter fee paid by the assessee for obtaining licence. It is further submitted that by APEDA and other public author ties the assessee was treated as manufacturer. Shri Aggarwal also relied upon the reasonings given by the learned CIT (Appeals) in her order for the assessment year 1990-91. Our attention was drawn to the decision of Karnataka High Court in the case of CIT v. Baraka Overseas Traders [1993) 201 ITR 827 wherein process of marine products and beef was held to be manufacture and production of articles for purposes of Section 80HHC of the Act. Shri Aggarwal also relied upon earlier decision of the Kerala High Court in the case of Marwell Sea Foods (supra). Shri Aggarwal further relied upon several decisions of the Tribunal wherein similar processes carried on by the assessee were held to be the manufacturing process. It was further submitted that context and purposes of Section 80HHC and of Sections 10A and 10B were same and, therefore, definition of "manufacture" given in the later sections was also applicable to provisions of Section 80 HHC. Shri Aggarwal further submitted that under main provision of Section 80 HHC(1), the exporter of goods or merchandise was entitled to benefits and it was not necessary that exporter should be a manufacturer or producer. As per proviso to the above section, the exporter could part with benefits to the supporting manufacturer by issuing a disclaimer in his favour. The word "manufacture" has to be construed liberally in the light of main provision of Section 80HHC. Shri Aggarwal further submitted that words "(including processing)" added through Finance Act, 1990 w.e.f. 1-4-1991 were clarificatory or declaratory in character added only to remove a defect or omission. These were inserted merely to avoid complication in cases of processors, who were being wrongly denied benefit of proviso to Section 80HHC (1). The provision was retrospective in operation. Shri Aggarwal accordingly submitted that assessee was entitled to benefit of provisions.
11. We have given careful thought to the rival submissions of the parties. There is no dispute that export house in this case issued necessary certificate referred to in Clause (b) of Sub-section (4A) of the Act and all other conditions of the section (except of being manufacturer) are admittedly satisfied by the assessee in both the years. The assessee claims to be a supporting manufacturer, whereas the revenue treats it to be a processor, as basic components of the goods supplied for export remained unaltered on account of process applied by the assessee. The assessee acquired meat and supplied meat for export, which, according to the revenue, was the same commercial article. However, having regard to the facts brought on record by the assessee we are of the view that the assessee is entitled to benefit under Section 80 HHC of the Income-tax Act, 1961.
12. It is no doubt true that in the books the assessee has shown purchases of carcasses of buffaloes and goats but from this, it does not follow that the assessee, purchased meat, the same commercial article which was ultimately sold for export. It is seen that right from the beginning, the assessee in every explanation, claimed before the Assessing Officer and other authorities that its process started with selection of live buffaloes/ goats, which were brought at the factory premises and were selected after visual examination. The selected animals were taken to the Slaughter House for slaughter. The sissessee did not claim to have purchased animal at that stage because the assessee was not interested in the skin of the live animals as it did not possess facility of tannery. The skin was disposed of by the owner of the animal separately.
13. The selected live animals were then taken to the Slaughter House where the animals were slaughtered for and on behalf of the assessee. This is clear from the certificates placed by the assessee at pages 70 to 76 of the paper book. It may be mentioned here that for carrying slaughter of animals even at Slaughter House, a licence is necessary and that licence is admittedly possessed by the assessee. The licence is limited only for purposes of export of meat. The assessee cannot carry slaughter of animals for sale in the local market. The licence further carry several conditions/restrictions detailed in the licence, including obtaining of health certificate before carcasses are removed from the premises. The licence further provides that blood, offal and certain parts like Spinal Cords, Ovaries, other inedible parts, Glands, condemned meat, etc. and other waste material of slaughtered animals shall be Municipal Corporation property. The health certificates issued by the Corporation specifically certified that slaughter of animals was carried in Halal Section of Municipal Slaughter House for export. The name of the assessee is also specifically mentioned. It is further certified as per certificate that animals are free from Anthrax and Salmonellosis.
14. Having regard to be above facts, particularly to the health certificate, required to be obtained from the Corporation as also the standard of different statutory authorities including Indian Standard, the assessee as exporter is required to meet the selection of healthy and proper animals before slaughter is of paramount importance. In the booklet issued by the Indian Standard under the heading (Specification for Beef and Buffalo Flesh-Fresh, Chilled and Frozen) regarding grades of Beef Carcasses, it is provided as under :
2.1...
(a) Conformation.... The most desired conformation is the one which will yield the greatest quantity of edible meat. Superior conformation implies short necks and shanks, deep plump rounds, thick backs with full loins and well-fleshed ribs and smooth shoulders. This is in contrast to ranginess and angularity. In other words, the most desirable cuts, including the loin, rib, round or leg, and chuck and shoulder have shapely and full muscles and a large proportion of edible meat to bone.
14.1 The above desired conformation could be obtained at the stage of selection and not later. The revenue did not controvert that the assessee selected live animals. Even otherwise, there is ample material on record to hold that process carried on by the assessee started with selection of animals. The animal no doubt is not purchased as assessee is not interested in the skin of the live animals. The selected animal is then carried to the Slaughter House where slaughter is carried for the assessee under the licence held by it. After the slaughter, de-skinning is not carried on by the assessee. However; having regard to the assessee's vested interest in the carcasses not in skin, the process is carried as per requirement of the assessee. After de-skinning, the carcasses are handed over to the assessee and are taken to area No. 1 where they are inspected for visual defects. About other processes carried on by the assessee like pre-cooling before de-boning, trimming, etc. etc. there is no dispute between the parties. The de-skinning as stated earlier is not actually carried by the assessee nor the skin of animal is purchased by it. But for holding a person to be manufacturer, it is not necessary that all proceeses of manufacture should be actually carried on by the person. In the case of CST v. Dr. Sukhdeo [1964] 23 STC 385 [sic) (referred by the Assessing Officer at page 9 of her order for 1989-90) it is observed by the Supreme Court that a manufacturer is a person by whom or under whose directions or control the articles or material are made. Having regard to the vested interest, which the assessee has in the carcasses and the purpose for which carcasses are to be acquired, it can safely be held that even during the process of de-skinning the assessee never lost supervision and control of the animal. Thus the process carried by the assessee starts with selection of animal and ends with packed frozen meat, ready for export through all specialised and regulated activities with strict adherence to norms prescribed by the Government, Export House, foreign buyers and other public agencies. It is difficult to accept that original commodity on which process was carried by the assessee did not under went a change and continued to be the same commercially. By stretch of no imagination, it can be held that no new substance was brought into existence through the process carried by the assessee. The manufactured article is commercially different from the raw materials taken by the assessee and subjected to different processes. The assessee, therefore, fully qualified to be called a manufacturer in the technical sense of the term as laid down by the different Courts.
15. In the case of Dy. CSTv. Pio Food Packers [1980] 46 STC 63 (SC), their Lordships enunciated manufacture in the following terms:
There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved, in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article, that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed articles, it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity.
16. It is thus clear that manufacture is end result of one or more processes. Merely because one process in the chain of processes le., de-skinning of animal is not actually carried on by the assessee after the selection of live animals to the export of frozen food, it cannot be said that the assessee till manufacturer. The denial of the relief to the assessee by the revenue, in our opinion, is based upon mis-reading of the case established by the assessee. The revenue has taken a very narrow view of the matter and clearly ignored the purpose of Legislature in enacting Section 80HHC of the Income-tax Act, 1961, which was to encourage export for earning foreign exchange. The provisions, in our considered opinion, should be construed liberally to advance the aforesaid object.
17. We further find force in the submissions of the assessee that for all intent and purposes the word "manufacture" should include process as given in the definition clause of Sections 10A and 10B of the Act. All these provisions were incorporated to serve the same purpose and there is nothing in the context of Sections 10A and 10B suggests some other meaning of term "manufacture". The assessee, therefore, is justified in relying upon the decision of the Supreme Court in the case of Suresh Chand (supra).
18. In denying relief to the assessee for the assessment year 1990-91, one of the grounds taken by the learned CIT(A) was that benefit of Section 80HHC was extended to "processors" only w.e.f. 1-4-1990 by amending lause (d) of Explanation to above section. The learned CIT(A) further cited notes and comments accompanying the Finance Bill, 1990 in support of his conclusion that intention to extend benefit to processors as supporting manufacturer only from 1-4-1991 was more than clear. The aforesaid argument was also taken before us. It is no doubt true that amendment in the definition of supporting manufacturer was made w.e.f. 1-4-1991 by adding words "(including processing)" of goods or merchandised.
19. However, having regard to the intent and purpose, setting the context and other relevant material when seen to determine whether the amendment made is declaratory in character or otherwise, we find that it is declaratory only. In this connection we may usefully refer to the cases of Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70 (Pat.) as also to the case of CITv. Sri Jagannath Steel Corpn. [19911 191 ITR 676 (Cal.) wherein proviso added to Section 43B specifically w.e.f. 1 -4-1988 was held to be applicable w.e.f. 1 -4-1984. The provision was also held to be declaratory in character. The S.L.P. filed against the decision in the case of Jamshedpur Motor Accessories Stores (supra) has already been dismissed by the Hon'ble Supreme Court. In the later case of Sri Jagannath Steel Corpn. (supra), the Calcutta High Court made the following observations:
When the section as a whole is read, the amendments by way of provisos and Explanations are considered, when both textual and contextual interpretations are taken into account and a harmonious construction is made, it would be evident that the intention was that the assessee who collects sales-tax, etc. during the previous year and pays or deposits the tax pertaining to the last quarter in the early part of the next succeeding previous year and, in any event, before the filing of the return for the previous year, it would be treated as sufficient compliance with the provisions of Section 43B. Any other interpretation would mean that the assessee would be denied deduction of such taxes in the subsequent assessment year only because the liability in respect of that tax did not arise in that year, but in an earlier year and thereby the assessee would be denied deduction of the taxes paid relating to the last quarter which could only have been paid in the next subsequent previous year. This could never be the intention of the Legislature.
It has also been contended that, no statute shall be construed to have retrospective operation unless such a construction appears very clearly at the time of passing of the Act or arises by necessary and distinct implication. There is nothing mentioned in the proviso that it would be retrospective. On the other hand, the Legislature had taken care to see that it applies only from April 1, 1988. Against the very specific mention of the date of its operation, it was difficult to say that it was intended to apply retrospectively either, by construction or by necessary implication. There was no material to say that the proviso is declaratory.
It is no doubt true that, ordinarily, a statute, and particularly when the same has been made applicable with effect from a particular date, should be construed prospectively and not retrospectively. But this principle will not be applicable in a case where the provision construed is merely explanatory, clariflcatory or declaratory. It cannot be disputed that the proviso may be used to act as an operational addendum to the enactment with the sole object of explaining the real intendment of the statutory provision. Similarly, the object of the Explanation is to explain the meaning and intendment of the Act itself. In the present case, having; regard to the object of Section 43B, it must be held that the provisos and the Explanation have been added as and byway of interpretation clause. The object, as we have said, is to suppress the mischief of getting deduction of liability without discharging such liability and not for the purpose of denying relief to an assessee who discharges the liability incurred. The provisos and the Explanation added to Section 43B supplied an omission and were intended to remove an. Impossibility of performance and, therefore, cannot be said to be prospective in operation.
20. It is thus clear that date mentioned by the Legislature for operation of a particular provision is not conclusive. Explanatory and declaratory provisions are always retrospective in operation. 'The amendment was made in the explanation and has to he taken as clarificatory-explanatory in character only. From any angle, we see no scope to deny relief claimed by the assessee. Having regard to the above discussion, we direct the Assessing Officer to allow relief to the assessee as claimed in both the. assessment, years. Consequently orders of the CIT(A) for the assessment year 1989-90 is confirmed and for the assessment year 1990-91 is set aside.
21. In the result, the assessee's appeal for the assessment year 1990-91 is allowed, whereas the revenue's appeal for the assessment year 1989-90 is rejected.