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TMI Blog2004 (1) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 30 - SUPREME COURT] . One of the tests laid down by the Hon ble Apex Court therein is that in the case of manufacturing activity, the inputs and outputs shall be commercially different. This commercial identity is to be considered in the light of the respective trade practice, or if no such trade practice, in the common parlance. In the present case, the raw material extracted by the assessee-firm is the granite boulders. What is sold by the assessee is granite aggregates (commonly known as metals) of different commercial sizes of 1 , 1 , , , etc. These different sizes of granite aggregates are used for different purposes, even though used generally in construction activities. The granite aggregates of different sizes sold by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1961. 2. In filing its returns of income, the assessee claimed deductions available under sections 80HH and 80-I on the ground that it is carrying on a manufacturing activity. The assessee is a small-scale industrial unit manufacturing graded metal (granite rubble of various sizes). 3. But the Assessing Officer held that the activity carried on by the assessee could not be held as a manufacturing activity. She held that conversion of granite boulders into granite rubble of various sizes did not amount to manufacturing, as according to her, the raw material and the final product was the same and the only difference was in size. For the purpose of coming to the above conclusion, she relied on the following decisions : i. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee ultimately resulted in an end-products (granite aggregate), which has a distinct utilitarian value, which the primary material of boulders did not possess. In support of his view, the CIT(Appeals) relied on the following decisions : ( a ) CIT v. M.R. Gopal [1965] 58 ITR 598 (Mad.) ( b ) CIT v. R.C. Construction [1996] 222 ITR 658 (Gauhati) a. Kher Stone Crusher v. District Industries Centre, Jabalpur [1990] STC 149. 6. Accordingly he directed the Assessing Officer to give the benefit of deductions available to the assessee under sections 80HH and 80-I of the Income-tax Act, 1961. 7. It is against the above directions of the CIT(Appeals) that the revenue has approached the Tribunal. The relevant grounds are extracted below : "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly on this point even though a number of decisions are available on the principle at large. Therefore, I have to scan through the various decisions of the Hon ble High Courts. In this context, I agree with the CIT(Appeals) that the decisions relied on by him are in fact relevant in deciding the matter in favour of the assessee. 9. In the case of M.R. Gopal ( supra ), the Court has held that the conversion of boulders into small stones with the aid of machinery amounted to manufacturing. Here also the assessee is converting big boulders of granites into granite aggregate of different commercial sizes. This is the cases with the decision in R.C. Construction s case ( supra ) also. In the case of Kher Stone Crusher ( supra ) also, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This "commercial identity" is to be considered in the light of the respective trade practice, or if no such trade practice, in the common parlance. In the present case, the raw material extracted by the assessee-firm is the granite boulders. What is sold by the assessee is granite aggregates (commonly known as metals) of different commercial sizes of 1 ", 1", ", ", etc. These different sizes of granite aggregates are used for different purposes, even though used generally in construction activities. The granite aggregates of different sizes sold by the assessee are commercially different from granite boulders extracted by the firm from the quarry. There is no doubt that they are commercially different. Therefore, the finding of the CIT(Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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