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TMI Blog1996 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... taking for the purpose of section 80HH of the Income-tax Act. The Income-tax Officer did not accept the same, as according to him, the assessee was not engaged in the manufacture or production of goods. The Commissioner of Income-tax (Appeals), however, accepted the claim of the assessee and allowed the appeal. The Appellate Tribunal, on appeal by the Revenue, sustained the order of the Commissioner of Income-tax (Appeals) following an earlier decision of the Bench in the case of the assessee itself for the assessment year 1978-79 in I. T. As. Nos. 1492 and 1493 dated July 25, 1980. " Mr. G. S. Bapna, learned counsel for the Department, urged that the assessee-company was engaged in the business of excavating the limestone and marble blocks and then selling the marble slabs after cutting them into marble slabs by sawing. It was submitted that the activities, being carried on by the assessee-company, do not involve any manufacturing process and, therefore, it was not entitled to deduction under section 80HH of the Act. In support of his arguments, Mr. Bapna relied upon the decision of this court in the case of Polar Marmo Agglomerates Ltd. v. Union of India [1994] 73 ELT 536 (Raj) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that this condition shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section ; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose in any backward area ; (iv) it 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. " It is true that section 80HH was brought on the statute book to encourage establishment of industrial undertakings in backward areas for the reason that such establishment leads to development of that area besides providing employment and, therefore, a liberal interpretation which advances the purpose and object underlying the provision may be adopted. But as was observed by the Supreme Court in CIT v. N. C. Budharaja's case [1993] 204 ITR 412, the said principle cannot, however, be carried to the extent of doing violence to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a v. Delhi Cloth and General Mills [1977] ELT (J) 199 where it was observed that manufacture implies a change, but every change in the raw material is not manufacture although every change of an article is the result of treatment, labour or manipulation. In order to make a change amount to " manufacture " something more is necessary and that something more is such transformation of a production as brings into existence a new and different article having distinct name, character or use. The same view was expressed in the case of South Bihar Sugar Mills v. Union of India [1978] ELT (J) 3, where it was observed that if a new substance known to the market emerges, this will amount to manufacture. In the case of Empire Industries Ltd. v. Union of India [1986] 162 ITR 846 (SC), it was observed by the Supreme Court that to constitute manufacture, it is not necessary that one should absolutely make out a new thing because it is well-settled that one cannot absolutely make a thing by hand in the sense that nobody can create matter by hand. It is the transformation of one matter into something else which would amount to manufacture. It is a question of degree that something else is a differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta) Ltd. v. Collector of Central Excise [1992] 60 ELT 639, paragraph 3, that the Revenue filed appeal against the order given in Collector, Central Excise v. Fine Marbles [1985] 2 ELT 128 and the Supreme Court dismissed it. Similar will be the position for the conversion of Agglomerated Marble Blocks into Agglomerated Marble Slabs/Tiles. " Following and borrowing the language from Deputy CST v. Pio Food Packers [1980] 46 STC 63 (SC), we conclude that although at some point processing and manufacturing will merge where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been manufactured. (emphasis supplied). We find the same position in the instant case. We have stated in extenso the facts found by the Appellate Tribunal. Those facts are that the activities of the assessee company consist of excavating limestone and marble boulders and after cutting the boulders into slabs, selling them. After cutting the boulders into slabs, may be with the aid of machinery, the original commodity retains a continuing substantial identity through the processing stage, carried out by the assessee-company. It has not been found by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgoing the process of cutting into slabs. In the case of CIT v. S. L. Agarwala and Co. [1992] 197 ITR 239 (Orissa), the activity of breaking up of huge iron ingots into small pieces, which were a different and distinct commercial commodity was considered to be manufacturing activity. The facts of that case are clearly distinguishable from those before us. In Aditya Mills Ltd.'s case [1989] 73 STC 195 (SC) doubling together of two plies of polyster spun yarn and one ply of rayon filament yarn resulting in a different yarn and in the case of Union of India v. Delhi Cloth and General Mills Co. Ltd. [1977] ELT (J) 199, the activity of manufacture of hydrogenerated oil known as vanaspati from the raw materials bringing into existence an altogether different commercial commodity were considered as amounting to " manufacturing ". Obviously such are not the facts in the case before us. To sum up, we answer the question, referred to us, in the negative, i.e., for the Revenue and against the assessee. We accordingly hold that the Tribunal was not justified, in holding that the business activity of the assessee is in the nature of manufacturing or production. We further hold that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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