COMMISSIONER OF INCOME TAX Vs. ANAND AFFILIATES

JUDGEMENT

(1.) THIS appeal has been preferred by the Revenue under Section 260A of the IT Act, 1961 (In short, 'the Act') against the order of the Tribunal, Chandigarh Bench 'A' in ITA No. 1033/Chd/2004 dt. 29th Dec, 2006 reported as Anand Affiliates v. , in respect of asst. yr. 1997 -98, proposing to raise following substantial question of law:

(2.) THE assessee has a factory in backward area where the assessee produces automobile filter elements for M/s Puralator India Ltd. which are further used for manufacture of automobile filters. The assessee claimed deduction under Section 80 -IA of the Act, which was disallowed by the assessing authority on the ground that the process carried out by the assessee did not yield commercially any new or different commodity and thus, the assessee could not be held to be engaged in production or manufacture. This view was upheld by the CIT(A) but on further appeal of the assessee, the Tribunal upheld the claim of the assessee. Following finding has been recorded by the Tribunal:

(3.) THE Tribunal has discussed the nature of raw materials and the process conducted by the assessee resulting in production of automobile filter element, which is supplied to the automobile manufacturer. The assessee brings together various raw materials and after carrying out process, assembles the same leading to the equipment being produced. It is well settled that every change or process cannot be termed as manufacture or production. Well known tests applied for determining whether a process amounted to manufacture or production are that a new and distinct commercial product is produced.