TMI Blog1990 (4) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... received a sum of ₹ 9,36,966 on account of job charges for twisting of yarn during the year. The claim of the assessee u/s. 80HH and 80-I was rejected by the assessing officer on the ground that separate balance sheet in respect of the unit had not been filed ; that the assessee had done job work and was not manufacturing goods on his own account and thirdly, the twisting of yarn does not amount to manufacturing of goods for the purposes of sections 80HH and 80-I claims. The CIT(A) considering the decision of the Gujarat High Court in the case of CIT v. J.B. Kharwar Sons [1987] 30 Taxman 225 to the effect that carrying on the job work of dyeing and printing of cloth was manufacturing activity held that assessee was entitled to a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of article and things. If the assessee is engaged in the manufacture of article and things, deduction u/s. 80HH and 80-I permissible. The third ground relied upon by the assessing officer for disallowance of the claim is that the twisting of yarn by a chemical process does not amount to manufacture of goods. The learned counsel contended. that the decision of the ITAT, Ahmedabad Bench in the case of N.(P.) Ltd. on identical facts has held that twisting of yarn by a chemical process amounts to manufacture. The learned counsel contended that flat yarn is used for manufacture of twisting yarn. Several threads are put together and twisted and processed chemically to produce a different commodity known as twisted yarn having differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in favour of the assessee by holding that the activity which the assessee carried on was manufacturing activity irrespective of the fact as to whether the cloth belonged to it or its customers. Thus the second objection raised by the assessing officer is also unsustainable. The third ground relied upon by the assessing officer for disallowance is that the processing of flat yarn into twisted yarn does not amount to manufacture. The issue in this case is as to whether the process of twisting the flat yarn by a chemical process amounts to manufacture of a different commodity than the flat yarn. In the case of Dy. CST v. Pio Food Packers [1980] 46 STC 63, 66, their Lordships of the Supreme Court dealing with the issue to whether processi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1982] 10 ELT (J) 253. The Hon'ble Bombay High Court had held as under : Fabric itself means woven materials. It was contended that processing the manufactured fabric does not bring into existence any new woven material but the question is new and different goods emerge having a distinctive name, use and character. The Hon'ble Supreme Court in Empire Industries Ltd.'s case held that the process of bleaching, dyeing and printing etymologically also means manufacturing. It was accordingly held that grey fabric after it undergoes the various processes of bleaching, dyeing, sizing, printing, finishing, etc., emerges as a commercially different commodity with its own particulars, structure, custom and other commercial incide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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