TMI Blog2005 (3) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer made spot verification by way of survey under section 133A to examine whether the process involved can be stated to be manufacturing activity or not, which would make entitle the assessee to claim deduction under section 80-IA. During the course of assessment proceeding, the assessee gave detailed working of the process with cross reference to certain text books, Indian as well as foreign issues and process has been reproduced at page Nos. 4 and 5 of the assessment order, for the assessment year 1995-96. As per the details, annealing has been described, being primarily process of heating a matter which is in a metasable or distorted structural state to a temperature which will remove the instability or distortion and then cooling is (usually at a slow rate) so that the room temperature structure is stable and/or strain free. The process is stated to be for the purpose of reducing hardness, hamognising the structure to make it stable, improving meachanability, remove gas etc. Thus, referring to this process, it is the claim of the assessee that it involves a process of manufacture production of an article within the meaning of section 80-IA. Therefore, it is claimed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices (P.) Ltd. (No. 1) [1999] 238 ITR 529 and also in another case of CIT v. Tamil Nadu Heat Treatment Fetting Services (P.) Ltd. (No. 2) [1999] 238 ITR 540 . He contended that the Hon'ble Madras High Court after detailed analysis has held that heat treatment of metals which includes annealing, brings a qualitative change in the crankshafts to make it fit to be used for automobiles, although, there is no physical change in them. In such a state of affairs it cannot at all be stated that the crank shafts subject to heat treatment etc. cannot at all change the status of new products of different quality for a different quality for a different purpose altogether. Thus it was held that the activities of the assessee in relation to raw or untreated crank shafts being subjected to heat treatment etc. is definitely a 'manufacture activity' entitling it to claim investment allowance under section 32A of the Act. Thus, he pleaded that the process carried on by the assessee is similar to the process dealt with by the assessee in the case of Tamil Nadu Heat Treatment Fetting Services (P.) Ltd. (supra). For this proposition he referred to the process described by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts could not be used in automobiles without giving heat treatment. It was pleaded that it was specifically found by the Hon'ble Madras High Court that without giving heat treatment, the crankshafts could not be used in automobiles. Therefore, he contended that the facts of the present case are distinct. He argued that nowhere the assessee could establish that without heat treatment, the rods annealed by the assessee could not be used by the manufacturer or producers who have used those rods for their manufacturing activity. Thus, he contended that the facts of the present case are distinguishable from the facts of the case in the case of Tamil Nadu Heat Treatment Fetting Services (P.) Ltd. (supra). In the same way he argued that other cases also could not be applied to the facts of the present case. He further referred to the case of Hon'ble Supreme Court in the case of India Hotels Co. Ltd. v. ITO [2000] 245 ITR 538 to contend that a statute cannot always be construed with dictionary in one hand and the statute in the other. Regard must also be had to the scheme, context and to the legislative history of the provision. What was the business of the assessee was to trade i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crease the wear and tear resistance to remove the inordinate stress and increase tensible strength. The raw untreated crankshafts and the like can never be used in an automobile industry. Thus, in the crankshafts subjected to the process of that treatment, etc. a qualitative change is effected, to be fit for use in automobiles, although there is no physical change in them. In such statement of affairs, it cannot at all be stated that crank shafts, subject to heat treatment, etc. cannot at all change the status of new products of different quality for a different quality for a different purpose altogether. In the view of the after, we are of the view that the activities of the assessee in relation to raw or untreated crankshafts being subjected to heat treatment etc. is definitely a 'manufacturing activity' entitling it to claim 'investment allowance' under section 32A of the Income-tax Act. We answer question Nos. 2 and 3 accordingly. In fine, we find that the assessee is engaged in manufacturing activities in relation to crankshafts being subjected to heat treatment etc. for the assessment years 1984-85, 1985-86 and 1986-87 and, consequently, entitled to ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem No. (3)(iii), Item (b). He in this regard referred to purchase bills as well as certificates given by the parties who have supplied these furnaces describing the nature of their product. In this regard reference was also made to the submissions made before the Assessing Officer vide letter dated March 17, 2003 placed at page Nos. 132 to 137 of the paper books, wherein at page No. 135 of the paper book, it was submitted on behalf of the assessee that four separate certificates were supplied by M/s. Precision Controls Chennai, according to which, the furnace supplied by them is electrically heated, flameless energy saving. He also referred to the certificates which are placed at page Nos. 138, 139, 145 and 146 of the paper book. Though the assessee has mentioned about the certificate given by the said Precision Controls, but there is no reference regarding certificate given by Mirra and Mirra Industries who has also supplied the furnace to the assessee. Said Mirra and Mirra Industries has also given a certificate which is dated 13-4-2003 and placed at page No. 145 of the paper book. Similarly one of the certificates given by Precision control is also dated April 13, 2003. Referri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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