Chitra Venkataraman, J.

This appeal is filed by the revenue seeking admission by framing the following question of law :

"Whether on the facts and circumstances of the case, the Tribunal was right in holding that blending and bottling of IMFL would amount to manufacture for the purpose of claiming deduction under Section 80-IB?

2. The assessee herein is small scale industry recognised as so by the Director of Industries, Pondicherry. It set up a second unit to manufacture and bottle Indian manufactured foreign liquor (IMFL) at Pondicherry. In its return for the assessment year 2003-04 and 2004-05, it claimed deduction under Section 80-IB of the Act in respect of the profits and gains derived from the second unit. The assessing officer however rejected the plea on the issue that the process carried on by the assessee for its product does not constitute manufacture within the meaning of Section 80-IB of the Act. He further held that setting up of the second unit is only an expansion or reconstruction of the existing unit. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).

.3. In the proceedings before the Commissione