TMI Blog1978 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act ", on its total manufacture. The ITO, on the other hand, allowed relief on the proportionate turnover of iron bars and rods out of ingots manufactured by the assessee itself and not on the turnover of iron bars and rods out of billets purchased by the assessee. Being aggrieved, the assessee filed revision application under s. 264 of the Act before the CIT, Kanpur-I. The learned CIT by a combined order dated July 3, 1976, upheld the view taken by the ITO. Essentially, he relied upon the assessee's own past history. For the assessment years 1965-66 and 1966-67, similar question had come up in revision application before the CIT (Central), Delhi. A reference was made by the revising authority to the CBDT and on receipt of reply the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its own furnace, certain manufacturing processes are involved while that manufacturing process is not involved when billets are purchased from outside. It was claimed that iron bars and rods manufactured from billets purchased from outside would not come within Entry 1 of Sch. VI of the Act. It was, however, not disputed that the assessee is a priority industry. Section 80-I of the Act reads as under : " 80-I. (1) In the case of a company to which this section applies, where the gross total income includes any profits and gains attributable to any priority industry, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such profits and gains of an amount equal to eight per cent. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified lengths on a cutting machine. The cut pieces are processed through a reheating furnace under controlled temperature for a controlled period. Thereafter, the cut pieces are processed through a rough milling plant. The final processing is made in the rods milling plant. It is correct that the ingots and steel castings are manufactured by the assessee in its own electric furnace by milling scrap iron while billets are purchased from outside. The question is whether in respect of the iron rods and bars produced or manufactured from billets purchased from outside, the relief under s. 80-I can be denied. To our mind, the answer to the question is in the negative, the reason being that entry 1 of Sch. VI does not speak of the source of raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough milling plant. The final processing is made in the rods milling plant. This yields iron rods and bars of required size and shape. The broad distinction between manufacture and processing is that manufacture involves bringing into existence of a new product, a product which is of a different chemical composition or whose integral structure is different from the raw materials. Processing, on the other hand, is doing specific acts to the raw material in order to change its shape or size, etc. The making of iron rods and bars from billets purchased from the market may not be " manufacture " in its true sense, but the question further is whether the involved processing constitutes " construction or production ". Production as dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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