Manufacturing process in quarry operations: stone chip production qualifies as an industrial undertaking for tax exemption.

Conversion of boulders and rocks into stone chips with labour and machinery was treated as a manufacturing process because it produced a commercially distinct product of different character and value. On that basis, the quarry was regarded as an industrial undertaking, and the exemption under section 15C was available. The fact that the raw material was stone did not prevent the activity from qualifying as manufacture where the process involved transformation into a useful marketable product.

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Issues: Whether the process of converting boulders and rocks into chips with the aid of machinery amounted to a manufacturing process so as to make the assessee's quarry an industrial undertaking eligible for exemption under section 15C.

Analysis: Section 15C granted relief only to profits derived from an industrial undertaking carrying on a manufacturing process with the prescribed workforce. The conversion of boulders into stone chips involved labour, machinery and transformation of the material into a commercially useful product of different character and value. On that footing, the activity was an enterprise or undertaking engaged in manufacture, and the mere fact that the raw material was stone did not prevent the process from being manufacturing in nature.

Conclusion: The process was a manufacturing process, the quarry was an industrial undertaking, and the assessee was entitled to the exemption under section 15C.

Ratio Decidendi: A process that by the use of labour and machinery transforms raw material into a commercially distinct product is a manufacturing process for the purpose of exemption provisions applicable to industrial undertakings.

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