COMMISSIONER OF INCOME TAX Vs. ANJANI KUMAR AND COMPANY PRIVATE LIMITED

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following questions of law arising out of its order dated December 30, 1982, in respect of the assessment year 1976-77 under Section 256(1) of the Income-tax Act, 1961 :

(2.) IN appeal before the Commissioner of INcome-tax (Appeals) it was agreed that the assessee has consumed stores worth Rs. 46.7 lakhs, incurred wage bills of Rs. 2.22 lakhs and consumed electricity worth Rs. 1.83 lakhs in converting the grey cloth to calendered cloth and, therefore, it cannot be said to be merely processing of some textile. The initial and final product was claimed to be entirely different. The contention was not accepted and ultimately the matter was challenged before the INcome-tax Appellate Tribunal.

(3.) THE benefit under Section 32(1)(vi) could be claimed if the assessee is engaged in the business of manufacturing one of the articles included in the Ninth Schedule. A certain process may amount to manufacture, but it is not necessary that all of them have to be considered as manufacture. In the manufacturing of articles produced it must be commercially different from that from which it is made. What is contemplated by entry 21 of the Ninth Schedule is that there must be manufacture of textiles. THE word "textiles" including dyeing, bleaching and printing or otherwise processed textiles which can be possible in a composite unit where for manufacturing of the fabric/textile even if they were dyed, printed or otherwise processed. THE word "textile" has further been clarified that the manufacturing is to be done from cotton including cotton yarn, hosiery, rope etc., and therefore, the manufacturing of textile must be from cotton yarn and/ or rope and if in that process of manufacturing, the unit is having the facility of dyeing, printing or calendering, etc., then such unit would also be entitled for the benefit under Section 32(1)(vi). If the textile is already manufactured and purchased as manufactured one, then simply by dyeing, printing or calendering, it cannot be said that there is manufacturing from the textile. THE view of the Tribunal that in converting the grey cloth into calendered cloth there is manufacturing and the articles are different as it is used for sarees, dhotis and other clothing material is not correct.