In this case, assessee was carrying on business of conversion of Jumbo Rolls of photographic films into small flats and rolls in desired sizes. It claimed deduction under secs. 80-HH and 80-I as well as investment allowance under sec. 32AB. The controversy arose whether conversion of jumbo rolls into small sizes amounts to manufacture or production, eligible for deduction under sec. 32AB or deduction under sections 80-HH and 80-I of the Income-tax Act, 1961/ Hon’ble Supreme Court has held that this activity amounts to manufacture or production.
The assessee has explained before us the hierarchy of Sacred Heart Congregation viz., Generalate, Province, Region and Convents. There is no dispute that the applicant herein is a Convent. It was further submitted that the constitution (meaning ‘bye laws’) is the same for all the four hierarchies stated above. It was further submitted that Chapter X of the constitution, referred above, is the authority of services given to the convents. We have gone through the Chapter X of the constitution referred above. We notice that the Chapter X discusses about the formation of new houses, local communities, colonial house, local supervisor, local assembly, local council, service centres etc., and the mode of regulation of the same. In clause 278, which is prescribed under the head “Colonial House”, it is stated as under:-
The question as to whether the business is derived from or attributable to SLR or non-SLR funds would not make any difference for the purposes of qualifying the interest earned by the cooperative bank under Section 80P (2) (a) (i) as the deposits of surplus idle money available from working capital, including reserves, excess collection of interest tax and other incomes are all attributable to the business of banking. The interest from such deposits cannot be said to be beyond the legitimate business activities of the bank.
