TMI Blog1993 (10) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that a ginning factory is not a new industrial undertaking and as such not entitled to the deduction under section 80J of the Income-tax Act, 1961, on the capital employed ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that expenditure incurred on customers is an entertainment expenditure ?" The brief facts of the case are that the assessee derives its income from purchase of cotton and sale of cotton and cotton seeds which is obtained after ginning of the same in its factory at Bali. A claim under section 80J/80HH was made in the revised return submitted by the assessee. The Income-tax Officer found that the assessee's capital at the beginning of the accounting year was Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as such no relief is admissible. It was further observed that the assessee is not engaged in the activities of processing of goods or production of articles. In the second appeal before the Income-tax Appellate Tribunal, the claim for Rs. 650 as entertainment expenditure was disallowed and with regard to the claim under section 80J, it was observed that the word " manufacture" has various shades of meaning, but generally it involves a process of manual labour, with or without the aid of machinery by which one object is changed into another for selling it. Processing has wider meaning than the term "manufacture". Sometimes processing and manufacturing will merge, where the commodity retains a substantial identity through the processin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture' implies a change, but every change is not manufacture, and yet every change of an article is the result of treatment, labour and manipulation. But, something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." In CIT v. R. Narayanaswami Naicker and Sons [1984] 149 ITR 283 (Mad) and in Girdharilal Nannelal v. CST [1971] 27 STC 316 (MP), it was held that ginning and pressing of cotton amounts to manufacture. This court in CTO v. Mohanlal Chiranji Lal [1985] 60 STC 356 (Raj) has also held that ginning of cotton is also a process of manufacture. In view of the decision of this court, we are of the view that the decision of the Income-tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
