Law:

Section:

Section 32A of the Income-tax Act, 1961 - Investment allowance - Assessment year 1980-81 - Assessee claimed investment allowance on machinery used for purpose of production of small iron pieces from big iron ingots - Whether for purpose of section 32A, no strait-jacket formula or general principle can be applied to find out whether there is manufacture - Held, yes - Whether, therefore, in view of categorical finding recorded by Tribunal that a different and distinct commercial commodity came into existence as a result of assessee's activity, there was no scope for taking a different view while exercising reference jurisdiction - Held, yes - Whether, consequently, assessee's claim for investment allowance was to be allowed - Held, yes FACTS The assessee-firm claimed deduction under section 32A on the footing that its machinery was used for the purpose of manufacture or production of articles and things inasmuch as, it produced small iron pieces by conversion of big iron ingots into small pieces. The Assessing Officer held that there was no manufacture involved and, therefore, the conditions as prescribed in section 32A were not satisfied. In appeal, the AAC held that the operation undertaken by the assessee was an operation of processing and did not involve manufacturing activities. In further appeal, the Tribunal held that disintegration of big boulders into small iron pieces amounted to manufacture, and therefore, allowed the assessee's claim. On reference : HELD The Tribunal had recorded a finding of fact that a different and distinctive commercial commodity came into existence on account of the activity undertaken by the assessee. No strait-jacket formula or general principle can be applied to find out whether there is manufacture. In view of the categorical factual finding recorded by the Tribunal that a different and distinct commercial commodity came into existence, there was no scope for taking a different view while exercising a reference jurisdiction. Factual conclusions, unless shown to be perverse, without basis or material and/or resultant of non-application of mind, was not to be upset while deciding cases in the exercise of reference jurisdiction.…

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