Fabrication of steel structures treated as manufacturing, qualifying the assessee for investment allowance under the Income-tax Act.

Fabrication of steel rods and sheets into trusses and steel structures was treated as manufacturing rather than mere assembling, because the activity produced a commercially distinct industrial product. Applying the earlier test used for similar fabrication under the Finance Act, the Court held that the assessee's structural fabrication work was industrial in character and therefore qualified as manufacture. On that basis, the assessee was entitled to investment allowance under section 32A of the Income-tax Act, 1961.

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Issues: Whether the assessee's fabrication activity amounted to manufacture so as to qualify as an industrial company and consequently entitle it to investment allowance under section 32A of the Income-tax Act, 1961.

Analysis: The assessee carried on structural fabrication work in which steel rods and sheets supplied by contractors were fabricated into steel structures according to specifications. The Court applied the test previously used for determining whether similar fabrication activity amounted to manufacture for the purpose of section 2(7)(c) of the Finance Act, 1978, and held that fabrication of components into trusses or steel structures is not mere assembling but amounts to manufacturing activity. On that basis, the assessee's activity was treated as industrial in character.

Conclusion: The assessee was entitled to investment allowance under section 32A of the Income-tax Act, 1961. The question was answered in the affirmative, in favour of the assessee and against the Revenue.

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