TMI Blog1993 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... n manufacturing and producing articles within the meaning of section 80J of the Income-tax Act, 1961, thereby entitling it to claim a deduction under that section ?" As per the aforesaid direction, a reference has been made under section 256(2) to this court. The present case relates to the assessment year 1977-78. The assessee-firm, namely, Messrs. Natraj Processing Industries, Gaya, started its business in calendering of cloth in the accounting year and thereby claimed the relief under section 80J of the Act. The relief was denied by the Income-tax Officer on the ground that the assessee-firm was not engaged in manufacturing or producing any article. The assessee filed an appeal before the Appellate Assistant Commissioner but there al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g process can be said to be equivalent to "manufacturing". The question of determination of this aspect is no more res integra. In the case of Mafatlal Fine Spg. and Mfg. Co. Ltd. v. Collector of Central Excise, AIR 1989 SC 784, the apex court, while considering a case of almost similar nature, has observed as follows (at page 787) : " Both `calendering' and `shearing' involve an assortment and variety of processes, some of which might and some others might not affect or alter the nature of the fabric. Both the expressions, 'Calendering' and 'shearing', are collective expressions representing a number of sub-species of operations which, depending upon the nature of the particular operation, may or may not alter the nature of the 'grey f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the present case, under section 80J(1) and (4)(iii) of the Act, an industrial undertaking can claim for deduction if it is found that it is engaged in the manufacture or production of articles. The business activity of the assessee is of calendering grey cloth. Apart from what has been found by the Tribunal as a matter of fact regarding the activities of the assessee, as noticed in the Encyclopaedia Britannica, Vol. 2, 15th edition, at page 740, "calendering is also widely used in the manufacture of textile fabrics, coated fabrics, plastic sheeting to provide the desired surface finish and texture". Therefore, calendering of grey cloth is done to make it presentable in the market. In the case of Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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