9911796707
TMI Blog1985 (12) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee installed machinery of Rs. 2,41,980 in the first year and of Rs. 3,08,887 in the second year and claimed investment allowance of Rs. 60,494 and Rs. 77,222, respectively, after creating necessary reserves as contemplated under section 32A of the Income-tax Act, 1961 ('the Act'). The income-tax authorities, however, did not accept the assessee's contention that it is carrying on manufacturing activities as according to them, in making grits (kapchis), no manufacturing activity was involved. For this purpose, they relied on the decision of the Hon'ble Calcutta High Court in the case of CIT v. Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 and of the Hon'ble Supreme Court in the case of Idandas v. Anant Ramchandra Phadke AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf. He also stated that the assessee was granted depreciation as per the rate applicable to mines and quarries by the ITO himself. Inviting our attention to the aforesaid decision of the Hon'ble Supreme Court in the case of Idandas, the learned counsel for the assessee submitted that the income-tax authorities had failed to appreciate the ratio laid down by the Hon'ble Supreme Court. In that case, a tenant had taken on lease an open piece of land on which a flour mill was installed. The issue before the Hon'ble Supreme Court was whether the lease was granted for the purpose of 'manufacturing process' within the meaning of section 106. The relevant head-note in that case reads as under: "The tests for determining whether a lease is granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court has further elaborated the meaning of 'manufacturing process' as under : "To constitute manufacture it is not necessary that one should absolutely make out a new thing because it is well settled that one cannot absolutely make a thing by hand in the sense that nobody can create matter by hand, it is the transformation of a matter into something else and that something else is question of degree, whether that something else is a different commercial commodity having its distinct character, use and name and commercially known as such. In other words, if by application of labour and skill on object is transformed to the extent that it is commercially known differently, it will suffice to say that manufacture has taken place." He, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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