Assembly of Wind Mills qualifies as 'manufacture' under Income-tax Act

The High Court of Madras upheld the Tribunal's decision, ruling that the assembly of different parts into Wind Mills by the assessee-company constituted "manufacture" and "production" under section 80-IB of the Income-tax Act, 1961. The Court determined that the assembly process resulted in the creation of a new and distinct product, meeting the statutory criteria for the deduction. Consequently, the appeal was dismissed, and no costs were awarded.

---

---

Issues involved: Whether assembling different parts of Wind Mills by the assessee-company amounts to "manufacture" or "production" under section 80-IB of the Income-tax Act, 1961.

Summary:
The High Court of Madras heard an appeal regarding the eligibility of an assessee-company for deduction under section 80-IB of the Income-tax Act, 1961, based on the activity of assembling different parts of Wind Mills. The appellant contended that such assembly does not constitute "manufacture" or "production" as required by the Act. However, the Tribunal had ruled in favor of the assessee, leading to this appeal.

The Court considered the definition of "manufacture" as laid down by the Hon'ble Supreme Court in a previous case, emphasizing that for an activity to amount to "manufacture," new goods with distinctive characteristics must emerge. Applying this test to the case at hand, the Court found that the assembly of different parts into a Wind Mill resulted in the creation of a new and distinct product, meeting the criteria of "manufacture" and "production" under section 80-IB(2)(iii) of the Income-tax Act.

Therefore, the Court upheld the Tribunal's decision, concluding that the activity undertaken by the assessee qualified for the deduction under section 80-IB. The appeal was dismissed, and no costs were awarded.

---