9911796707
TMI Blog2006 (8) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... ble slabs are measured in square feet or square meters. It is clear from the sample copies of purchase bills enclosed at assessee s paper book and the copies of sales bills enclosed at assessee s paper book. Accordingly, the processes undertaken by the assessee fulfil all the criteria/tests for constitution manufacture . We agree with the contention of the ld AR on behalf of the assessee that it has carried out manufacturing process on raw blocks. This view is fortified by the judgment in Empire Industries Ltd. s case [ 1985 (5) TMI 53 - SUPREME COURT] and by the CBDT vide Circular No. 693 in which, extent of value addition involved when a rough mineral is polished has also been clarified. Accordingly, we hold that the assessee is engaged in manufacture/production of polished marble slabs, tiles, table tops, etc. in terms of section 80-IB(2)(iii) of the Act. The compliance with other conditions u/s 80-IB has not been disputed by the Revenue authorities. As such, we agree with the contention of the assessee that it is entitled for deduction under the provisions of section 80-IB of the IT Act, 1961. As a result, appeals of the assessee are partly allowed. - Shailendra K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery or plant previously used for any purpose; ( iii ) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India: Provided that the condition in this clause shall, in relation to a small-scale industrial undertaking or an industrial undertaking referred to in sub-section (4) shall apply as if the words not being any article or thing specified in the list in the Eleventh Schedule had been omitted. Explanation 1. For the purposes of clause ( ii ) Explanation 2. Where in the case of an industrial undertaking... ( iv ) in a case where the industrial undertaking manufacturers of produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power. Section 80-IB(4) reads as under: The amount of deduction in the case of an industrial undertaking in an industrially backward State specified in the Eighth Schedule shall be hundred per cent of the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The dressed marble block is put into cutting machine for the purpose of cutting into slab. The machine is fitted with high quality blade attached with export quality of diamond segments. Continuous water supply is required for cutting block and for this shower system is attached and arrangement is done to recycle the water. Normally, it takes minimum 8 to 10 hours to cut a dressed block into standard uniform marble slab. Sometimes if the nature of the marble block is very hard then it takes 20 to 22 hours to cut a block. Similar looking marble blocks are cut into slabs. A proper detailed designing plan is involved in undertaking cutting and polishing of marketable marble slabs. Cutting is done in such a way that the quality, appearance of the marble slabs, can easily be identified; ( ix ) The finished product i.e. marble slab is of thickness ranging from 20 mm. to 17 mm. The manufactured slabs are required to be padded on its backside. The padding is undertaken on each slab by applying fiberglass mat pasted on the slab with the help of GP Resin, catalyst, and is, therefore, kept for drying; ( x ) After sorting and grading of the slabs and in order to remove the natural flaw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act, 1961, the words manufacture and production per se have not been defined under the IT Act. However, the Hon ble Karnataka High Court in the case of CIT v. Mysore Minerals Ltd. (No. 1) [2001] 250 ITR 725 wherein the assessee-company was engaged in extracting granite from quarry, converting the same to slabs, polishing and cutting before effecting the sale of the same. It was held ( i ) that the original assessment granting the relief under sections 32A and 80-I of the Act to the assessee was not erroneous and the order of the CIT under section 263 withdrawing the relief was not proper; ( ii ) that extracting granite from quarry and cutting it to various sizes and polishing was manufacture or production of any article or thing and the assessee s business activity was an industrial undertaking for the purpose of granting reliefs under sections 32A and 80-I. The Hon ble Supreme Court dismissed the Special Leave Petition filed by the Revenue against the above judgment, reported in (2002) 254 ITR (St) 278. The Hon ble Court in the case of CIT v. Sesa Goa Ltd. [2004] 271 ITR 331 (SC) affirming the decision of Mysore Minerals ( supra ) held that excavating and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent i.e. the rough blocks are measured in metric tons whereas the polished marble slabs are measured in square feet or square meters. It is clear from the sample copies of purchase bills enclosed at pp. 10 to 15 of the assessee s paper book and the copies of sales bills enclosed at pp. 16 to 18 of the assessee s paper book. Accordingly, the processes undertaken by the assessee fulfil all the criteria/tests for constitution manufacture as discussed above. 12. The Assessing Officer, while disallowing the claim of the assessee, mainly relied on the judgment of the Hon ble Supreme Court in the case of Lucky Minmat (P.) Ltd. v. CIT [2000] 245 ITR 830. In the said case, the activity undertaken by the concerned assessee was limited to mining of limestone and marble blocks and, thereafter, cutting and sizing the same before being sold in the market. The cutting and sizing marble blocks etc. are carried out only for the case of handling and transportation. Even after being cut into smaller blocks, the cut blocks retain the same characteristics and existing at the mining stage. The cut blocks remain in the same raw form as the uncut marble blocks. However, in the case befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. In this background, the stand of the assessee is that the apex IT authority has clarified that when rough granite is cut and polished into dimensional blocks of uniform colour and size, there is substantial value addition to rough granite; that while granite alone is considered as mineral, any process applied to granite would deprive the quality of rough mineral from the dimensional blocks of granite which is a value added marketable commodity. Cutting granite blocks into size, pressing and polishing them would constitute manufacture in the context of relief under section 80HHC. It, thus, follows that production of cut and polished marble tiles, slabs etc. entails carrying out of several manufacturing processes on rough raw marble blocks, at the end of which a distinguishable value added marketable commodity emerges. A rough marble block is only a portion of land excavated from mountains and/or quarries which is known as such in the market, whereas a polished marble slab or tile is the finished product emerging after carrying out of several mechanical and manual processes, fit for final usage by the end user. By no stretch of imagination can the rough marble block be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Regarding alternative ground that in case the assessee is allowed deduction under section 80-IA of the IT Act, 1961, at the appellate stage, interest income of the assessee amounting to Rs. 3,88,616 should not be considered as eligible for deduction under section 80-IA of the Act. In this regard, it was submitted that the fixed deposits were made out of business compulsion and the interest earned thereon was having direct and immediate nexus with the business of industrial undertaking of the assessee, the assessee was eligible for deduction under section 80-IB of the Act (erstwhile section 80-IA) on the interest earnings. Accordingly, the order of the lower authorities disallowing the claim of the assessee-company under section 80-IA in respect of interest on fixed deposits was requested to be quashed. In the interest of justice, we restore this issue to the Assessing Officer with the direction to decide whether fixed deposits were made out of business compulsion so as to decide the issue whether interest earned thereon was having direct nexus with the business of industrial undertaking of the assessee. Accordingly, the assessee is eligible for deduction under section 80-IB of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
