LexC. I. T. MUMBAI versus M/S. EMPTEE POLY-YARN PVT. LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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[2010] 1 S.C.R. 801
C.1.T., MUMBAI
v.
MIS. EMPTEE POLY-YARN PVT. LTD.
(Civil Appeal No. 786 of 2010)
JANUARY 20, 2010
[S.H. KAPADIA AND H.L. DATTU, JJ.)
Income Tax Act, 1961:
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s. 80 IA - 'Manufacture' - Twisting and texturising of c
partially oriented yarn (POY) - HELD: Keeping in view the
process in the light of the opinion given by the expert, which
has not been controverted, POY is a semi-finished yarn not
capable of being put in warp or weft, it can only be used for
making a texturized yarn, which, in turn, can be used in the
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manufacture of fabric - Thus, POY cannot be used directly
to manufacture fabric - According to the expert, crimps,
bulkiness etc. are introduced by a process, called as thermo
mechanical process, into POY which converts POY into a
texturized yarn - If thermo mechanical process is examined
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in detail, it becomes clear that texturising and twisting of yam
constitutes 'manufacture' in the context of conversion of POY
into texturized yam - Besides, under the Income Tax Act, as
amended in 2009, the test given bf Supreme Court in Mis.
Oracle Software's case* has been recognised when the
definition of the word 'manufacture' is made explicit by F
Finance Act No.212009 which states that 'manufacture' shall,
inter alia, mean a change in bringing into existence of a new
and distinct object or article or thing with a different chemical
composition or integral structure - Thus, it may be mentioned
that the thermo mechanical process also bring about a
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structural change in the yarn itself, which is one of the
important tests to be seen while judging whether the process
is manufacture or not - The structure, the character, the use
and the name of the product are indicia to be taken into
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802
SUPREME COURT REPORTS
[2010] 1 S.C.R.
A account while deciding the question whether the process is a
manufacture or not.
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c
D
E
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G
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*C.I. T. vs. Mis. Oracle Software India Lid. 2010 (1) SCALE
425, relied on.
Commissioner of Central Excise, Mumbai-V vs. Swastik
Rayon Processors 2007 (209) E.L.T. 163 (S.C.), held
inapplicable.
'Manufacture - Examination of the process applicable to
the product - HELD: Repeatedly the Supreme Court has
recommended to the Department, be it under Excise Act,
Customs Act or the Income Tax Act, to examine the process
applicable to the product in question and not to go only by
dictionary meanings -
This recommendation is not being
followed over the years - Even when the assessee gives an
opinion on a given process, the Department does not submit
any counter opinion wherever such counter opinion is possible
- Prima facie, however, in the instant case, there is no
possibility of any counter opinion to the opinion given by the
Mumbai University - This judgment is to be confined to the
facts of the present case - It is not being said that texturising
or twisting per se in every matter amounts to manufacture -
It is the thermo mechanical process embedded in twisting and
texturising when applied to a partially oriented yarn, that
makes the process a manufacture - Central Excise Act, 1944
- Customs Act, 1962 - Constitution of India, 1951 - Article
141.
Words and Phrases:
Expression 'manufacture' - Meaning of in the context of
s.80 IA of the Income Tax Act, 1961.
Case Law Reference:
2010 (1) SCALE 425
relied on
para 7
"-----
C.l.T., MUMBAI v. EMPTEE POLY-YARN PVT LTD.
803
2007 (209) E.L.T. 163 (S.C.) held inapplicable para 9
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 786
of 2010.
. From the Judgment & Order dated 27.02.2008 of the High
Court of Judicature at Bombay in IT A No. 1393 of 2000.
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WITH
C.A. No. 787, 788, 789, 790, 791, 792 of 2010
Arijit Prasad, Rahul Kaushik, B.V. Balaram Das for the
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Appellant.
V. Lakshmi Kumaran, Alok Yadav, Ankur, M.P. Davanath
for the Respondent.
The following Order of the Court was delivered
ORDER
1. Leave granted.
2. Heard learned counsel on both" sides.
3. The short question which arises for determination in this
batch of Civil Appeals is: Whether twisting and texturising of
partially oriented yarn ('POY' for short) amounts to 'manufacture'
in terms of Section SOIA of the Income Tax Act, 1961?
4. The lead matter in this batch of Civil Appeals is C./. T.,
Mumbai vs. Mis. Emptee Poly-Yam Pvt. Ltd. (Civil Appeal
arising out of S.L.P.(C) No.26482/2008), in which the relevant
Assessment Year is 1996-97.
5. Repeatedly this Court has recExcerpt shown. Read the full judgment & AI analysis in Lexace.