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TMI Blog1985 (4) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... d prejudicial to the interests of the revenue. He, therefore, took up the matter in revision under section 25(2) of the Act for both the assessment years. 2. The Commissioner held that the exemption under section 5(1)(iv) can be claimed only with regard to one house or part of a house belonging to the assessee, that in the present case all the three flats are separate houses and that the assessee can, therefore, claim exemption only with regard to one flat. With regard to the value, the Commissioner held that although the returned value, which was the price at which the assessee purchased the flats could be accepted for the assessment year 1976-77, a suitable enhancement of the value is required as regards the assessment year 1977-78 consequent on the high rate of increase in the value of flats in Bombay. He, therefore, directed the WTO to redetermine the market value of the flats for the assessment year 1977-78. 3. With regard to the assessment year 1976-77, the assessment was revised by the Commissioner on one more aspect. The assessee had an interest in Popular Garage at Ernakulam. The value of the interest was calculated by the assessee at Rs. 1,00,566. The assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was only a single electricity meter and a single water meter for the entire building. It was held by the High Court that the building is to be treated as one unit. This decision will not apply to the present case, where the assessee is the owner of three separate flats in a multi-storeyed building and the other flats belong to other persons. The assessee purchased the three flats under three separate agreements. They constitute different units. It has been held by the Kerala High Court in CIT v. Joy P. Jacob [1985] 151 ITR 19, which was also a case arising under the 1961 Act, that there may be many house properties in one building, where the building is divided horizontally or vertically into parts which are independent units and let out or intended to be let out as separate house properties, that in the case of a building having several floors or where several houses are attached to each other, each floor or house could be considered as an independent unit or a house property forming part of the whole building, that in a city where tall buildings having many floors or houses inseparably built from each other are common, each floor or house may be treated as an independent or se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture' implies the bringing into existence of a new substance and does not mean merely producing some change in a substance and that in other words, a new and different article must emerge having a distinctive name, character or use. The decision of the Kerala High Court in CIT v. Casino (P.) Ltd. [1973] 91 ITR 289 is to the same effect. This aspect has been highlighted in Addl. CIT v. Kalsi Tyre (P.) Ltd. [1981] 131 ITR 636 (Delhi), which is also a decision relied upon by the assessee. The assessee in that case was engaged in the retreading of tyres. It was held that although the assessee applies certain industrial processes to worn out tyres and gives them a new lease of life and the process, though not equivalent to the manufacture of a new tyre, stops very little short of it and that the activity of the assessee is clearly an activity of processing. In the present case, the assessee is not bringing into existence an engine or an engine block. The assessee is only processing an engine block, which had become useless and giving the same a new life. The activity is identical with that of retreading of tyre in the sense that an article, which had worn out and had become useless, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts to the processing of the engine, as a result of which, an engine which had become unusable becomes usable and gets a new lease of life. We are unable to accept the contention of the department that the assessee is only repairing the engine. The activity of the assessee is entirely different from the repairing activities carried on in a workshop. The engine which had become unusable is rendered useful by subjecting the same to certain processing. As already stated, the work requires a high degree of skill and precision. Costly machinery is also required to carry out the work. The work cannot be equated with the replacement of a worn out part of an automobile or the repairing of the same. 5.5 It was then contended by the department that for constituting an activity as processing of goods, the activity should be related to the goods belonging to the assessee. In other words, it was contended that when the activity was in the nature of doing job work on goods belonging to a customer, the activity will not amount to processing of goods. We are unable to accept this contention also. In the case of Kalsi Tyre (P.) Ltd., it was held that retreading of tyres will amount to processin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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