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2010 (1) TMI 1263 - SC - Income TaxDeduction u/s 80IA - Whether twisting and texturising of partially oriented yarn ('POY') amounts to 'manufacture' in terms of Section 80IA? - HELD THAT:- As examined the process in the light of the opinion given by the expert, which has not been controverted, we find that POY is a semi-finished yarn not capable of being put in warp or weft, it can only be used for making a texturized yarn, which, in turn, can be used in the manufacture of fabric. In other words, POY cannot be used directly to manufacture fabric. According to the expert, crimps, bulkiness etc. are introduced by a process, called as thermo mechanical process, into POY which converts POY into a texturized yarn. If one examines this thermo mechanical process in detail, it becomes clear that texturising and twisting of yarn constitutes 'manufacture' in the context of conversion of POY into texturized yarn. See M/s. Oracle Software India Ltd. [2010 (1) TMI 9 - SUPREME COURT] as held term “manufacture” implies a change, but, every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process fall6 s within the meaning of the word “manufacture Applying the above test to the facts of this case, it is clear that POY simplicitor is not fit for being used in the manufacture of a fabric. It becomes usable only after it undergoes the operation/process which is called as thermo mechanical process which converts POY into texturised yarn, which, in turn, is used for the manufacture of fabric. Our judgment in the present case is to be confined to the facts of the present case. We are not saying that texturising or twisting per se in every matter amounts to manufacture. It is the thermo mechanical process embedded in twisting and texturising when applied to a partially oriented yarn which makes the process a manufacture. In the circumstances, the judgment in the Swastik Rayon Processors's case[2006 (11) TMI 31 - SUPREME COURT] will not apply. Decided in favour of assessee.
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