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Section 80HHA of the Income-tax Act, 1961 - Deductions - Profits and gains from newly established small-scale industrial undertakings - Assessment year 1988-89 - Assessee, a small scale industrial undertaking, was involved in making blown bitumen by process of heating waste scrap bitumen - Whether heating of scrap bitumen, which only resulted in separation of oil and water from bitumen, amounted to a process of manufacturing - Held, no FACTS The assessee, a small-scale industrial undertaking, was involved in making blown bitumen. The process involved in making it was that waste scrap bitumen was heated in a heating tank up to 225 degree centigrade and was transferred into a reactor, and blown by air compressor, which raised the temperature up to 300 degree centigrade. Thereafter, it was kept in a chamber for 3 to 4 hours, during which period the water and oil in the bitumen evaporated. As part of oil that was so removed did not evaporate fully, a portion of it came down as processed oil, which was used again as fuel. The assessee did not regard this process as resulting in a product which was different from the original. It also did not possess any licence under the Central Excise Act for manufacture. It claimed that even if the bitumen could not be regarded as a new product, nevertheless, it should be regarded as being engaged in manufacture and, hence, it was entitled to deduction under sections 80HHA and 80-I. The Tribunal accepted the assessee's claim and allowed the deduction. On appeal to the High Court : HELD No new product emerged from the process employed by the assessee. What was bitumen continued to be bitumen, but with lesser quantity of oil and moisture. The purposes for which it can be used are only the purposes for which the use of bitumen is appropriate. [Para 4] The Tribunal was in error in holding that heating of the scrap bitumen, which only resulted in separation of oil and water from bitumen, amounted to a process of manufacturing. [Para 9] Therefore, the assessee was not entitled to deduction as claimed. CASES REFERRED TO Aspinwall & Co. Ltd. v. CIT [2001] 251 ITR 323/ 118 Taxman 771 (SC) [Para 5], Sacs Eagles Chicory v. CIT [2002] 255…

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