Printing activity as manufacture: commercially distinct finished products brought the business within the statutory classification

Printing balance-sheets, profit and loss accounts, dividend warrants, pamphlets and share certificates was treated as manufacture in the ordinary commercial sense because the process produced a distinct finished article with its own commercial identity and use. The court held that, for Explanation 2 to section 23A of the Indian Income-tax Act, 1922, the absence of a statutory definition required the word "manufacture" to be read in its common trade meaning, and the object of the provision supported inclusion of such printing activity. The business was therefore wholly manufacture, and the statutory percentage under clause (ii) of Explanation 2 applied.

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Issues: Whether the assessee-company's business of printing balance-sheets, profit and loss accounts, dividend warrants, pamphlets and share certificates constituted the manufacture or processing of goods within Explanation 2 to section 23A of the Indian Income-tax Act, 1922.

Analysis: The expression "manufacture" in the provision was not defined and had to be understood in its ordinary commercial sense. The object of the classification in Explanation 2 was to give encouragement to manufacturing concerns, and the court held that printing activities of the kind carried on by the assessee produced a distinct finished article different from the paper and ink used as raw material. The finished product had its own commercial identity and use, and the business therefore fell within the concept of manufacture. On that view, it was unnecessary to exclude the activity merely because the raw materials may not have lost their identity in every sense.

Conclusion: The assessee-company's business was held to be wholly manufacture, and the statutory percentage under clause (ii) of Explanation 2 applied.

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