C.I.T..MUMBAI vs M/S.EMPTEE POLY-YARN PVT.LTD.

The Supreme Court clarified that the term 'manufacture' under the Income Tax Act requires a significant change in the product, as established in the case of M/s. Oracle Software India Ltd. The Court held that the thermo-mechanical process converts partially oriented yarn (POY) into texturized yarn, which is necessary for fabric production, thus constituting 'manufacture'. The judgment distinguished prior rulings, asserting that POY alone is not fit for fabric manufacture without this process, and reaffirmed the definition of 'manufacture' as per the Finance Act No.2/2009.