By TIOL News Service

JAMMU, SEPT 21, 2017: THE ISSUE BEFORE THIS COURT IS - Whether activity of galvanization of iron pipes, would amount to manufacture, and hence eligible for deduction u/s 80IB, when the galvanized iron pipe is a different commercial commodity. YES is the verdict.

Facts of the case:

The Assessee is a small scale industry which is engaged in the manufacture of black and galvanized iron pipes. The Assessee's case was that, it was entitled to deduction on the process of manufacture and production of goods u/s 80-IB, and accordingly it had filed return claiming deduction on account of galvanization. However, the ITO held that galvanization did not amount to 'manufacture'.

High Court held that,

++ the Assessee is admittedly engaged in the manufacture of black pipes as well as galvanized iron pipes. The appellant also undertakes to manufacture all galvanized iron pipes by galvanization of raw pipes of customers on job work basis. The pipe is required to undergo the processes of prickling, rinsing, fluxing, drier, zinc tank and water quenching for the purpose of galvanization of iron pipe. After the completion of the entire processes, the end product which comes into existence is called galvanized iron pipe which is a different commercial commodity than iron pipe. A galvanized iron pipe is sold at a higher price than an iron pipe and a galvanized iron pipe is used for laying water lines, manufacture of different machinery and plants and for other purposes for which iron pipes cannot be used. Thus, galvanized iron pipe is a different commercial commodity than a iron pipe, therefore the activity of galvanization in our considered opinion amounts to manufacture.

(See 2017-TIOL-1964-HC-J&K-IT)