Himachal HC lays important law on what amounts to manufacture in Income Tax

The issue that what amounts to manufacture came up for hearing before the Hon’ble Himachal High Court and the court held as under :

“18. From the perusal of the factual aspects, it is evident that the qualitative changes effected in the raw material by various means like annealing, quenching, acid pickling and flux application, galvanizing and following the zinc hot dip, definitely amounts to manufacture. There is a complete transformation of raw materials into a new and different article having a different identity, characteristic and use. The series of changes transform the commodity into a different commercial commodity whereby it can no longer be regarded as the original commodity but recognised as a new and distinct article.

19. Further, keeping in mind the exposition of law set out above, we have no hesitation in concluding that the Appellate Tribunal was justified in concluding that the paper insulated wires and strips of copper and aluminium being manufactured/processed by the assessees were commercially different from its raw material and further it is commercially known different in the market. In other words, the assessees were engaged in the manufacture of the product and, therefore, were entitled to the deductions claimed under Section 80 IC of the Act. We find no reason to disagree with the said opinion of the Tribunal and the question No.1 is, therefore, answered accordingly against the revenue.”

To view complete text of judgement, click here CITA600172010

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