Manufacture for section 80J relief requires a new product; dredging sea-bed sand was only extraction, not manufacture.

Relief under section 80J is available only to an industrial undertaking engaged in manufacture or production. Removing sand by dredgers from the sea-bed was held not to constitute manufacture because the activity merely extracted sand mixed with harder substances and brought it to the surface in the same form in which it existed at the sea bottom. No new product was produced from raw material; the process was only separation of sand from surrounding material, so the assessee was not entitled to section 80J benefit.

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Issues: Whether the activity of removing sand by dredgers from the sea-bed amounts to manufacture so as to entitle the assessee to relief under section 80J of the Income-tax Act, 1961.

Analysis: Relief under section 80J is available only to an industrial undertaking engaged in manufacture or production. The activity carried on by the assessee consisted merely of extracting sand mixed with harder substances from beneath the water and bringing it to the surface in the same form in which it existed at the sea bottom. The process did not involve manufacture of a new product out of raw material, but only separation of sand from surrounding material.

Conclusion: The activity did not amount to manufacture and the assessee was not entitled to the benefit of section 80J.

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