Aloke Chakrabarti, J.
Facts relevant in the present appeal under section 260A of the Income Tax Act are that the assessee is a public limited company engaged, inter alia, in the business of manufacturing, selling and exporting under its own brand name, packet tea, conventional and instant coffee, oleoresins, meat products and marine products. On 7-3-1994, Lipton India Ltd. was amalgamated with Brooke Bond India Ltd. and the amalgamated company changed its name to Brooke Bond Lipton India Ltd. which has since amalgamated with the Hindustan Lever Ltd.
2. For the assessment year 1984-85, the assessee made a claim for deduction in respect of investment allowance of Rs. 91,84,078 under section 32A of the Income Tax Act, 1961 in respect of new machinery purchased and put to use during the previous year relevant to the said assessment year. Contention of the assessee was that it is not merely a blender of tea, it produces a new and distinct type of tea having a pre determined quality in terms of test, liquor, aroma and hygienically packed through mechanical contrivances which the assessee markets in packet and under different brand names and therefore, the assessee should be considered, not only as a blender of tea but also a manufacturer or at least a producer of certain types of tea in packed condition. Argument advanced by the learned counsel for the appellant was only to the aforesaid aspect and therefore, facts relating to items other than tea need not be discussed here.
The assessing officer held that at best the assessee can be considered to be engaged in processing only for which deduction for investment allowance under section 32A of the Act would not be available and accordingly the claim of the assessee towards the same was not entertained by the assessing officer.
Assessee preferred an appeal which was dismissed. Further appeal filed by the assessee before the Tribunal having also failed, the present appeal was filed by the assessee.
Dr. Pal, learned counsel for the appellant drew our attention to the provisions of section 32A of the Income Tax Act and contended that question involved in the present appeal is as to whether the assessee in the present case is entitled to deduction for investment allowance under section 32A being treated as manufacturer or at least a producer of a different marketable commodity when it carried on the business of selling blended tea under different brand names upon manufacture or at least production of a new item upon blending of various categories of teas. Strong reliance was placed on the judgment of a Division Bench of Karnataka High Court in the case of Brooke Bond Lipton India Ltd. v. State of Karnataka (STRP No. 55 of 1995, dated 21-11-1997) is similar facts, wherein it was held that the packed blended tea produced in the industrial unit of the assessee, is a manufactured product, the contributing imputes being garden tea of various colours and flavour and the packaging materials. It is further contended that the said judgment when was challenged before the Apex Court the special leave petition was dismissed on merits by order dated 17-7-1998 and therefore, the findings in the judgment impugned before the Apex Court, having obtained an approval from the Apex Court, has become a law under article 141 of the Constitution.
Reference was made to various judgments in the case of Chowgule & (P) Ltd. v. Union of India 47 STC 124, G.A. Renderian Ltd. v. CIT (1984) 145 ITR 387 (Cal), Appeejay (P) Ltd. v. CIT (1994) 206 ITR 367 (Cal), Aspinwall & Co. Ltd. v. CIT (2001) 23 DTC 402 (SC) : (2001) 251 ITR 323 (SC), Arthur E Newell, In re v. CIT (1997) 223 ITR 776 (AAR), Brooke Bond India Ltd. v. Union of India 60 ELT 88, CCE v. Eastend Paper Industries Ltd. (1990) 186 ITR 105 (SC), Chrestien Mica Industries Ltd. v. State of Bihar 12 STC 150, CIT v. N.C. Budharaja & Co. (1993) 204 ITR 412 (SC) North Bengal Stores Ltd. v. Member, Board of Revenue 1 STC 157 (Cal), Brooke Bond India Ltd v. Union of India 34 ELT 590, CIT v. Mercantile Construction Co. (1994) 74 Taxman 41 (Cal), Khalsa Bros. v. CIT (1996) 217 ITR 185 (Cal) and CIT v. G.S. Atwal & Co. (2002) 27 DTC 221 (Cal) : (2002) 254 ITR 592 (Cal). Special reference was made on the judgment of Division Bench of this court in the case of G.A. Renderian Ltd.s (supra).
Mr. Kapoor learned counsel appearing for the revenue contended that in the present case admittedly even after completion of the process undertaking by the assessee tea remained tea and there was no new product and therefore, the assessee could not have been held to be involved in any manufacturing process or in production.
With regard to the judgment of the Division Bench of Karnataka High Court, it has been contended that the said law does not become a declaration of law by the Apex Court when the special leave petition filed against said judgment was dismissed on merit.
Reliance was placed on behalf of the revenue on the judgment in the case of Kunhay Ammed v. State of Kerala (2000) 17 DTC 665 (SC) : (2000) 245 ITR 360 (SC) and Supreme Court Employees' Wellare Association v. Union of India AIR 1990 SC 334.
In reply to the said argument, Dr. Debi Prasad Pal placed reliance on further judgment in the case of Kalpetta Estates Ltd. v. CIT 1996 (9) SCC 510, Junior Telecom Officers Forum v. Union of India 1993 (Supp. 4) SCC 693, Babu Singh Bains v. Union of India AIR 1997 SC 116 and Abbai Maligai Partnership Firm v. K. Santhakumaram AIR 1999 SC 1486.
After considering the respective contentions of the parties, we find that the scope of the present appeal is very limited and facts are not disputed. The question falls for our decision is as to whether by blending various categories of teas and selling them after packaging with new brand name, the assessee is to be held to be involved in manufacturing or in production of a new marketable commodity and therefore, it is entitled to deduction for investment allowance under section 32A. Dr. Debi Prasad Pal, appearing for the assessee contended that this question has been decided in the matter of Brooke Bond Lipton India Ltd. (supra) by a Division Bench of Karnataka High Court which is binding on this court as the said judgment has since been confirmed by the Apex Court when it rejected on merit, the special leave petition challenging the said judgment.
It appears that the said Division Bench of Karnataka High Court considered the facts involved therein as follows :
"23. For the above uncontrovereted affidavit, it is clear that the original garden teas of different flavour, taste and colour are blended in defined proposition through sophisticated mechanical process and the same is weighed through clectro-mechanical weighers and is filled and sealed in pack cartons or purches in a synchronized manner. It is this packet of blended tea which is the final product of the industrial unit which is marketed. It is also not in dispute that the said process of blending and packaging lead to "value addition" to be blended garden teas and it is this value of the packaged tea which forms the measure of levy of excise duty and sales tax both."
The Division Bench ultimately came to the final finding considering the facts and law involved in the said case in the following manner :
"49. Coming back to the facts of the present case, as noticed above, the industrial unit of the petitioner produces blended tea packages by the operation of modern automatic machines ensuring unadulterated blended tea in order to maintain its basic qualities and properties like colour and flavour for longer period. It is also not in dispute that the packaged blended tea so produced has its own price structure much higher than the blended tea available in loose or ordinary packings with distinct class of customers and having all together different commercial incidents as has been placed or record before the assessing authority and the Tribunal by way of affidavits and statements of the technical experts, wholesellers, bulk consumers and retailers.
For the said reasons, keeping in view the law laid down in the Ujjagar Singhs case and the uncontroverted facts brought on record, it is quite permissible to take it as a possible view that the packaged blended tea produced in the industrial unit of the petitioner is a manufactured product, the contributing inputs being garden teas of various colour and flavour and the packing materials."
Another Division Bench of this court in the case of Appeejay (P) Ltd (supra) while considering the similar aspect took into consideration a similar business of blending different types of tea and sale them so blended in the market, for the purpose of finding whether the assessee there could be said to be manufacturing or producing articles within the meaning of section 80-J (4)(iii) of the Income Tax Act. It took into consideration that when various types of tea produced blended and sold whether it amounted to manufacturing or producing any article within the scope of sections 32A or 80-J of the Act. The Division Bench recorded its findings as follows :
"It appeals to us that, in the fact of the instant case, the assessee carries on business in buying different types of tea from the market, blends them in different proportions and thereafter sells the tea in the market. The assessee has claimed relief under section 80-J of the Income Tax Act on the basis that it is engaged in the manufacture and production of an article within the meaning of section 80-J(4)(iii) of the Income Tax Act, 1961. Section 80-J(4)(iii) provides as follows :
"Section 80-J(4)(iii) it manufactures or produces articles, or operates one or more cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of thirty-three years next following the 1-4-1948, or such further period as the Central Government may by notification in the Official Gazette, specify with reference to any particular industrial undertaking;
It appears that the said section applies to any industrial undertaking which fulfils certain conditions, namely, that it manufactures or produces articles etc. It appears to us that the Tribunal was correct in holding that in the instant case, the assessee is not entitled to any relief under section 80-J of the Income Tax Act, as it is not an industrial undertaking which manufactures or produces any article since the assessee is engaged only in blending of tea which may amount to processing but not manufacture or production of an article, within the meaning of section 32A or section 804 of the Income Tax Act." (p. 378)
In above view of the facts when the two Division Benches of different High Courts are holding different views, which law should prevail when the present case is under consideration. Ordinarily the view taken by the Division Bench of this court will be having a binding effect as a decision of a co-ordinate bench of the same High Court. But on behalf of the assessee, it is contended the special leave petition against the judgment of the Division Bench of Karnataka High Court was dismissed with the following order :
The special leave petitions are dismissed on merits."
The learned counsel for the assessee contended that when the Apex Court dismissed the special leave petitions specially mentioning that it was being dismissed on merits, it has only one meaning that the Apex Court approved the finding recorded in the impugned judgment on merit and therefore, the judgment of the Division Bench of Karnataka High Court got the stamp of approval from the Apex Court and therefore, is a law declared within the meaning of article 141 of the Constitution of India.
But law in this regard appears to have been settled by the Apex Court in the case of Kunhay Ammed (supra) holding, inter alia, as follows :
"40. A petition seeking grant of special leave to appeal may be rejected for several reasons. For example, it may be rejected (i) as barred by time, or (ii) being a defective presentation, (iii) the petitioner having no locus standi to file the petition (iv) the conduct of the petitioner disentitling him to any indulgence by the Court, (iv) the question raised by the petitioner for consideration by this court being not fit for consideration or deserving being dealt with by the Apex Court of the country and so on. The expression often employed by this court while disposing of such petitions are-"heard and dismissed", dismissed, "dismissed as barred by time" and so on. May be that at the admission stage itself the opposite party appears on caveat or on notice and offers contest to the maintainability of the petition. The court may apply its mind to the merit worthiness of the petitions prayer seeking leave to file an appeal and having formed an opinion may say dismissed on merits. Such an order may be passed even ex parte, that is, in the absence of the opposite party. In any case, the dismissal would remain a dismissal by a non-speaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the special leave petition. Even if the merits have been gone into they are the merits of the special leave petition only. In our opinion neither doctrine of merger nor article 141 of the Constitution is attracted to such an order. Grounds entitling exercise of review jurisdiction conferred by order 47 rule 1 CPC or any other statutory provisions or allowing review of an order passed in exercise of writ or supervisory jurisdiction of the High Court (where also the principles underlying or emerging from order 47 rule 1 CPC act as guidelines) are not necessarily the same on which this court exercises discretion to grant or not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of a special leave petition does not take away the jurisdiction of the court, Tribunal or forum whose order forms the subject-matter of petition for special leave to review its own order if grounds for exercise of review jurisdiction are shown to exist. Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petition has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this court. Here also the doctrine of merger would not apply. But the law stated or declared by this court in its order shall attract applicability of article 141 of the Constitution. The reasons assigned by this court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, Tribunal of authority to express any opinion in conflict with or in departure from the view taken by this court because permitting to do so would be subversive of judicial discipline and an affront to the order of this court. However, this would be so not by reference to the doctrine of merger.
41. to 43** ** **
44. To sum up, our conclusions are :
(1) to (iii) ** ** **
(iv) An order refusing special leave to appeal may be a non-speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the court was not inclined to exercise its discretion so as to allow the appeal being filed.
(v) If the order refusing leave to appeal is a speaking order, i.e., given reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, Tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the Apex Court of country. But, this does not amount to saying that the order of the court, Tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (pp. 382-384)
Similar view was taken by the Apex Court in the case of Supreme Court in Employees Welfare Association case (supra).
The judgment in the case of Abbai Maligai Partnership firm (supra) was decided in different factual background and consideration was also different in the said case and therefore, the said judgment does not help in deciding the present question. In the case of Junior Telecom Officers Forum (supra), an eligibility list was challenged before the High Court and its decision when was challenged before the Supreme Court in a special leave petition, the same was dismissed in limine but on merits. Subsequently some other petitioners approached the Tribunal obtaining similar reliefs on the basis of the High Court judgment and the special leave petition filed against the said judgment of the Tribunal was also dismissed. Again some original applications were filed before the Central Administrative Tribunal again seeking relief on the basis of the High Court judgment and the said applications were rejected and relief was granted following the High Court judgment. Against the said order, when special leave petition was filed it was held that as the issues highlighted in the subsequent petition were directly and substantially projected of the earlier litigations, the rejection of the special leave petition on merit had a binding effect. It appears that in the same factual background dismissal of the special leave petition in one case was held to be having a binding effect in the subsequent litigations in the same factual background. As the present case in hand does appear to involve all facts similar as were involved in the Karnataka case, the said judgment does not apply.
In above view of the law as it stands settled, the dismissal of special leave petition even on merit in respect of the judgment of the Division Bench of Karnataka High Court did not amount to a declaration of law by the Apex Court thereby making it binding under article 141 of the Constitution as has been held in the case of Kunhay Ammed (supra) and Supreme Court Employees Welfare Associations case (supra). In such circumstances, the finding of the co-ordinate Bench of this court in the case of Appeejay (P) Ltd. (supra) being binding on this court while deciding the present appeal and as the facts available in the case decided by the Division Bench of Karnataka High Court including the fact of user of sophisticated mechanical process and electro mechanical weighers being not available in present case, we hold that the assessee is not entitled to deduction for investment allowance under section 32A of the Income Tax Act, 1961 as the assessee cannot be held to be a manufacturer or producer in the facts available. Therefore, the appeal is dismissed.