JUDGMENT
1. This is a reference under Section 256(1) of the Income-tax Act at the instance of the assessee and the following questions of law have been referred by the Tribunal for answer by this court :
“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee, being not an industrial undertaking, it is not entitled to deduction under Section 80I of the Income-tax Act, 1961 ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is not entitled to deduction under Sections 80HH and 80I of the Income-tax Act, 1961, as an industrial undertaking ?
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in not following the decision of the Andhra Pradesh High Court in the case of Sri Venkateswara Hatcheries (P.) Ltd., [1988] 174 ITR 231 which was favourable to the assessee, particularly when there was no decision of jurisdictional High Court on the point at issue ?”
2. The brief facts giving rise to this reference are that the assessee established an industrial unit in the backward area duly registered with the District Industries Centre, Rajnandgaon. For establishment of the unit, the assessee invested substantial amount in building, plant, machinery and equipment, etc. The unit was also granted subsidy by the State Government. The assessee’s business was rearing of chicks to broilers, a saleable product, by applying scientific process and technology. The assessee claimed deduction under Sections 80HH and 80I of the Income-tax Act in the return filed by it. The assessee, for the purposes of getting benefit under Sections 80HH and 80I of the Income-tax Act, also filed an auditor’s report in the prescribed form along with the return. The Assessing Officer rejected the claim of the assessee under Sections 80HH and
80I of the Income-tax Act. Against this, the assessee approached the appellate authority. The Commissioner of Income-tax (Appeals) allowed the appeal of the assessee. Hence, the Revenue approached the Tribunal in appeal and the Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and affirmed the order of the Assessing Officer. The assessee, therefore, approached the Tribunal for making a reference to this court and accordingly the aforesaid questions were referred by the Tribunal for answer by this court,
3. Suffice it to say that the process which is involved in development of chicks into broilers is nothing but basically the chicks remain chicks only. There is no substantial change so as to acquire new commercial identity. Chicks are smaller ones and when they are reared for some time, they develop suitably for table purposes. Therefore, there is no change of the substance.
4. In this connection, two decisions of the Supreme Court of America may be referred to : (1) East Texas Motor Freight Lines v. Frozen Food Express, (100 L.Ed 917) and (2) Anheuser Busch Brewing Association v. United States, (52 L.Ed 536-338). Both these decisions of the Supreme Court of America have been approved by the Supreme Court of India also.
5. It is true that even if the chicks which develop into broilers and they are dressed and sold in the market, they still continue to be chicks only. Therefore, there is no substantial change in the matter. “Manufacture” implies a change, but every change is not manufacture and yet every change in an article is the result of treatment, labour and manipulation and does not necessarily mean that on account of certain treatment and manipulation, a new identity has come to be acquired.
6. In the present case, the chicks are only reared for a few days and they are developed ; thereafter they become broilers. Therefore, even after rearing, they remain chicks only.
7. Hence, we are of the opinion that the view taken by the Tribunal is correct and we answer the reference against the assessee and in favour of the Revenue.