Chandurkar, J.:— This is a reference under s. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), in which the following question has been referred at the instance of the revenue:

“Whether, on the facts and in the circumstances of the case, the asses-see-company was engaged in the ‘manufacture’ or ‘production of articles’ within the meaning of section 84(2)(iii) and hence was entitled to relief under section 84(1) of the Income-tax Act, 1961, for the assessment year year 1963-64, and relief under section 84(1) and section 101 for the assessment year 1964-65?”

2. The assessee is a private limited company doing the business of laying foundations of buildings by a specialised patented method known as “pressure piling”. The process has been described as follows in the statement of case.

“Pressure piles are cast in site and piles are formed in bore holes previously excavated by suitable boring plant at each pile position. The borings are sunk to suitable bearing stratum and concrete is then introduced into the holes under applied air pressure. This, when set, forms a permanent pile giving a very high surface friction in addition to the bearing value obtained at the foot of the pile. The method adopted of sinking pressure piles is as under: A boring is first made for each pile, the hole being bored with steel tubes. As the boring proceeds, these steel tubes are sunk in the ground, the soil being excavated through the tube itself in the manner employed by well bores. In this way the underlying soil is thoroughly explored, samples of the succeeding strata being obtained as each hole is sunk. This permits the correct depth of boring to be determined in every case. If necessary, steel reinforcements of any required design can then be lowered down the casing and fixed in a correct position so that the rods will be properly embedded when concrete is added. If the bore hole is dry, concrete is introduced to the casings and compressed air is admitted. The air pressure forces the concrete down the casing and presses it into the interstices of the bottom part of the bored hole from which the casing is withdrawn. In this way, the actual diameter of the pile is made to exceed that of the casing itself and it also forms a rough surface that bonds into the strata penetrated by the pile. As each section of the tube is raised above ground, it is unscrewed and further batch of concrete is added. This process is continued until the pile is completed.”

3. The only question before the I.T authorities with regard to the assessment years 1963-64 and 1964-65 was whether having regard to the nature of the business of the assessee, the assessee-company qualified for relief under s. 84 of the Act to the extent of 6 per cent. of the capital employed in its industrial undertaking for both the years. The ITO took the view that the assessee had not satisfied the condition laid down in s. 84(2)(iii) and was, therefore, not entitled to relief under s. 84. Appeals filed by the assessee-company before the AAC against the orders of the ITO also came to be rejected. The AAC took the view that the pile was in fact a concrete structure built into the ground and once it is built into the ground, it cannot normally be taken out unless it is dug out of the ground. Therefore, according to the AAC, the assessee-company could not be said to be engaged in the manufacture or production of any article within the meaning of s. 84(2) of the I.T Act, 1961. The assessee-company filed two appeals before the Appellate Tribunal. There was, however, a difference of opinion between the Accountant Member and the Judicial Member of the Tribunal. The Accountant Member held that in the present case, there was no doubt that the final product was different in form from the raw materials which were used in bringing it about. According to him, the fact that the manufactured product is made for one specific use of one specific customer or for one specific site, does not disqualify the product for being considered as a manufactured product. He also took the view that the mobility or capacity for being frequently exchanged is not a distinguishing feature of a manufactured product. Thus, according to the Accountant Member, the assessee was engaged in the manufacture of piles and was entitled to relief under s. 84 subject to other conditions being satisfied.

4. The Judicial Member, who took a contrary view, expressed that the idea of manufacture involved a production of articles by a large number of physical labour or by machinery run by power. He then held:

“Pressure piling by no stretch of imagination can be considered as goods as distinct commodity saleable in the market. In the instant case, the activity carried on by the assessee-company is nothing but building a concrete structure underground. It forms part of the superstructure that is built on it. It is neither removable nor saleable as a commodity. It is not an article produced either by physical labour or by mechanical means.”

5. Thus, according to the Judicial Member, pressure piling was only a construction work undertaken by the assessee-company and the company was not, therefore, manufacturing or producing articles so as to qualify for relief under s. 84 of the Act.

6. In view of this difference of opinion, the matter had been referred to a third Member of the Tribunal. The third Member took the view that the mere fact that the assessee carried out manufacturing activities at the site did not take away from its business the character of a manufacturer or a producer of cement concrete piles and that since the assessee-company carried out manufacturing operations, it was entitled to the benefit of s. 84(1) as its business consisted of manufacture of piles. The third Member has, in the course of his order, referred to one of the conditions in the tender form, viz, that “any pile that fails to reach the specified set or state or is damaged owing to any reason whatsoever shall be rejected and extracted, if necessary, at contractor's cost”. Since the third Member had agreed with the learned Accountant Member and the assessee was held entitled to the benefit of s. 84(1), the question reproduced earlier has been referred to this court under s. 256(1) of the Act.

7. In order to appreciate the contention raised by Mr. Joshi for the revenue, it is necessary to reproduce the material part of s. 84 which read as follows:

“84. Income of newly established industrial undertakings or hotels.— (1) Save as otherwise hereinafter provided, income-tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking or hotel to which this section applies as do not exceed six per cent. per annum on the capital employed in the undertaking or hotel, computed in the prescribed manner.

(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:—

(i) it is not formed by the splitting up, or the reconstruction of, a business already in existence;

(ii) it is not formed by the transfer to a new business of a building, machinery or plant previously used for any purpose;

(iii) it has begun or begins to manufacture or produce articles in any part of India at any time within a period of eighteen years from the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking……”

8. Thus, s. 84(1) provides that the profits or gains of an industrial undertaking to which that section applies are not subject to income-tax to the extent of six per cent. per annum on the capital employed in the undertaking or hotel. What industrial undertaking can avail of this facility or concession is specified in sub-s. (2) which deals with the conditions which must be fulfilled by an industrial undertaking which wants to claim the advantage of sub-sec. (1) of s. 84. We are in this case concerned only with condition No. 3. Condition No. 3 provides that the industrial undertaking must have begun or must begin to manufacture or produce articles within the period specified in that clause. The question which arises in this reference is whether the assessee-company can be said to manufacture or produce articles when it carries on the business of pressure piling. The question which will, therefore, have to be decided is whether the product which results from the process of pressure piling can be classified as an article and whether this article can be said to have been manufactured or produced by the assessee-company. There cannot be much dispute that when this condition refers to manufacture or production of the article, it contemplates that the articles which are produced or manufactured are something new and different from the raw materials or the things which are used for the purpose of production of those articles. Where an article which is the end-product of a scientific and technical process of its preparation is some thing new and different from the raw material used in its preparation, there cannot be much difficulty in holding that the article has been produced or manufactured. The crucial question which is to be decided in this case is whether the pile which is prepared at the construction site by the special process of pressure piling can be said to be an article. Mr. Joshi supported the view taken by the Judicial Member of the Tribunal and, according to Mr. Joshi, unless a thing can be sold or supplied, it cannot be classified as an article and, in the instant case, the process of piling is in essence a part of the building activity. According to him, it is a part and parcel of the activity of construction or raising a building because the work of piling is done at the site itself.

9. Now, it is difficult to see how the mere fact that an article is manufactured or brought into being at a particular site would be material for determining whether the thing produced or manufactured is an article. It is not necessary that an article should be manufactured in a factory alone. In our view, the place or the site where the manufacturing process or the process of production of something is carried out is not relevant at all for determining whether the product produced or manufactured is an article. The essence of the manufacturing process is the conversion of raw material into an entirely new commodity or a new thing. There can be no doubt in the instant case that by subjecting the concrete mixture which may consist of several articles to certain process along with iron bars, something new is brought into being. If that newly produced thing can be called an article, then the requirements of cl. (iii) of sub-s. (2) of s. 84 of the Act will have to be specified.

10. It has been observed in Longhurst v. Guildford Godalming and District Water Board, [1961] 3 All ER 545, 547 (HL): “…… the word ‘article’ itself appears to me to be capable of meaning anything corporeal”. It appears that the learned Judicial Member laid more emphasis on the process which is adopted by the assessee-company than on the product which resulted from the process which is adopted by the assessee-company and in which it is specialised. By the piling process no doubt something which ultimately forms a part of the construction, comes into being. But at the time when it is brought into being, it has a complete independent existence. It is described as a pile which is more or less akin to a pillar. It is true that when the superstructure is constructed, the foundation which is in the form of the piles, gets attached to the superstructure and becomes part of the entire building. This fact would, however, not be material because the point of time with reference to which the applicability of s. 84 will have to be considered, is when the article is brought into being as a product of the piling process. Though ultimately the piles become a part of the building, that does not detract from the fact that before the superstructure was constructed, a pile is an independent product as such.

11. It is difficult, therefore, to see how the product which ultimately results from the piling process cannot be said to be an independent article. It is also not necessary that all articles must necessarily have the quality or the possibility of being sold and purchased across the counter or it must necessarily be transportable to another site before it can be classified as an article. A particular manufacturer specialising in the production of a particular product may, by way of a special facility to certain customers, undertake to produce and supply it at the site itself, and, therefore, the site where the manufacturing process is carried on would be immaterial or irrelevant for the purpose of determining whether the product of the manufacturing process can be described as an article. In our view, since the end-product of the piling process is something which has an independent existence and is an independent entity and is normally described as a pile, it is an article for the purpose of s. 84(2)(iii) of the Act. It is brought into being by a special process of production. Therefore, in our view, the learned third Member and the learned Accountant Member had taken a correct view when they held that the assessee-company had qualified for earning the benefit of the provisions of s. 84(1) of the Act.

12. The question referred to us must, therefore, be answered in the affirmative in both the parts and in favour of the assessee. The assessee to get the posts of this reference.