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"3.ITA Nos. 598 to 600/Mds/2011: It was submitted by the learned authorised representative that the only issue in the assessee's appeals was as to whether the assessee is entitled to the benefit of deduction u/s 10B of the Income-tax Act, 1961 ('the Act' in short) in regard to its business of manufacturing of gherkin pickles. It was the submission that gherkins are commonly known as cucumbers. The assessee purchased gherkins and put them through various processes for manufacture of gherkin pickles. The learned authorised representative placed before us the process involved which is extracted herein below :
(o) In addition to the above, the gherkins removed at the stage of pre-cutting (i.e., gherkins of good quality and big in size) are again taken into process.

These gherkins are put into a machine which washes them, cuts them into required pieces and automatically packs in bottles. These bottles are filled with the aforesaid chemicals to convert them into a distinct product namely sweet pickle or hot pickle. Sugar is added to the sweet pickle and chilly is added to the hot pickle at the process of topping up the chemicals. This process involves chemical reactions like fermentation; neutralization and oxidization."

5. The learned authorised representative drew our attention to the provisions of section 10B as it stood when the assessee started its business. It was the submission that the assessment year 2006-07 was the 7th year of claim and the date of commencement of manufacture or production was 01-04-1999. It was the submission that the provisions of section 10B had been substituted by the Finance Act, 2000 w.e.f. 1-4-2001. It was the submission that when the assessee had made its claim for deduction u/s 10B, the provisions of the Explanation to section 10B had categorically provided that "manufacture" includes any "process". It was the submission that in any case the activities of the assessee in converting raw gherkins into gherkin pickles involved multiple processes and the same, in view of the Explanation to section 10B as it stood at the year of commencement of its claim, were "manufacture". It was the further submission that the Hon'ble Kerala High Court in the case of Tata Tea Ltd. v. Asstt. CIT [2010] 189 Taxman 303 , for the purpose of section 10B of the Act had held that blending, packing and exporting of tea bags, tea in packets and tea in bulk packs was manufacture. The learned authorised representative further relied upon the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Jamal Photo Industries (I) (P.) Ltd. [2006] 287 ITR 620 (Mad.) wherein it had been held that for the purpose of section 80-IA, the expression "manufacture" involves the concept of changes effected to a basic raw material resulting in the emergence of, or transformation into, a new commercial commodity. It is not necessary that the original article or material should have lost its identity completely. All that is required is to find out whether as a result of operation in question, a totally different commodity had been produced. It was the submission that in the present case the gherkins which were converted into gherkin pickles was a totally different commodity which had been produced. It was the submission that in view of the later development in the law, the decision of the co-ordinate Bench of this Tribunal in the assessee's own case for the assessment years 2001-02 to 2003-04, referred to supra, should not be followed and it should be held that the assessee is entitled to the claim of deduction under section 10-B of the Act.

8. We have considered the rival submissions. A perusal of the provisions of section 10-B of the Act in the present case clearly shows that it is the provision of section 10-B before its substitution w.e.f. 1.4.2001 which is applicable in the assessee's case. This is because the assessment year 2006-07 is the 7th year of its business and it remains undisputed that the assessee had started its production on 1.4.1999 and its first year of claim is 2000-01. Before its substitution, section 10B and the Explanation thereto has categorically held that "manufacture" includes any "process". A perusal of the various decisions as have been quoted above clearly shows that the conversion of the gherkins in the present case into gherkin pickles involves "process". This is also evident from the chart of the activity done by the assessee, extracted above. Once it is held to be a "process" for the purpose of the provisions of section 10B, it would have to be held that the assessee is doing "manufacture". Further a perusal of the provisions of section 2(29BA) though inserted by the Finance (No.2) Act, 2009, with retrospective effect from 1-4-2009, clearly shows that "manufacture" would mean a change in a non-living physical object or article or thing resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use. In the present case, the term "difference name, character and use" comes into importance. The gherkin by itself is a vegetable. When it is processed and made into gherkin pickles, the name is "gherkin pickles". Its characteristic from that of a vegetable changes into a pickle and its use also changes. Gherkin as a vegetable is used for making food dishes or salads. It is eaten raw. It is used for beauty treatment. The gherkin pickles cannot be used in the same manner as the gherkin itself. Washing the gherkin pickles to obtain the gherkins would in no way help the case of the Revenue insofar as the gherkin pieces so obtained from the washing of the gherkin pickles cannot be used for the same purpose as gherkin could normally be used. Further, a reading of the provisions of section 80-IC(2) talks of manufacture or production. The XIV Schedule to the Income Tax Act, 1961 which gives the list of articles or things or Page | 28 ITA Nos.2943, 4987, 4988 & 6523/MUM/2008, 6537/MUM/2006, 5539 & 5047/MUM/2009, 3409/MUM/2011, 755/MUM/2012 M.M. Poonjiaji Spices Ltd,A.Y.2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 operations in Item I recognizes Fruit and Vegetable Processing Industries manufacturing or producing -- (i) canned or bottled products. Obviously, the assessee is a Vegetable Processing Industry and as per the XIV Schedule itself, it is manufacturing or producing the bottled product of gherkin pickles.