2010 (2) TMI 1216 - AT - Income Tax

Summary

Issues Involved: Determination of eligibility for deduction u/s 80IB of the Income Tax Act, 1961 for the assessment year 2003-04 based on the nature of activities performed by the assessee in the business of cutting and polishing of marble stone.

Summary:

Issue 1: Eligibility for deduction u/s 80IB
The appeal was filed against the order treating the activities of the assessee as non-manufacturing for the purpose of granting deduction u/s 80IB. The assessee engaged in cutting and polishing of marble stone, involving processes like chiseling, polishing, and cutting edges. The Assessing Officer (A.O.) and the Commissioner of Income Tax(Appeals) initially denied the deduction under section 80IB, stating it was not a manufacturing activity.

Issue 2: Interpretation of activities
The assessee argued that the purpose of their activity was to produce polished marble slabs, not waste materials like pieces of stones or slurry. Citing a Supreme Court judgment in a similar case, the assessee contended that they should be considered an Industrial Undertaking engaged in manufacturing and production. The Revenue representative requested verification of activities by the A.O. for comparison with the Supreme Court judgment.

Judgment:
After reviewing the activities and the Supreme Court judgment, the Tribunal concluded that the assessee's operations were akin to those in the Supreme Court case, thus qualifying as an Industrial Undertaking engaged in manufacturing and production. The Tribunal directed the A.O. to verify the calculations and allow the deduction u/s 80IB to the assessee. The appeal was treated as allowed for statistical purposes, with the order pronounced on 12.02.2010.