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2015 (10) TMI 589 - AT - Income TaxConversion of jumbo rolls into small sizes - whether conversion amounts to manufacture or production, eligible for deduction under sec. 32AB or deduction under sections 80-HH and 80-I? - Held that:- Hon'ble Supreme Court in M/s India Cine Agencies & Computer graphics Ltd. Versus CIT [2008 (11) TMI 15 - SUPREME COURT] held that this activity amounts to manufacture or production. Thus, we think it is not necessary to recapitulate and recite all the decision on the construction expression "manufacture". But suffice to say that core of all the decisions of the Hon'ble Supreme Court or Hon'ble High Court is to the effect that broadly manufacture is a transformation of an article, which is commercially different from the one which is converted. It is a change of one object to another for the purpose of marketability. It brings something into existence, which is different from that, which originally existed. The new product is a different commodity physically as well as commercially. The Hon'ble Court also explained broader test to determine whether manufacture is there or not, it is propounded that when a change or series of changes are brought out by application of processes which take the commodity to the point where, commercially, it cannot 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. Thus, in our opinion, the moment the assessee has carried the embroidery work, the character of sari had changed. It does not remain the original grey synthetic cloth. It has its independent market and value in the market other than the grey synthetic cloth. Thus, the learned AO failed to appreciate this aspect. We further, find that the ld.First Appellate Authority has appreciated the controversy in right perspective as well as followed the order of the ITAT, wherein, it has been held that the embroidery work is an activity of manufacture. In view of the above discussion, we do not find any merit in the appeal of the Revenue. - Decided in favour of assessee.
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