M/S. CHILLIES EXPORTS HOUSE LTD.versusCOMMISSIONER OF INCOME TAX

                M/S. CHILLIES EXPORTS HOUSE LTD.                                       A
                                        v.
                   COMMISSIONER OF INCOME TAX

                                APRIL 22, 1997

           (S.C. AGRAWAL AND K.S. PARIPOORNAN, JJ.]                                    B

       Finance Acts of 74-75, 76-77 & 77-7/r-S. 2(8)(c) of 74, S. 2(7)(c) of
76 and S. 2(6)(c) of 77, respectively-The tenn 'processing ofgoods' in relation
to an 'llldustrial Company'-Refers to the c11111u/ative effect of all the activities
canied out to make the goods marketable/aportable, and it is immatelial                c
even if some part of that activity is done by an outside agency.

      The short question raised in these Appeals was whether the Appel·
!ant was entitled to the concessional tax as applicable under S. 2(8)(c) of
the Finance Act 74-75 based on a finding of whether there was 'processing
of goods'. The High Court rejected the Appellant's case earlier inter alia             D
on the ground that the Appellant only sorted, graded clipped and stemmed
the chillies but did not do the fumigation which was done by another
agency. The same reasoning was followed in the later cases as well.

      The Appellant, relying on the judgment of the Supreme Court in                   E
Chowgule & Co. .v. Union of India, 47 STC 124 pleaded that there was
'processing of goods' and hence was entitled to be taxed at 55% only. The
Revenue contested by submitting that the Chowgule case was restricted in
scope and referred to another decision of this Court in Delhi Cold Storage
P. Ltd. v. CIT, (191 ITR 656).
                                                                                       F
      Allowing the Appeal, this Court

       HELD : 1. The entire matter requires a second look. A better
investigation into the different activities carried on by the assessee which
resulted in the making of the goods lit for export and how far the cumula·
tive effect of those activities will amount to 'the processing of goods' should G
be arrived at in the light of the various decisions referred to hereinabove.
Since such indepth investigation and analysis of the matter has not been
made, the decision in the three instant appeals solely based on the earliest
decision of the High Court of Madras, rendered in 115 ITR 73, when such
materials were not available, cannot stand. TI1e impugned judgments are H
                                       907
    908                  SUPREME COURT REPO R'.'.S               [1997] 3 S.C.R.

A set aside and the matters remitted to the High Court for a denovo con·
    sideration according to law. [918-D-F]

          2. It is evident that the various aspects highlighted in the decisions
    adverted as also the circular of the Central Board of Direct Taxes were
    not available to the Madras High Court when it rendered its main decision
B   in 1977 (115 ITR 73). The ultimate conclusion as to whether the assessee
    was carrying 011 the business of processing of goods would depend upon
    the consideration of all relevant materials available in the case. [917-E-F]


          3. The Madras High Court has eschewed from consideration one
C important activity carried on in the matter, namely, the activity relating to
    fumigation by the treatment with methyl bromide on the ground that it was
    done by •mother (M/S. Mysorlet Pvt. Ltd., Bangalore) on behalf of the
    assessee. That is an irrelevant or immaterial factor. The sole 11uestion is
    whether on a consideration of the totality of the activities induding the one
D   relating to the fumigation by the treatment with methyl bromide which
    enables the goods to be exported as a marketable commodity, amounted
    to the business of proces~ing of goods. The High Court has omitted to
    consider the matter in that perspective. [917-F-G]

          4. It also does not stand to reason to state that the dictum laid down
E   by the three member hench in Clwwgule case has been departed from in
    the later decision rendered by another coordinate Bench in the New De/Iii
    Cold Storage P. Ltd. v. Commissioner of Income Tax, (191 ITR 656). It
    appears that since in the cold storage there was only an act of preserva·
    tion· without any positive action this Cnurt was inclined to take the view
F   that the company running cold storage is not an industrial company and
    no process is inrnlved. Fumigation requires positive action. The dictionary
    meaning of the said word is "to treat (something contaminated or infected)
    with fumes or smoke". The meaning for the word, "fumigate" is to subject
    to smoke or fumes, as for dbinfection". Archaic-to perfume. Whether
    "refrigeration" "fumigation" are of the same or similar import, or whether
G   there is any difference, is a matter which re11nires a close look. It appears
    that though the goods purchased by the assessee were chillies, it had to
    undergo a series of activities in order to make it marketable in the export
    market-a sensitive market. These and other consideration require proper
    evaluation and an indepth analysis and as~istance from technical persons
H   may be required to ascertain how far and to what extent the various
    CHILLIES EXPORTS HOUSE LTD. v. C.l.T. [PARIPOORNAN, J.] 909

activities on, by the assessee to render the chillies purchased locally as one   A
of export quality can be termed as "carrying on the business of processing
of goods." [917-H; 918-A-D]

       Clzowgule & Co. v. Union of India, 47 STC 124; Delhi Cold Storage P.
Ltd. v. Commissioner of Income Tax, 191 !TR 656; Commissioner of Income
Tax, Gujarat-Iv. Lakhtar Cotton Press Co. (Pvt.) Ltd., 142 ITR 503; Com-         B
missioner of Income Tax v. Datacons (P) Ltd., 155 ITR 66; Commissioner
of Wealth Tax v. Syed Amjad Ali, 202 ITR 19; Shree Mulchand Co. Ltd. v.
Commissioner of Income Tax, 162 ITR 764; Commissioner of Income Tax
v. Rajmohan Cashews (P) Ltd., 185 ITR 472, Referred to.

       Collins English Dictionary and Webster's Comprehensive Dictiona1y
                                                                                 c
referred to.

        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3637 of
1983.
                                                                                 D
     From the Judgment and Order dated 18.12.81 of the Madras High
Court in T.C. No. 469 of 1978.

    T.A. Ramachandran, K.R. Ramamani and Mrs. Janaki
Ramachandran for the Appellant.
                                                                                 E
     J. Ramamurthy, Tara Chandra Sharma, B.K. Prasad and C. Radha
Krishnan for the Respondent.

        The Judgment of the Court was delivered by

       PARIPOORNAN, J. An identical question of law arises for con-
sideration in this batch of three appeals. The appellant is the same firm in     F
all the tlm:e appeals. The appellant-assessec is a public limited company
carrying on inter alia the business of exporting chillies to United States of
America, USSR and Ceylon. The only question that arises for considera-
tion is "whether the appellant is an 'industrial company' as defined in the
respective Finance Acts and can therefore be taxed only at 55%? The              G
revenue is the respondent in all the appeals.

     2. Civil Appeal No. 3637 of 1983 is filed against the judgment of the
Madras High Court dated 18.12.1981 in Tax Case No. 469 of 1978 (Refer-
ence No. 289 of 1978) and relates to the assessment year 1974-75. Civil
Appeal No. 8017 of 1995 is preferred against the judgment of the same            H
    910                       SUPREME COURT REPORTS                (1997] 3 S.C.R.

A High Court dated 4.4.1995 in Tax Case No. 998 of 1982 and relates to the
    assessment year 1976-77 (Judgment of the High Court is reported in 220
    ITR 411). Civil Appeal No. 15346 of 1996 is preferred against the judgment
    of the same High Court dated 27.6.1996 in Tax Case (Reference) No. 893
    of 1984 and relates to the assessment year 1977-78. Regarding the assess-
    ment year 1974-75, we are concerned with the Finance Act of 1974, section
B   2(8)(c); for the assessment year 1976-77 Finance Act, 1976, section 2(9)(c);
    and for the assessment year 1977-78 Finance Act No. 2 of 1977 section
    2(7)(c). A similar provision occurring as section 2(6)(c) of the Finance Act
    No. 2 of 1971 and relating to the income tax assessment of the appellant
    for the assessment year 1971-72 was construed by the Madras High Court
C   and the decision was rendered on 8.12.1977 and the judgment is reported
    as Additional Commissioner of Income-Tax, Madras- I v. Chillies Export
    House Ltd., 115 ITR 73.

          3. Since the language of different Finance Acts relating to the issue
    in controversy is substantially the same, we shall quote the earlier provision
D   contained in the Finance Act of 1974 relating to the assessment year
    1974-75. It is as follows ;

             "2. Income-tax. --

             (8) For the purposes of this section and the First Schedule, -
E
             (a) ....... ..

             (b) ....... ..
                                                                                     --
             (c) "Industrial company" means a company which is mainly
F                engaged in tile business of generation or distribution of
                 electricity or any other form of power or in the construction
                 of ships or in the manufacture or processing of goods or in
                     mining."

             xxx                xxx          xxx             xxx
G
                                      "Paragraph F

                In the case of a company, other than the Life Insurance Cor-
             poration of India established under the Life Insurance Corporation
H            Act, 1956 (31 of 1956), --
    CHILLIES EXPORTS HOUSE LTD. v. C.l.T. [PARIPOORNAN,J.) 911

                            Rates of income -tax                                  A
         I. In the case of a domestic company, --

        (1) Where ehe company is a company in which the public are
        substantially interested, -
                                                                                  B
         (i) in a case where the            45 per cent, of the
         total income does not              total income;
         exceed Rs. 1,00,000
         (ii) in a case where the total     55 per cent, of
                                            the total income;
         income exceeds Rs 1,00,000
                                                                                  c
         (2) Where the company is not a company in which the public are
         substantially interested, --

         (i) in the case of an industrial company --

         (a) on so much of the               55 per cent.;"                       D
         total income as does
         not exceed Rs. 2,00,000

                                                         (emphasis supplied)

       4. The basic facts relevant to all the three appeals are not in dispute.   E
The question that arises for consideration is whether the appellant-assessee
is an "industrial company" within the meaning of the Finance Act aforesaid
(hereinafter referred to as the Act) and the tax should be levied at the
concessional rate of 55% only. The assessee, a public limited company, is
carrying on the business of sale and purchase of chillies. Chillies are           F
exported to USSR, USA and Ceylon. The chillies purchased by the asses-
see company are sorted and graded as per Agmark specifications. Better
quality chillies are picked up and sorted out for export and before export they
are clipped and stemmed and subjected to fumigation under expert technical
hands in order to prevent deterioration and with a view to give better polish
and appearance and duri11g that process they are treated with methyl bromide. G
A substantial part of the goods are exported. According to the assessee, it
is engaged in the "business of processing of goods" and so entitled to the
concessional rate of income tax as per the Finance Act. The revenue
disputes this claim. According to it, no processing is involved and the goods
purchased and exported are chillies and the assessee cannot be considered H
                                                                                    r

                                                                                   -I
    912                  SUPREME COURT REPORTS                  [1997) 3 S.C.R.

A lo be an "industrial company" carrying on the business of processing of
  goods. The identical matter came up for consideration before the Madras
  High Courl relating to lhe same assessee-appellant for the assessment year
  1971-72 and the Court held thal the assessee is not an industrial company
  coming within Lhe meaning of section 2(6)(c) of the Finance Act No. 2 of
  1971. The said decision is reported in 115 ITR 73. When the maltcr came
B up for consideration in subsequent years 1974-75, 1976-77 and 1977-78, the
  earlier decision rendered for the assessment year 1971-72 (115 ITR 73) was
  followed without discussion. In this batch of appeals, the appellant assails
  the reasoning and conclusion of lhe High Court contained in its judgment
  dated 8.12.1977 relating to lhe assessment year 1971-72 (115 ITR 73) as
C incorrect and unsustainable.
          5. We heard counsel. Appellant's counsel vehemently contended that
    the decision of the High Court rendered for Lhe assessment year 1971-72
    (115 ITR 73) did not consider in an appropriate perspective the require-
    ment of relevant provisions of the Finance Act or the meaning to be given
D   to Lhe word "processing of goods". As stated, Lhe asscssec-appellant pur-
    chased chillies. They were sorted and graded as per Agmark specifications.
  Better quality chillies were picked up and sorted out for expo1t and before
  export they were clipped and stemmed and subjected to fumigation under
  expert technical hands in order to prevent deterioration and with a view to
E give better polish and appearance and during that process they were treated
  with methyl bromide. It is common ground that the appellant got the chillies
    fumigated by M/s. Mysodet Pvt. Ltd. Bangalore by paying charges therefor
    under a contract On the basis of these facts, the High Court in the earlier
    decision (115 ITR 73) concluded that the relevant section of the Finance
F   Act -- section 2(6)(c) -- suggests thal the appellant company itself should
    engage in the entire activity which leads to the final processing of the
    goods. In the said decision, the High Court look the view that the appel-
    lant-assessee is concerned only with the activity of sorting and grading of
    chillies as per Agmark specifications and making them fit for export and
G   before exporting clipping and stemming of chillies. The activity relating to
    fumigation by the treatment with methyl bromide was done by M/s.
    M ysodet Pvt. Ltd. and the assessee did not engage in this treatment of
    preservation and cannot claim the benefit of the concession specified in
    the Finance Act.

H
   CHILLIES EXPORTS HOUSE LTD. v. C.l.T. [PARIPOORNAN,J.) 913

      6. We were referred to a few decisions by both the sides to            A
understand the scope of the word "processing" contained in the respec-
tive Finance Acts and also as to how it was understood by the Board of
Direct Taxes. We shall refer to them in brief. (These decisions were not
available when the Madras High Court rendered the earlier decision
reported in 115 ITR 73 dated 8.12.1977). Construing the word "process-
ing" occurring in section 8(3)(b) of the Central Sales Tax Act and
                                                                             B
(Registration and Turnover) Rules, 1957, to decide whether the ore
blended in the course of loading through the mechanical ore handling
plant ,can be said to undergo processing when it is blended, a three
Member Bench of this Court in Chowgule & Co. v. Union of India, (47 STC
124 at pp. 130-131) stated thus ;                                            c
        "whether the ore blended in the course of loading through the
        mechanical ore handling plant can be said to undergo processing
        when it is blended. The answer to this question depends upon what
        is the true meaning and connotation of the word "processing" in D
        section 8(3)(b) and rule 13. This word has not been defined in the
        Act and it must therefore be interpreted according to its natural
        meaning. Webster's Dictionary gives the following meaning of the
       word "process", "to subject to some special process or treatment,
        to subject (especially raw material) to a process of manufacture,
        development or preparation for the market, etc., to convert into E
        marketable form as livestock by slaughtering, grain by milling,
        cotton by spinning, milk by pasteurising, f rnits and vegetables by
       sorting and repacking." Where therefore any commodity is subjected
       to a process or treatment with a view to its "development or
        preparation for the market", as for example, by sorting and repacking F
       frnits and vegetables, it would amount to processing of the com-
        modity within the meaning of section 8(3)(b) and rule 13. The
        nature and extent of processing may vary from case to case; in one
        case the processing may be slight and in another it may be exten-
        sive; but with each process suffered, the commodity would ex-
        perience a change. Wherever a commodity undergoes a change as G
        a result of some operation performed on it or in regard to it, such
       operation would amount to processing of the commodify. 11te
       nature and extent of the change is not material. It may be that
       camphor powder may just be compressed into camphor cubes by
       application of mechanical force or pressure without addition or H
    914                  SUPREME COURT REPORTS                   [1997) 3 S.C.R.

A           admixture of any other material and yet the operation would amount
            to processing of camphor powder as held by the Calcutta High Court
            in Shri Om Prakas Gupta v. Commissioner of Commercial Taxes,
             (1995) 16 STC 935. What is necessary in order to characterise an
             operation as ''processing" is that the commodity must, as a result
             of the operation, experience some change."
B
                                                           (emphasis supplied)

  The above decision was followed by different High Courts in giving effect
  to similar provisions in Finance Acts in different contexts. In Commissioner
C of Income-Tax, Gujarat- Iv. Laklitar Collon Press Co. (Pvt.) Ltd., 142 ITR
  503 the Gujarat High Court held that when the asscssee was carrying on
  the business of ginning and pressing of cotton, and cotton received in bulk
  was mechanically pressed into small units and packed in commercial
  acceptable bales, it is an operation which results in the change of com-
D modity and amounts processing of goods and the company engaged in such
  an activity is an industrial company entitled to concessional rate of tax since
  it is engaged in the processing of goods. In Commissioner of Income-Tax
  v. Datacons (P.) Ltd., 155 ITR 66 the Karnataka High Court held that
  conversion of data furnished by customers into balance sheets, stock ac-
E count, etc., amounts to processing of goods within the meaning of term
  contained in the Finance Act and so, the assessee is entitled to concessional
  rate of tax. The Allahabad High Court in Commissioner of Wealth-Tax v.
  Syed Amjad Ali, 202 ITR 19 held that the activity of crushing of tobacco
   leaves and separating stems and dust therefrom amounts to processing
  within the meaning of the relevant expression that occurred in Wealth Tax
F Act. The Bombay High Court in Shree Mulcha11d Co. Ltd. v. Commissioner
  of Income- Tax, 162 ITR 764 held that when a company purchases wool,
   sorts out the same in different qualities and colours and staple lengths, and
   then hand-washed to eliminate dirt, etc., and dried it in sun and blended
   uniformly for sale and export, a new commercial commodity is brought into
G existence and the operation carried on amounts to processing of goods and
   the assessee is an industrial company, entitled to concessional rate of tax
   under Finance Act 2 of 1971. The Kerala High Court in Commissioner of
   Income-Tax v. Rajmohan Cashews (P.) Ltd., 185 ITR 472 held that when
    the assessec company was engaged in processing raw cashew nuts and the
H major operation of processing work was done by outside agencies on behalf
    CHILLIES EXPORTS HOUSE LTD. v. C.l.T. [PARIPOORNAN,J.) 915

of the assessee and charges, therefor, were paid by the assessee, the           A
assessee was engaged in manufacture and processing of the goods and was
an industrial company within the meaning of section 2(6)(c) of the Finance
Act, 1972. The Court held that the fact the processing was not done in the
factory of the assessee but in the factory of someone else would not
necessarily mean that the assessee is not mainly engaged in the processing      B
of the goods provided. there is material to show that the processing was
done by the outside agency for and on behalf of the assessee and the
charges incurred therefor were paid by the assessee directly. Reference
may also be made, in this connection, to circular No. 347 dated 7th July,
1982, issued by the Central Board of Direct Truces, printed at 137 ITR
(Statutes) p. 14, which is to the following effect :
                                                                                c
        "Circular No. 347, dated 7th July, 1982.

        To
                                                                                D
               All Commissioners of Income-true

        Sir,

               Subject : Book publishing - whether industrial companies.
                                                                                E
            The Board has received representations that companies
        engaged in publishing of books should be treated as industrial
        companies for the purpose of section 104 of the Income-true Act,
        1961. Reference has been made in this connection to the decisions
        of the Madras and Calcutta High Courts in the cases of CIT,             F
        Madras v. Commercial Laws of India Pvt. Ltd., (1977) 107 ITR 822,
        and Addi. CIT, West Bengal-II v. A. Mukherjee & Co. (P.) Ltd.,
        (1978) 113 ITR 718, respectively. In the Madras decision it has
        been held that folding and stitching the printed sheets and con-
        verting them into parts or books, as the case may be, constituted
        processing of goods, In the Calcutta decision, it was held that it is   G
        wholly unnecessary for a publisher of books to be an owner of a
        printing press or to be himself a book binder to be a manufacturer
        of books. A publisher may get the books printed from any printer,
        but the printer is a mere contractor and the publisher carries on the
        business of manufacturing and processing of goods.                      H
    916                   SUPREME COURT REPORTS                    [1997] 3 S.C.R.

A              2. The Board has been advised to accept these decisions. In
            view thereof, book publishing companies even though they may
            themselves 1101 be engaged in the printing or binding of books qualify
            to be treated as industrial companies for the purpose of section 104
            as well as for the concessional tax treatment given to industrial
            companies.
B
            3. The contents of the circular may kindly be brought lo the notice
            of all officers working under your charge."

                                                             (emphasis supplied)

C On the basis of the above materials, counsel for the appellant vehemently
    contends that the entire approach made by the High Court and the
    conclusion reached by it is unsustainable and the above materials were not
    available to the Madras High Court when it rendered the parent decision
    in (1977) 115 ITR 73. It was contended that main reasoning in the said
D   decision 115 ITR 73 is to the effect that the activity done by the assessee,
    namely, sorting and grading of chillies as per Agmark specifications and
    making them fit for export and before export clipping stemming of chillies
    were alone done by them but the activity relating to fumigation by the
    treatment of methyl bromide was done by another on its behalf, and so the
E   asscssee cannot clalm the benefit and the totality of the activities cannot
    be considered as having been done by the assessee and it is on this basis
    of reasoning, it was held that in this view it cannot be said that the assessee
    was engaged in the processing of goods within the meaning of Finance Act
    No. 2 of 1971. The pica urged before us is that the word "processing" has
    been understood in a very wide sense by the three member Bench of this
F   Court in Chowgule case (supra) and by various High Courts referred to
     hereinabove and, even if one or more of such activities in the series arc
    entrusted to any other person like a contractor, to enable the assessee to
    complete the task, it will not disable or disentitle the assessee to claim the
    concessional rate of tax.                                      ·

G         7. On the other hand, counsel for the Revenue stibmitted that the
    decision in Chowgule case (supra) rendered by a three member Bench of
    this Court has been given a restricted scope in a later three member
    decision of this Court in Delhi Cold Storage P. Ltd. v. Commissioner of
    Income-Tax, 191 ITR 656. In that case a private limited company was
H   running a cold storatc. It was held that the articles stored in cold storage
     CHILLIES EXPORTS HOUSE LTD. v. C.l.T. (PAIUPOORNAN,J.] 917

 did not undergo any process. The question was posed as to whether the          A
 cold storage company can be held to have been engaged in the processing
 of goods. A three member Bench of this Court, after quoting the passage
 s~bscquent to the one quoted by us hercinabovc • Clwwgule case 47 STC
 124 at 131 held that the word "processing" is of wider amplitude, and has
various aspects and meaning and observed at p. 660, "the judgment indi-         B
 catcs that processing involves bringing into existence a different substance
from what the mate1ial was at the commenceme/11 of the process". Counsel
contended that in this case the goods purchased and exported are the
same, namely, chillies. And so, it cannot be stated that by processing a
different substance was brought into existence. It was further stated that
 the activity of fumigation in the present appeals is similar to preservation   C
by refrigeration. It was further argued that the activity carried on by the
 asscsscc is only marginal or minimal and so the assessce cannot be said to
be carrying on the business of processing of goods. Reference was also
made to the decisions of Karnataka High Court in Hind Nippo11 Rural
Indmtries Pvt. Ltd. (No. 1) v. Commissio11er of Income-Tax, 201 !TR 581         D
 and Hind Nippon Rural Industries Pvt. Ltd. (No. 2) v. Commissioner of
Income-Tax, 201 ITR 588.
 \
       8. On hearing the rival picas urged before us, it is evident that the
various aspects highlighted in the decisions adverted to hcreinabovc as also
the Circular of the Central Board of Direct Taxes were not available lo the E
Madras High Court when it rendered its main decision in (1977) 115 !TR
73. The ultimate conclusion as to whether the assesscc was carrying on the
business of processing of goods would depend upon the consideration of
all relevant materials available in the case. The Madras High Court has
eschewed from consideration one important activity carried on in the p
matter, namely, the activity relating to the fumigation by the treatment with
methyl bromide on the ground that it was done by another (M/s. Mysodet
Pvt. Ltd., Bangalore) on behalf of the assessee. That is an irrelevant or
immaterial factor. The sole question is, whether on a consideration of the
totality of the activities including the one relating to the fumigation by the
treatment with methyl bromide which enables the goods to be exported as G
a marketable commodity, amounted to the business of processing of goods.
The High Court had omitted to consider the matter in that perspective. It
also does not stand to reason to state that the dictum laid ·down by the
three member Bench in Chowgule case (supra) has been departed from in
the later decision rendered by another coordinate Bench in New Delhi Cold H
                                                                                      -j
    918                      SUPREME COURT REPORTS                 [1997) 3 S.C.R.

A Storage P. Ltd. v. Commissioner of Income-Tax, 191 ITR 656. It appears
  that since in cold storage there was only an act of preservation -- without
  any positive action -- this Court was inclined to take the view that the
  company running cold storage is not an industrial company and no process
  is involved. Fumigation requires positive action. The dictionary meaning of
  the said word is, "to treat (something contaminated or infected) with fumes
B or smoke" (Collins English Dictionary). Webster's Comprehensive Diction-
  ary - International Edition - p. 512, gives the meaning for word, "fumigate"
  thus, "To subject to smoke or fumes, as for disinfection". Archaic -- to
  perfume. Whether "refrigeration" and ''fumigation" are of the same or
  similar import, or whether there is any difference, is a matter which
C requires a close look. It appears that though the goods purchased by the
  assessec were chillies, it had to undergo a series of activities in order to
  make it marketable or more marketable in the export market -- a sensitive
  market. These and other considerations require proper evaluation and an
  indepth analysis and assistance from technical persons may be required to
D ascertain how far and to what extent the various activities carried on, by
   the assessee to render the chillies purchased locally as one of export quality
  can be termed as "carrying on the business of processing of goods". The
  entire matter requires a second look. A better investigation into the dif-
  ferent activities carried on by the assessee which resulted in making the
  goods fit for export and how far the cumulative effect of those activities
E will amount to "the processing of goods" should be arrived at in the light
   of the various decisions referred to hereinabove. Since such an indepth
   investigation and analysis of the matter has not been made, we are of the
  view that the decision in the three instant appeals solely based on the
   earlier decision of the High Court of Madras, rendered in 115 ITR 73,
   when such materials were not available, cannot stand. We, therefore, set
F
   aside the judgments in all the appeals and order a remit of the matters to
   the High Court for a denovo consideration according to law.

              9. The appeals are, therefore, allowed. There shall be no orde~ as to
     costs.                                                                 '
G    l.M.A.                                                      Appeals allowed.