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TMI Blog1991 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ? " The controversy lies within a very narrow compass. In its return of income for the assessment year 1980-81, M/s. S. L. Agarwala & Co., partnership firm (hereinafter referred to as "the assessee"), claimed deduction under section 32A of the Act on the footing that its machinery is used for the purpose of manufacture or production of articles and things. According to the assessee, it produces small iron pieces by conversion of big iron ingots into small pieces. For such activity, it installed a crane which lifted huge iron ingots with magnetic force and then hit them against another hard material as a result of which small pieces of iron came into existence. The original material, that is, the big iron ingot, is commercially and intri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) requires that the machinery or plant (a) should be owned by the assessee, (b) should be wholly used for the purposes of the business carried on by him, and (c) should be the machinery or plant specified in sub-section (2), i.e., it should be new machinery or plant installed in an industrial undertaking for the purposes of the business of manufacture or production of articles or things. Whether a particular activity is the manufacturing activity or not is dependent upon several factors and no strait-jacket formula or general principle can be applied. Though manufacture implies a change, every change is not a manufacture. There must be a transformation of some kind and a new and different article must emerge having distinctive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the article suffers a species of transformation and a new and different article emerges. This characteristic has been the subject of considerable discussion and the courts have experienced some difficulty in determining what constitutes a new and different article". As observed by the Supreme Court in Aditya Mills Ltd. v. Union of India [1989] 73 STC 195 ; AIR 1988 SC 2237, manufacture is complete as soon as the raw material undergoes some change and a new substance or article is brought into existence. The new substance or article must have a distinct name, character or use. The new commodity must be commercially separate and distinct commodity having its own character and use. The word " manufacture " said Abbott C. J. in R v. Wheeler ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur or manipulation is necessary, i.e., there must be transformation ; a new and different article must emerge, " having distinctive name, character or use ". A similar observation was made by the American Supreme Court in Anheuser-Busch Brewing Association v. United States (52 L. Ed 336). The Supreme Court in Chowgule and Co. Pvt. Ltd. v. Union of India [1981] 47 STC 124 ; AIR 1981 SC 1014, held that (at page 130), " the test that is required to be applied is : does the processing of the original commodity bring into existence a commercially different and distinct commodity?" The Tribunal has recorded a finding of fact that a different and distinctive commercial commodity came into existence on account of the activity undertaken by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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