9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 1646 - HC - Income TaxBenefit of deductions u/s 80IB - Determination of Manufacturing Activities - as submitted assessee is not involved in any manufacturing activity and is only engaged in mining blocks and cutting them into tiles and polishing them - HELD THAT - As contended that the word production is to be construed as a wider meaning than manufacture and in view of the observations made by the Supreme Court in Sesa Goa Ltd 2004 (11) TMI 14 - SUPREME COURT the view taken by the Tribunal is just and proper. In CIT vs. Goverdhan Prasad 2017 (3) TMI 1951 - RAJASTHAN HIGH COURT similar view was taken. Taking into consideration the activity which is carried out, in view of the above, we are in complete agreement with the view taken by the Tribunal. The issues are answered in favour of the assessee and against the department.
Issues Involved:
1. Entitlement of the assessee for benefit of deductions under Section 80IB. 2. Determination of whether the assessee's activities qualify as manufacturing or production. Detailed Analysis: Issue 1: Entitlement of the Assessee for Benefit of Deductions under Section 80IB The appellants challenged the Tribunal's decision, which dismissed the department's appeal and partly allowed the assessee's appeal, modifying the CIT(A)'s order. The primary legal question was whether the assessee, involved in mining blocks, cutting them into tiles, and polishing them, is entitled to deductions under Section 80IB of the Income Tax Act. Issue 2: Determination of Manufacturing or Production Activities The court examined whether the activities undertaken by the assessee constitute "manufacturing" or "production" for the purposes of Section 80IB. The appellant's counsel relied on the Supreme Court's decision in the case of Additional Commissioner of Commercial Taxes, Bangalore vs. Ayili Stone Industries, which held that mere extraction of stones or cutting marble blocks into slabs does not amount to manufacturing. The court distinguished this case by noting that the present case involves additional processes like polishing and converting blocks into polished slabs and tiles, which constitute manufacturing or production. Legal Precedents and Provisions: 1. Section 10BA of the Income Tax Act: The appellant's counsel cited Section 10BA, which pertains to special provisions for export of certain articles, to argue that the assessee's activities do not qualify as manufacturing. 2. Arihant Tiles and Marbles Pvt. Ltd. vs. Union of India: This case was referenced to support the argument that cutting marble blocks into slabs does not constitute manufacturing. 3. Amruthsheele vs. Union of India: This judgment declared that cutting marble blocks into slabs does not involve a manufacturing process, hence no excise duty is payable. Respondent's Argument: The respondent's counsel relied on several decisions, including: 1. Grace Exports vs. ITO: This case supported the view that the Tribunal was not justified in disallowing benefits under Section 10B. 2. CIT vs. M/s. Mangalam Arts: The court held that the process undertaken by the assessee, which involved several stages of work on semi-finished materials, constituted manufacturing or production. 3. Income Tax Officer, Udaipur vs. Arihant Tiles and Marbles (P) Ltd.: The Supreme Court observed that activities involving multiple stages, including polishing and conversion into tiles, fall under manufacturing or production. Court's Conclusion: The court agreed with the Tribunal's view that the assessee's activities, which include various stages beyond mere cutting of marble blocks, amount to manufacturing or production under Section 80IA. The court emphasized that the term "production" has a broader meaning than "manufacture" and includes the processes undertaken by the assessee. Final Judgment: The issues were resolved in favor of the assessee, affirming that the activities qualify for deductions under Section 80IB. The appeals were dismissed, and the Tribunal's decision was upheld. The court ordered that a copy of the judgment be placed in each file.
|
