Manufacture of iron and steel articles qualifies for section 80-I relief even when billets are purchased externally.

Deduction under section 80-I was available for profits from iron bars and rods manufactured from purchased billets because the statutory test focused on manufacture or production of iron and steel articles, not on the source of the raw material. Entry 1 of the Sixth Schedule covered iron and steel, and converting billets into bars and rods was treated as production within the statutory language. Relief could not be denied merely because the billets were procured from outside; the resulting turnover qualified for the deduction.

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Issues: Whether relief under section 80-I of the Income-tax Act, 1961 was admissible in respect of profits attributable to iron bars and rods manufactured from billets purchased from outside.

Analysis: Section 80-I grants deduction in respect of profits and gains attributable to a priority industry. Under section 80B(7), a priority industry includes the business of manufacture or production of articles specified in the Sixth Schedule, and Entry 1 of that Schedule covers iron and steel. The Court held that the statutory focus is on the manufacture or production of iron and steel articles, not on the source from which the raw material is obtained. Since iron bars and rods manufactured from purchased billets were still articles covered by the relevant entry, the fact that the billets were purchased from outside did not justify denial of relief. The process involved in converting billets into rods and bars was also treated as production within the statutory language.

Conclusion: Relief under section 80-I could not be denied merely because the billets were purchased from outside, and the assessee was entitled to the deduction on the turnover of iron bars and rods so manufactured or produced.

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