The assessee was a public limited company engaged in the business of manufacturing of cloth, industrial fabrics, readymade garments, sewing threads, etc. The assessee claimed a deduction under section 80HH of the Act in respect of its dipping plant. The claim was disallowed by the AO and affirmed by the Tribunal on the ground that the activity carried on amounted only to “processing” and not “manufacture”. On appeal High Court held that the activity of dipping was, key to stabilising and heat-setting the products. It was only after such dipping and heat stabilisation that the material would be compatible for rubber adhesion in various products requiring dimensional stability. The input used was industrial fabric or yarn and what emerges after the aforesaid activity was a commercially distinct product, different from the input used. It could be seen from the explanation provided before the authorities that a series of processes were carried out resulting in the final products. Such a series of processes in itself, amounted to the activity of “manufacture”. The assessee was entitled to special deduction under section 80HH.  S. 2(29B) “manufacturre” the definition   inserted by the Finance (No. 2) Act, 2009, with effect from April 1, 2009 any activity that would result in the transformation or change in the character of the object or article or thing, such that a new and distinct object is brought into existence would amount to “manufacture”. The definition statutorily enshrines one of the long settled tests of what would constitute “manufacture”. Thus, notwithstanding that the definition itself has been inserted only with effect from April 1, 2009 the test itself has been consistently applied by the courts even prior thereto in determining whether an activity would amount to manufacture or not. (AY. 1991-92 to 1995-96, 1998-99)