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2014 (12) TMI 858 - HC - Income TaxActivity amounts to manufacture or not - Whether conversion of pure gold into jewellery amounts to manufacture or processing – Held that:- Following the decision in Commissioner of Income-tax Versus Lovlesh Jain [2011 (12) TMI 93 - DELHI HIGH COURT] - manufacture as well as production of goods, articles or things is covered under Section 10A/10B - The activity for converting gold bricks, biscuit or bars, into jewellery amounts to “production or manufacture” of a new article - The gold, silver or platinum in bar, biscuit or brick form, is converted by manual labour and by the use of implements/tools or by machinery, culminating into an entirely new article/thing called jewellery or ornaments. Jewellery is a wearable item and is used by both men and women - a commercially different saleable product comes into existence - the activity of the respondent assessee amounts to “manufacture or production” and, therefore, qualifies for deduction under Section 10A/10B – thus, the assessee was engaged in processing of goods or merchandise as activity of converting raw gold into jewellery or ornaments amounts to processing, if not manufacture of goods or merchandise. Jewellery has distinctive name, character and use and is a different and new commercially saleable product. Deductions u/s 80HHC(3)(a) – Whether the Tribunal was right in holding that manufacture of gold jewellery on job work basis amounts to manufacturing activity by the assessee entitling it to deductions u/s 80HHC(3)(a) and Whether the assessee was engaged in manufacture or processing of jewellery or was merely procuring jewellery from the market as a trader and thereafter exporting the same – Held that:- A manufacturer of jewellery or ornaments might not require huge investment in machinery etc. Mode and manner of engaging and undertaking manufacturing activity could be variable - sub-clause (a) to sub-section (3) to Section 80 HHC of the Act, would be applicable in view of the factual finding recorded by the Tribunal that the aforesaid work was undertaken by the job workers under the supervision and control of the assessee and under their directions/check – Decided against revenue.
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