TaxTMI 
TaxTMI 
2013 (2) TMI 175
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....trical goods which are used in generation of the power. The dispute is in respect of nature of product of Parwanoo unit of the appellant which is manufacturing Advanced Microprocessor based Fast Bus Transfer Scheme for power generation segment. The contention of the appellant is that it is a manufacturing process while the Tribunal has found that it was an assembling process, while the Commissioner of Income Tax (Appeal) had found that it was a product manufactured by the appellant. Learned counsel appearing for the appellant at the outset submitted that none of the authorities had examined the matter in proper perspective. Looking to the complex of the product, the authorities ought to have obtained an expert's opinion in this regard or the matter ought to have been referred to a panel of the experts to examine the nature of the product manufactured by the appellant at Parwanoo unit. Reliance is placed by the appellant to three judgments of the Apex Court in Commissioner of Income Tax Vs. Oracle Software India Ltd. (2010) 320 ITR 546, Commissioner of Income Tax Vs. Emptee Poly-Yarn P.Ltd (2010) 320 ITR 665 and recently in Morinda Co-operative Sugar Mills Ltd. Vs. Commissioner of I....
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....haping or combination of raw materials or parts. What is manufactured or produced in the undertaking should be a marketable, new and distinct commercial commodity. According to Corpus Juris Secundum, "manufacturing" is the activity in which the original material undergoes a transformation so that a new and different article or product emerges; but what constitutes a new and different article is a question which has caused considerable difficulty to the Courts. The word "manufacture" as a verb has been defined in Black's Law Dictionary as making of goods or wares by manual labour or by machinery especially on large scale." The word "manufacture" as a noun has been defined therein to mean "the process or operation of making goods or any material produced by hand, by machinery or by other agency; anything made from raw materials by hand, by machinery or by art; the production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations whether by hand, labour or machine." In the same book, again, the words "manufacturer" has been described as one who by labour or for skill transforms raw materials into some kind of ....
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..... CIT(A) has discussed the issue only with reference to the legal aspect as to what constitutes manufacturing, is correct. It is seen from the copies of the balance sheet and profit and loss account placed in the paper book that the assessee had incurred nominal manufacturing expenses of Rs.34,820/- only at Parwanoo Unit, of which Rs.13,955/- is on cartage and loading, the electrical consumption is only Rs.8360/- and the labour charges are shown at Rs.11,705/- only. It is seen from the certificate date 29.12.2008 given by the Member Secretary, S.W.C.A. Parwanoo of the Department of Industries that on the date of inspection on 29th December, 2008, three technical persons and one office staff were present at the factory site in Parwanoo Unit of the assessee. It has also been stated in the aforestated certificate dated 29th December, 2008, that on enquiry, the three technical persons and one office staff present at the site, informed the Member Secretary, S.W.C.A., Parwanoo that the equipments being assembled were to be supplied to Thermal/Hydro Plants to be used as protective system in the power generation system and the equipment was a big panel (Almirah Type), fitted with electroni....
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....arly show that the assessee had made a wrong claim of its turnover and its profit of Parwanoo Unit and it was not possible to run the unit by incurring labour expenses of Rs.11,705/- and to manufacture or assemble the sophisticated equipment as per description given by the assess itself in its written submission. The submission of the Learned Counsel that the Directors were technically qualified and they had guided the process of assembling and manufacturing is also not considered correct, because the total traveling of the Director for the Parwanoo Unit is shown at Rs.1,21,957/- only and it has been admitted that the Directors were stationed at Bhopal and not at Parwanoo. Even if the technically qualified Directors would have been supervising and guiding the work, the technical staff was not available at the Parwanoo Unit to carry out the manufacturing and assembling by incurring Rs.11,705/- on labour charges and even with the help of three technicians and one office staff as per the Inspection Report dated 29th December, 2008, it was impossible to carry out manufacturing and assembling of very sophisticated equipment and machinery, which was being produced in collaboration of the....
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....n a given process, the Department does not submit any counter opinion wherever such counter opinion is possible. The Apex Court considering the issue in Morinda Co-operative Sugar Mills Ltd. (supra) reiterated the law, held in para 9 thus:- "This Court has repeatedly told the Department that, in all such cases, they should have a panel of experts who may be engaged in appropriate cases so that the cases need not be remitted. We do not express any opinion on the merits of the case. We give liberty to the advocates on both sides to cite appropriate judgments of this Court which have laid down the test as to when an operation becomes 'manufacture'. We have laid down the test in one of the cases, namely, Oracle Software India Ltd., (supra)." 6. In the light of the aforesaid judgments, if we look into factual aspects in the present matter, we find that as per case of the appellant, it was a hyper technical process of manufacturing which was placed before the CIT (Appeal). The CIT (Appeal) in para 3.3 of the order referred the process for manufacturing but had not evaluated/got examined aforesaid process through a technical person. Before it, when the matter was before the As....