Manufacture by blending oils for perfumed hair oil supports deduction under Section 80IB where a distinct product emerges.

Blending coconut oil and mineral oil with perfume to produce perfumed hair oil was treated as manufacture because the process yielded a distinct product from the inputs. The analysis also noted that central excise duty had been paid on the manufactured product, and that deduction under Section 80IB had already been allowed in the first year of manufacture, with that order attaining finality. On that basis, the manufacturing activity qualified the assessee for deduction under Section 80IB, reflecting the principle that where processing creates a distinct marketable product and is recognised as manufacture, the related tax deduction cannot be denied.

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Issues: Whether the production of perfumed hair oil by blending coconut oil and mineral oil amounts to manufacture so as to entitle the assessee to deduction under Section 80IB of the Income-tax Act, 1961.

Analysis: The finding recorded was that the process resulted in a product distinct from the inputs and that central excise duty had been paid on the manufactured product. The view was also supported by the fact that deduction under Section 80IB had already been allowed in the first year of manufacture and that order had attained finality. The conclusion was consistent with the principle that adding perfume to coconut oil to produce perfumed oil amounts to a manufacturing process.

Conclusion: The activity constituted manufacture and the assessee was entitled to deduction under Section 80IB.

Ratio Decidendi: Where processing of inputs results in a distinct product and the process is recognised as manufacture, deduction available to a manufacturing undertaking cannot be denied.

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