2017 (9) TMI 481

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....this appeal and that question would be:- "Whether the Income Tax Appellate Tribunal was justified in deleting the addition made by the Assessing Officer by dis-allowing the deduction claimed under Section 80IB of the Income Tax Act, 1961, on the ground that the Assessee was not involved in the activity of manufacture when the Assessee was converting raw 24 carat gold into 22 carat gold ornaments?" 4. The present appeal under Section 260-A of the Income Tax Act, 1961, is directed against the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar's order dated 10.12.2015 passed in ITA No. 332 (Asr)/2015 pertaining to the assessment year 2010-11. The appeal before the Tribunal arose out of the order of the Commissioner of Income Tax (Appe....

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....ufacture in Section 2(f) of the Central Excise Act, 1944, came to the conclusion that such an activity whereby standard gold is converted into ornaments/jewelery, would amount to manufacture. The view taken was based on the reasoning that as a result of processing of standard gold a commercially different saleable product came into existence. Jewelery had a distinctive name, character and use and, therefore, it could no longer be regarded as the original commodity ( i.e. gold), as it had a separate set of consumers and was a new commercial commodity. As pointed out above, this decision of the Delhi High Court commends to us and we have no hesitation in applying the same. 7. Secondly, for the assessment year 2010-11, with which we are conce....

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....sessee before the Assessing officer, standard gold having a purity of 0.999/0.995 is converted into ornaments which have a purity level of 22 carats or lower. The purity is reduced by mixing other metals like silver, copper etc., which are necessary to give strength and durability to ornamental gold, inasmuch as, standard gold of 0.999/0.995 purity is very soft and tends to bend and break easily. The manufacturing processes also involve various steps whereby standard gold, copper, silver and other ingredients are processed through various mechanical processes with the aid of power as well as manual labour and skill, such as melting of metals, cold rolling, blanking, cutting and joining, sizing, base cutting, design cutting, rubbing, polishi....

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....m Overseas Limited v. Commissioner of Central Excise: (2015) 13 SCC 166. That decision, of course, was in the context of the Central Excise Act, 1944. But, even that decision does not run counter to the view we have taken in the present case. In that decision, the Court took the view that the process employed did not result into transformation into a new commodity, commercially known as a distinct and separate commodity. 13. In the present case, the essential character has clearly undergone a change and this is the determinative factor. Gold in the raw form cannot be classified as jewelery or as an ornament. One of the main distinctive features being that raw gold or standard gold does not have the ability and character of being wearable w....