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Issues involved:
The judgment addresses the following issues: 1. Whether converting limestone into limestone powder qualifies as a manufacturing activity for deduction u/s 80IA/80IB of the Income Tax Act, 1961? 2. Whether the Tribunal correctly relied on the judgment in M/s. Lucky Minmat Pvt. Ltd. v. CIT regarding manufacturing process? 3. Whether the Tribunal misconstrued the material on records? Issue 1: Converting limestone into limestone powder as a manufacturing activity: The central question is whether the process of converting limestone into limestone powder constitutes a manufacturing activity under Section 80IA and 80IB of the Income Tax Act, 1961. The definition of "manufacture" from Black's Law Dictionary emphasizes the transformation of materials into new forms. The judgment in Sterling Foods v. State of Karnataka established that processed shrimps, prawns, and lobsters retain their original identity despite undergoing various processing stages. This principle was upheld in CIT v. Relish Foods, applying the same definition to tax provisions. Additionally, the Madras High Court decision in CIT v. Sacs Eagles Chicory affirmed that a change in form does not alter the identity of a commodity. The Apex Court further clarified in Indian Hotels Co. Ltd. v. ITO that kitchen processing of raw food items does not constitute manufacturing. The case of CIT v. Gem India Manufacturing Co. highlighted that cutting and polishing raw diamonds do not result in a new article. Moreover, in Aspinwall & Co. Ltd. v. CIT, the Apex Court determined that the process of manufacturing coffee beans from raw berries qualifies as manufacturing due to the distinct transformation resulting in a new commodity. Issue 2: Tribunal's reliance on M/s. Lucky Minmat Pvt. Ltd. v. CIT: The Tribunal's reliance on the judgment in M/s. Lucky Minmat Pvt. Ltd. v. CIT was questioned regarding the classification of activities as manufacturing processes. The Apex Court in the Lucky Minmat case stated that converting lime and lime dust by stone crushers constitutes manufacturing, unlike mere mining and cutting of limestone. While the revenue argued that this observation was obiter dicta and not the ratio of the decision, the Court clarified that the conversion of limestone into lime and lime dust is indeed a manufacturing process, as established by the Supreme Court. Therefore, the contention of the revenue was deemed without merit, and the questions were resolved in favor of the assessee. Issue 3: Misconstruction of material by the Tribunal: The final issue pertained to the Tribunal's alleged misconstruction of the material on records. The Apex Court's clear stance that the conversion of limestone into lime and lime dust qualifies as a manufacturing process was emphasized. The Court rejected the revenue's argument, affirming that the Supreme Court's observation on this matter was not obiter dicta but a definitive statement. Consequently, all questions were decided in favor of the assessee, leading to the disposal of the appeals without costs.
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