In Brief
Polyflex (India) manufactures polyurethane foam in different sizes and designs at its Pune facility. The foam is sold to automobile seat manufacturers who use it as an ingredient. Polyflex claimed tax deduction under Section 80-IB of the Income Tax Act, arguing its final product is automobile seats. The Revenue contended it manufactures only polyurethane foam, which falls within the Eleventh Schedule—disqualifying it from Section 80-IB benefit. The Supreme Court upheld the Revenue's position, holding that the critical test is what the assessee actually manufactures and sells. Since Polyflex manufactures only the foam ingredient and undertakes no further process to assemble it into seats, polyurethane foam is its final product and falls within entry 25 of the Eleventh Schedule, rendering it ineligible for deduction.
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