Assistant Commissioner of Income Tax v Avinashi Industries, 12 December 2013

 Deduction u/s 80IC — Blending and mixing different reactive dyes — Whether amounts to “manufacture” and “production” — Assessee firm was engaged in business of manufacturing of reactive dyes in notified industrial area — Assessee declared nil total income after claiming deduction of ₨ X u/s 80IC — AO disallowed deduction and assessed total income of assessee at ₨ X — CIT(A) reversed order of AO — Held, assessee firm had undertaken activity of blending and mixing different reactive dyes with help of two
ball mills at its unit and profits generated out of sale of such products manufactured was claimed as deduction u/s 80IC — As per cl (b) of s 2 (29BA) inserted by Finance (No 2) Act, 2009 definition of “manufacture” means “bringing into existence new and distinct object or article or thing with different chemical composition or integral structure” — Nothing brought on record to demonstrate that chemical composition of raw materials used by assessee had undergone change or there was substantial change in chemical composition or integral structure of raw materials so as to form new product and chemical composition of finished product is different from that of original raw material — CIT(A) had not obtained any report from expert to conclude that new product which has come into existence by undertaking process of mixing and grinding is on account of manufacturing process — Matter restored to CIT(A) for deciding issue as to whether due to activity undertaken by assessee, any change in chemical composition had taken place — CIT(A) may obtain expert opinion on composition of raw material and its transformation into finished goods.