TaxTMI 
TaxTMI 
2008 (10) TMI 68
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....ing substantial questions of law:- "(a) Whether, on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal, was right in law in ITA No.505 of 2007 directing the Assessing Officer to allow deduction under section 80-IA whereas the question before Income Tax Appellate Tribunal, was related to deduction under section 80-IB? (b) Whether, on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal, was right in law in holding that process of assembling carried out by the assessee is to be understood as amounting to 'manufacture' or production of an article?" 2. The assessee claimed deduction under section 80IB which was disallowed by the Assessing Officer on the ground that assemblin....
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....dered by the lower authorities is detailed as shown in the paper book on record:- 1. Drum Assembly In this process the Collar & Bearing are pressed in the Drum with the help of pneumatic press. 2. Drum & Spoke Assembly 18 No. each of outer & inner spokes are assembled with the drum on Assembly stands. 3. Rim & Drum assembly In this process the drums assembled as per process No.2 is assembled with the Rim by tightening Nipples with Spokes and Rim with the help of Pneumatic Gun. 4. Tightening Operation The Rim & Drum assembled as per operation No.3 are put on the tightening machine for tightening the Nipples with spokes with the help of Pneumatic Guns. 5. Balancing Operation The Rim & drum assembly after tightening operation as per ....
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....mponents, which gives rise to an article which is totally different from the parts, amounts to 'manufacture' or not? This proposition has been directly answered by the Hon'ble Bombay High Court in the case of Tata Locomotives & Engineering. Co. Limited, [1968] 68 ITR 325. The following extract of the head note of the judgment is worthy of notice. "The word "manufacture" has a wider and also a narrower connotation. In the wider sense it simply means to make, or fabricate or bring into existence an article or a product either by physical labour or by power, and the word "manufacturer" in ordinary parlance would mean a person who makes fabricates or brings into existence a product or an article by physical labour or power. The other sha....
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....ng its machinery results in achieving of a final product. The parts or components utilized by the assessee in its assembling process undergo a transformation and result into a product namely motorcycle wheel, which is distinct and separate commodity in character, name and use than each of the parts or components. Therefore, on the basis of the principles referred to above, in the instant case, it is safe to deduce that the process of assembling carried out by the assessee is to be understood as amounting to 'manufacture' or production of an article. Therefore, the profits derived from each activity is eligible for the claim of benefit under section 80-IA of the Act." 6. It is clear that the assessee assembles wheel from the raw material/co....
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....ary meaning. 11. In N.C. Budhiraja (1993) 204 ITR 412, the Hon'ble Supreme Court considered earlier judgment in Pio Food Packers [1980] 46 STC 63; AIR 1980 SC 1227, particularly the observation that where commodity retained substantial identity, no manufacturing was involved. In the said judgment, the question involved was whether manufacturing was involved in construction of a dam so as to avail of benefit under section 80HH(1) of the Act. It was held that the word 'article' or 'thing' mentioned in section 80HH could not cover dam, bridge, building, road, canal and so on. Construction of dam was, thus, held not to be manufacture. Though the dam comprised of various articles, it was observed that end product could not be held to be an arti....