Veeraswami, J.:— This reference relates to the assessment year 1959-60 and the question is whether the assessee is entitled to exemption under section 15C in regard to the profit earned by him in Pallavaram quarry. The actual process consisted of this, namely, rocks and boulders were cut into chips of various sizes with the use of machinery. The departmental authorities were of the view that this is not a case of an industrial undertaking because there was no manufacturing process involved. The Tribunal disagreed with the view and held that the process employed by the assessee in converting the boulders into small stones with the aid of machinery is a manufacturing process and the undertaking of the assessee is an industrial undertaking.
2. Section 15C exempts from tax the newly established industrial undertakings, and the section would apply only if the profits or gains charged to tax are derived from any industrial undertaking, and further if the undertaking employs 10 or more workers in a manufacturing process carried on with the aid of power or employs 20 or more workers in a manufacturing process carried on without the aid of power.
3. To qualify himself to the benefit of this section the assessee must establish that the profits and gains are derived from an industrial undertaking and that the undertaking employed the required number of people in a manufacturing process carried on with the aid of power or without power. What is an industry? Webster's New International Dictionary gives various meanings to the word, one of which is: “Systematic labour or habitual employment; especially human exertion employed for the creation of value, regarded by some as a species of capital or wealth; labour.” Another meaning is: “Any department or branch of art, occupation or business; especially one which employs much labour and capital and is a distinct branch of trade; as, the sugar industry; the iron industry; the cotton industry.” “Undertaking” also has different shades of meaning; and, according to Webster, it means: “Anything undertaken; any business, work, or project which one engages in, or attempts, an enterprise.” There is here no doubt that labour is employed, capital is utilised and a form of wealth is produced in the shape of small chips of stones by the aid of machinery. The process of making chips is obviously also an enterprise, an occupation, or a business, and, therefore, is an undertaking. In fact the only ground on which the departmental officers have held the process in question as not an industrial undertaking is that it did not involve a manufacturing process.
“Manufacture”, as we find from Webster's Dictionary, means: “Anything made from raw materials by the hand, by machinery, or by art, as clothes, iron utensils, shoes, machinery, etc.; a manual occupation or trade; to produce by labour especially now, according to an organised plan and with division of labour and usually with machinery.” It seems to us to be unarguable having regard to the meaning of manufacture that the process employed in converting boulders into small chips of stones with the aid of labour and machinery is not a manufacturing process. Surely labour is employed and something is converted into something else, a product which is of value and is used, and in that sense the chips are a new production as a result of a manufacturing process.
4. We are of opinion that the Tribunal was right in holding that the assessee is entitled to the benefit of section 15C.
5. The reference is answered in favour of the assessee and against the department. Counsel's fee Rs. 250.
6. Reference answered in favour of the assessee.