TMI Blog2008 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... -452 of 2008 Civil appeal Nos. 6835-6836 of 2005 JUDGMENT Dr. ARIJIT PASAYAT, J. 1. In all these appeals common questions are involved relating to the entitlement of benefit in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act, 1961 (in short the 'Act'). In all these cases the issue is the effect of conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes. The assessees' contention was that the same amounted to manufacture/production as the case may be. Stand of the revenue was that it was not either manufacture or production. In some cases the High Court held that in any event because of Item 10 of the Eleventh Schedule, no deduction was permissible. The High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be several stages of processing, a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. Whenever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. But it is only when the change or a series of changes takes the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Process in manufacture or in relation to manufacture implies not only the production but also various stages through which the raw material is subjected to change by d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no longer be regarded as the original commodity but is, instead, recognized as a distinct and new article that has emerged as a result of the process. There might be borderline cases where either conclusion with equal justification can be reached. Insistence on any sharp or intrinsic distinction between 'processing and manufacture', results in an oversimplification of both and tends to blur their interdependence. (See Ujagar Prints v. Union of India (1989 (3) SCC 488). 7. To put it differently, the test to determine whether a particular activity amounts to 'manufacture' or not is: Does a new and different good emerge having distinctive name, use and character. The moment there is transformation into a new commodity commercially known as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various processes involved and the various processes would involve production within the meaning of Section 32A of the Act. It was inter alia observed as under: "There is no dispute that the plant in respect of which the assessee claimed deduction was owned by it and was installed after March 31, 1976, in the assessee's industrial undertaking for excavating, mining and processing mineral ore. Mineral ore is not excluded by the Eleventh Schedule. The only question is whether such business is one of manufacture or production of ore. -The issue had arisen before different High Courts over a period of time. The High Courts have held that the activity amounted to "production" and answered the issue in question in favour of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der connotation than the word 'manufacture'. While every manufacture can be characterised as production, every production need not amount to manufacture . The word 'production' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and reside rodeos which emerge in the course of manufacture of goods." 10. In "Words and Phrases" 2 nd Edn. by Justice R. P. Sethi the expressions 'produce' and 'production' are described as under: "In Webster's New International Dictionary, the word "produce" means something that is brought forth either naturally or as a result of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling of containers. (ii) re-packing from bulk packages to retail packages, and (iii) the adoption of any other method to render the product marketable. 'Production' in relation to a feature film, includes any of the activities in respect of the making thereof. (Cine Workers and Cinema Theatre Workers (Regulations of Employment) Act (50 of 1981) S.2(i). The word 'production' may designate as well a thing produced as the operation of producing; (as) production of commodities or the production of a witness. 'Manufacture' includes any art, process or manner of producing, preparing or making an article and also any article prepared or produced by manufacture. (Patent and Designs Act (2 of 1911), S.2(10). 'Manufacture' include ..... X X X X Extracts X X X X X X X X Extracts X X X X
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