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2019 (3) TMI 223 - HC - Income TaxDeduction u/s 80HH on dipping plant - manufacturing or production activity - ITAT held that dipping of the fabric was only for the purposes of marketability and would not impact the position that the activity involved only a series of processes and not 'manufacture' or 'production' - HELD THAT:- The activity of dipping is, thus, key to stabilising and heat - setting the products. It is only after such dipping and heat stabilisation that the material would be compatible for rubber adhesion in various products requiring dimensional stability. The input used is industrial fabric or yarn and what emerges after the aforesaid activity is a commercially distinct product, different from the input used. The conclusion of the Tribunal to the effect that the activity engaged is a mere process does not appear to be justified as it is seen from the explanation provided before the authorities that a series of processes are carried out resulting in the final products. Such a series of processes in itself, in our view, amounts to the activity of 'manufacture'. Referring to definition of the term 'manufacture' inserted in the Act by Finance (No.2) Act 2009, with effect from 1.4.2009 any activity that would result in the transformation or change in the character of the object or article or thing, such that a new and distinct object is brought into existence would amount to 'manufacture'. The definition statutorily enshrines one of the long settled tests of what would constitute 'manufacture'. Thus, notwithstanding that the definition itself has been inserted only with effect from 01.04.2009, the test has itself has been consistently applied by the Courts even prior thereto in determining whether an activity would amount to manufacture or not. - Decided in favour of the assessee Allowability of payment u/s 37 - Amounts paid to the Labour Welfare Association for Death Relief Fund - Assessing Authority held not sllowble in the view of Section 40A (9) - HELD THAT:- Contribution made by the employer to the Death Relief Fund is also an allowable business expenditure in terms Section 37 in so far as the expenditure is incurred wholly and exclusively for the welfare of its employees and is for the purposes of the business. Similar contributions made by the assessee towards labour welfare have been accepted by the revenue and no distinguishing features have been brought out before us to persuade us to take a different view in the case of this contribution. We draw support in this regard from a decision of the jurisdictional Court in the case of Cheran Engineering Corporation (1998 (2) TMI 74 - MADRAS HIGH COURT). - Decided in favour of the assessee
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