Conversion of jumbo rolls of photographic films into small rolls of various sizes is manufacture or not?

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 3649-3650 OF 2003

M/s India Cine Agencies

Versus

Commissioner of Income Tax, Madras

Civil Appeal No. 1522 of 2007

Civil appeal No. 3720 of 2007

Civil appeal Nos. 451-452 of 2008

Civil appeal Nos. 6835-6836 of 2005

JUDGMENT

Dr. ARIJIT PASAYAT, J.

1. In all these appeals common questions are involved relating to the entitlement of benefit in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act, 1961 (in short the `Act’). In all these cases the issue is the effect of conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes. The assessees’ contention was that the same amounted to manufacture/production as the case may be. Stand of the revenue was that it was not either manufacture or production. In some cases the High Court held that in any event because of Item 10 of the Eleventh Schedule, no deduction was permissible. The High Court decided in favour of the revenue and therefore these appeals have been filed by the assesses.

2. As noted above, the core issue is whether activity undertaken was manufacture or production.