TMI Blog2014 (4) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ransformer core only, which is the end-product, which can be used in the manufacturing of transformer - due to various processes, the product has distinct name, shape and uses - By these processes, the raw material loses its identity and new product comes into existence, which is commercially recognized as new product - the assessee were engaged in the manufacturing or producing an article or thing and had rightly allowed exemption u/s 80 IB of the Act – thus, the process used by the assessee in its business is eligible for deduction u/s. 80IB of the Act – Decided against Revenue. Eligibility for deduction u/s. 80IB of the Act - Assessee did not employ 20 or more workers in the process carried on by the assessee without the aid of power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciating that the process carried out by the assessee did not amount to manufacturing as stipulated in provision of Sec.801B(2)(iii) of the IT. Act. 3. On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in allowing the assessee claim for deduction u/s.801B of the I.T. Act on the basis of appellate order in Assessee case on similar issue for A.Y.2006-07, without appreciation that the principle of Res-judicata does not apply to the assessee s claim for the assessment year under consideration. 4. On the facts and in the circumstances of the case and in law the Ld.CIT(A) erred in allowing the assessee s entire claim of deduction u/s.801B as against the reduced amount computed by the Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the produce is by itself a commercial commodity capable of being sold or supplied. The material, from which the thing or product is manufactured, may necessarily lose its identity or may be transformed into basic or essential product. Manufacture is a transformation of an article which is commercially different from one which is converted. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, the identity of the original commodity ceases to exist and the commodity coming into existence will serve no purpose other than the said purpose for which it was manufactured. Manufacture is the end-result of one or more processes through which the origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loss. During the course of these processes, the mechanical stresses are developed inside the lamination. It is tested to find out as to how much stress has developed and how much losses will be increased. It is to be done so as to find out as to whether with these stresses, the transformer core will give desired result as per technical specification or not. In such a situation, the lamination is to be passed through a temperature of more than 820 degree Celsius, which removes the stresses and also improves and increases the quality and structure of the lamination sheet used in a transformer core. This process is called annealing process. The next process is known as core assembly. Some of the processes are performed thereafter. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is decrease in inherent characteristics of the product, which is required to be corrected, this process is adopted. Otherwise even without annealing process, transformer cores have all the qualities, which are essential to use it in the transformer for controlling supply of electricity. Therefore, this is not essential process of manufacturing. Hence, from the evidences on record, the Vice President rightly held that the assesses were engaged in the manufacturing or producing an article or thing and had rightly allowed exemption under section 80 IB. Respectfully following the decision of the Co-ordinate Bench, we hold that the process used by the assessee in its business is eligible for deduction u/s. 80IB of the Act. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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