New Delhi: Preparing food items like paratha, samosa, dhokla and chappati for sale is a 'manufacturing activity' and entitled to tax exemptions, ruled an income tax tribunal.
"...Manufacturing of chappati, paratha, samosa, dhokla constitutes manufacturing activity," said Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT).
Giving its ruling in favour of Deepkiran Foods Pvt Ltd, the tribunal said various raw materials like flour, ghee, oil etc., which are used in the manufacturing of food items, lose their individual and independent identity and result in a different and new product.
The produced goods, it said, "was not sold to the customer as floor, ghee, etc., but with the change in the form and it attained a different identity and was recognised as a new and distinct article and was sold as a different and distinct commodity."
The ITAT further said that Deepkiran Foods, which is a 100 percent export-oriented unit (EOU) engaged in production of frozen foods, would be entitled to tax exemptions under Section 10B (relating to exports) of the Income Tax Act as it is engaged in manufacturing activity.
The company had filed an appeal before the ITAT against the order of a Commissioner of Income Tax (CIT) who had rejected its tax exemption claim holding that making of edible items like paratha, samosa, dhokla, idli, vada and chappati cannot be treated as a manufacturing activity.
While ruling in favour of Deepkiran Foods, the ITAT also said the company was granted registration under the Customs and Central Excise laws for setting up facilities storing and manufacturing of food items.