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TMI Blog2010 (6) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... law and hence deserves to be deleted. 04. On appreciation of the facts and circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned AO not granting deduction to the appellant u/s 80IB of the Income-tax Act. 05. The appellant craves leave to add, amend, modify or alter the above grounds of appeal at any stage of appellate proceedings. 06. The appellant humbly prays that the appeal be allowed in toto . 2 Adverting to ground nos. 2 to 4 in the appeal, facts, in brief, as per relevant orders are that the return declaring nil income after deduction of ₹ 37,50,732/- u/s 80IB of the Income-tax Act,1961[hereinafter referred to as the Act ] filed on 1-11-2004 by the assessee, engaged in the business of cutting and polishing of marble stones, after being processed on 25-1-2005 u/s 143(1) of the Act, was taken up for scrutiny with the issue of notice u/s 143(2) of the Act on 25.10.2005. During the course of assessment proceedings, the Assessing Officer [ AO in short] analysed the manufacturing activity of assessee. It was found that the assessee procured rough marble blocks and cut or chiseled it using a hammer and a chisel. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative of the appellant has attempted to present before the department that a series of processes are done by the appellant. [b] Stage 2 is done only to settle the holes and racks in the marble blocks to make efficient cutting and cannot be considered as manufacturing activity. [c] Stage 3 is nothing but simple cutting of marble blocks in to slabs as per the desired thickness. [d] Stage-4 is actually a simple process. Anybody can purchase stones without polishing and polishing can thereafter be done with a polishing machine. This does not mean that they are creating a new article and that they are manufacturing or producing a commodity. At the most it can be called a simple process which does not transform the original material either in terms of use, characteristics or name. [e] State-5 is nothing but re polishing and there is no transformation of the original commodity upon which the above process(es) were applied. 6.1 The AO in support of his above referred arguments that the activities of the appellant were not manufacturing, relied upon various judicial pronouncements, such as Niemla Textiles Finishing Mills (P) Ltd. Vs. ITO 152 ITR -129 (P H), M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under: Only manufacturing is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another and indeed there may be several stages of processing and perhaps different kind of processing at each stage. With each process suffered, the commodity experiences a change. But it is only when the change or a series of changes, take the commodity to point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. [c] In the case of Aditya Mills Vs/ Union of India (1979) 73 STC 195, AIR 1988 SC 2237, the honorable court has held the same view while defining the word manufacturing. The Honorable court has held as under: Manufacture is complete as soon as by the application of one or more process, the raw material undergoes some changes and a new substance or article is brought into existence. The new substance or article must have a distinct name, character or use. The new commodity must be a commercially separate and distinct commodity having its ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he form of end product. The authorized representative has also submitted that in the end marble blocks are transformed into the form of marble tiles and its original form is finally consumed into a new form i.e. Tiles . 6.6 In his findings for A.Y. 2003-2004 the AO has cited various case laws and after relying upon the judicial findings in such case laws held that the activity of the appellant is not manufacturing. The case laws relied upon by the assessing officer are (i) CIT Vs. Gen India Mfg. Co. (2001) 219 ITR 307 (SC); (ii) M/s. Lucky Minmat Private Limited Vs. CIT (2000) 215 ITR 380 (SC); (iii) CIT Vs. Relish Foods (1999) 237 ITR 59 (SC); (iv) CIT V/s. George Maijo (2001) 250 ITR 440 (Mad.); (v) CIT V/s. Lucky Mineral Private Limited (1997) 226 ITR 245 (Raj.) and (vi) India Cine Agencies V/s. CIT, (2002) 261 ITR 491 (Mad.) etc. In response to the findings of the assessing officer based on the above judgments, A.R. had distinguished the nature of activity carried out by the assessee in the above cases vis-a-vis the activity carried out by the appellant and made a detailed submission at the time of assessment proceedings as well as at the time of appellate proceedings. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the appellant that the manufacturing process undertaken by the appellant and M/s. Aakash Stone Industries Limited are the same and that the finished products are also the same. After considering the facts of the case and the observation of the CBDT in Circular No. 693 dated 17-1-1994 the honorable Tribunal concluded that the assessee in that case is engaged in manufacturing / production of polished marble slabs and tiles. The Honorable Tribunal also fortified its view by relying on the observation of the he honorable Supreme Court in the case of Bajaj Tempo's case reported in 196 ITR 188 highlighting that a provision, in a taxing statute granting incentive for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction in it too has to be considered so as to advance the objective of the provision and not to frustrate it. 6.10 From the assessment order for A.Y. 2003-2004 and the facts and arguments advanced by the learned counsel appearing on behalf of the appellant, it is found that the facts of the case of the appellant are similar though not the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mill-sawing into slabs is done with sets of parallel iron blades that move back and forth and are fed by sand and water. The marble may be machined with lathes and carborundum wheels and is then polished with increasingly finger grades of abrasive . It is therefore seen that only after machining and polishing and such other process are applied to the cut slabs do they become a marketable commodity viz. marble tiles . In short the manufacture of an article known as marble could be said to be complete only after all or most of these process(es) are undergone to result in a distinctly different commodity. In the case of the appellant, the A.R. appellant failed to submit either before the assessing officer during the course of assessment proceedings or before me during the course of this appeal proceedings the exact nature of manufacturing process which has given rise to the birth of a new product which is different from the original input i.e. marble slabs. 6.13 In the case of Sourubh Stone International, as relied upon by the appellant, the assessee in that case has submitted its manufacturing process and established that a new product has come into existence as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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