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TMI Blog2004 (7) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as rightly claimed in the return of income. ( ii )That the levy of interest under section 234B and 234C needs to be kept in abeyance till the case is disposed of. 2. The assessee declared an income of Rs. 9,12,150 in its return filed on 22-10-1997 which was processed on 20-8-1998. The claim of the assessee for deduction under section 80-IA for Rs. 3,04,049 was allowed. It was noticed by the Assessing Officer, subsequently, that the business of printing of technical literature, brochures, manuals, catalogues, etc., is processed as per the orders and requirements of Multi National Companies. As per the Assessing Officer, the assessee is only a printer and thereby ineligible for deduction under section 80-IA. The Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i), to which the learned representative for the revenue argued that there is no manufacturing activity involved in the case of the assessee and relied upon the decision pronounced in CIT v. Hemsons Industries [2001] 251 ITR 693 (AP). In nutshell, the learned representative supported the orders of the lower authorities. We have considered the rival submissions. Manufacture and processing are not clearly demarcated fields. The test of manufacture lies in the answer to the question whether what is processed or produced as the end product is commercially known as a different product from the materials out of which it is so produced. Therefore, if the product has a different name and is identified by the buyers and sellers as a different p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e granting incentives for promoting growth and development should be construed liberally. Since a provision intended for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not to frustrate it. At the same time, the word derived from cannot have a wide import so as to include any income which can in some manner be attributed to the business. The derivation of the income must be directly connected with the business in the sense that the income is generated by the business. The Hon ble High Court of Calcutta in the case of Addl. CIT v. A. Mukherjee Co. (P.) Ltd. [1978] 113 ITR 718 hold that book publishing is covered, where it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar lines, in the present case, the assessee used lot of machinery to transform the raw materials into a commercially different end product. The Hon ble High Court of Gujarat in the case of CIT v. Ajay Printery (P.) Ltd. [1965] 58 ITR 811 , where the assessee was having the business of printing balance sheets, profit and loss accounts, dividend warrants, pamphlets, share certificates, etc., required by companies. It was held that the pamphlet or the balance sheet or the share certificate is an article quite different from the raw materials, paper and ink, from which it is made, the use of which would be different from the use of the raw materials used in producing it. In the present case also, the assessee used plain paper with the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, or series of changes of the prime commodity ( viz., paper) to the point where commercially, it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. In CIT v. D.K. Kondke [1991] 192 ITR 128, 131 (Bom.), the production of a cinematograph film is a manufacturing activity. The Hon ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acking and repacking, etc., which may involve processing that the latter decision in Delhi Cold Storage (P.) Ltd. v. CIT [1991] 191 ITR 656 (SC) did not really depart from this view, because the latter decision against cold storage was only on the ground that preservation is different from processing and not by diluting the concept of processing in any manner. We are aware that there is a hairline difference between the word process and manufacture , but we are supposed to see the same in the light of intention of the Legislature in introducing section 80-IA and also whether any new article or a thing has been oozed out, using the raw material consumed in the same. In our considered opinion, we are of the view that the appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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