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TMI Blog2019 (5) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceedings when the AO has already allowed the claim of the assessee while passing the assessment U/s 143(3) of the Act. The AO has reopened the assessment to deny the claim only on the ground that in view of the decision of Hon ble Bombay High Court in case of CIT vs. Premier Construction Co. (supra) the activity carried out by the assessee does not ambit production or article. Hence, the AO never disputed the nature of actually activity carried out by the assessee. Thus, question of genuineness of the activity in the set aside proceeding that too arising from reassessment proceeding after allowing the claim in the assessment frame U/s 143(3) of the Act is not permitted. Hence, in the facts and circumstances of the case, we do not concur with view of the ld. CIT(A) on this objection of incomplete certificate in Form No. 10CCB. The assessee is undertaking the process of broking the big boulders into small size of required dimension then removing the impurities from the surface of the lumbs through machinery boulders, the process is known as dressing process of lumbs then washed by water to remove siliceous and other impurities and therefore, these are crushed to reduce in the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stone is not manufacture so as to entitle the assessee for deduction U/s 80J. In the reassessment proceeding, the AO denied the claim of deduction U/s 80I and 80IA of the Act to the assessee by holding that the process of crushing boulders to obtain stones of smaller size termed as "gitti" cannot be regarded as a process manufacturing or production. 3. Before us, the ld. AR of the assessee has submitted that in this connection it is stated that the mixed soapstone lumps were purchased by assessee in the form of big builders. Thereafter segregation of soapstone lumps and unwanted material like dolomite, stone etc. is done and whole of ore is sorted and re-handled. The manually sorted soap stone lumps are cleaned by brushes & checals etc. to remove the surface impurities and big boulders of soapstone lumps reduced in smaller size of around 12 to 8 inches pieces with the help of hammers. Then the clean and sorted soapstone lumps are washed and lumps is crushed into chips of 1 to 2 inches small pieces. Thereafter the different grades of cleaned sorted chips are blended in different proportions to get appropriate quality of required whiteness to be supplied to different industrial use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed to have two grinding units i.e. Unit No. 1 and Unit No. 2. It has claimed deduction u/s 80I and 80IA of the Act in respect of unit no. 1 and unit no. 2 for the year under consideration at ₹ 1,46,730/- being 20% of ₹ 7,33,650/- and ₹ 7,51,274/- being 25% of ₹ 30,05,095/- respectively. During the appellate proceedings, the appellant has stated the various processes in the manufacturing of talc ore soap stone power as under:- • Purchase of Talc ore. • Segregation of Talc and unwanted material lime dolomite, stone etc. manually. • Sorted talc lumps cleaned by brushes & checals etc. to remove the surface impurities. • Big boulders to talc are reduced in smaller size or around 1 feet with the help of hammers. • Clean and sorted talc lumps are washed and ore is crushed into chips of 1 to 2 inches. • Different grades of cleaned sorted chips are blended in different proportions to get appropriate quality of required whiteness. (iv) It appears that the appellant has missed about the grinding of the chips to form soap stone powder as nothing has been stated about this activity. Thus, the soap stone powder or tale proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the appellate proceedings, which is being reproduced as under: S.No. Assets Amount ( in Rs.) 1. Wxhaust & Cooler 5,443/- 2. Fan 1,077/- 3. Pulveriser 1,94,650/- 4. Weighing Scale 25,397/- Total 2,26,567/- (vi)(b) These facts itself prove that the appellant at least in Unit No. 2, was not having the required plant and machinery for converting the soap stone crude into soap stone powder. It was the contention of the appellant that it was mixing the different types of soap stone chips to produce the desired quality of soap stone powder. However, no evidence was furnished by the appellant to support such contention. It is noted from the profit and loss relating, to Unit No. 2 that it has claimed only a sum of ₹ 1,080/- on account of testing and analyzing expenses on total sales of ₹ 65,45,392/-, which is quite low. It is to be noted that in Unit No. 1, in the schedule of fixed assets, the opening WDV as on 01.04.1996 of 'Analysing Testing' was shown at ₹ 13,674/- whereas the same is conspicuous by its absence in Unit No. 2. Thus, all these facts clearly establish that in Unit No. 2, the appellant was not having the facilities requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said certificate and secondly unit no. 2 was not having the necessary infrastructure to carry out the activity has been claimed by the assessee. It is pertinent to note that as regards objecting of incomplete certificate in Form No. 10CCB it is only a minor mistake/error on the part of the Auditor for not giving the amount of deduction U/s 80I & IA of the Act, however neither the AO nor the ld. CIT(A) has disputed the correctness of computation of deduction as claimed by the assessee in the return of income. Further once, the books of accounts of the assessee are audited then the computation of deduction cannot be questioned without find out any apparent mistake. Therefore, this technical objection of the ld. CIT(A) in the certificate in Form No. 10CCB cannot be a reason for denial of deduction U/s 80I & IA of the Act in the reassessment and set aside proceedings when the AO has already allowed the claim of the assessee while passing the assessment U/s 143(3) of the Act. The AO has reopened the assessment to deny the claim only on the ground that in view of the decision of Hon'ble Bombay High Court in case of CIT vs. Premier Construction Co. (supra) the activity carried out by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has added the marketable value. Though the process has not changed any chemical property of the goods, however the outcome is altogether distinct from the input. The Hon'ble Supreme Court in case of Lucky Minmat vs CIT 245 ITR 830 has upheld the decision of Hon'ble Jurisdiction High Court reported in 226 ITR 245. The Hon'ble Supreme Court in case of CIT vs. Arihant Tile and Marbles Pvt. Ltd. 320 ITR 79 (supra) while considering an identical issue held in para 11 to 20 as under:- "11. The main judgment on which the Department has placed reliance is the judgment of this Court in Lucky Minmat (P) Ltd. vs. CIT (2000) 162 CTR (SC) 404 : (2001) 9 SCC 669. In that case, the following question came up for consideration before the Tribunal : "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that business activity of the assessee was in the nature of manufacturing or production so as to be entitled for relief under s. 80HH of the IT Act, 1961." The assessee in that case had the business of mining of limestones and marble blocks which thereafter were cut and sized before being sold in the market. It was held by this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the State under s. 3(3) of the Act granting exemption from tax on the energy consumed by a consumer in any industry in the manufacture, production, processing or repair of goods and by or in respect of any mine as defined in the Indian Mines Act, 1923. This notification was later on superseded on 2nd March, 1963 by which electricity duty came to be remitted in certain cases. One more notification was issued on 1st Nov., 1965 once again superseding earlier notifications. By cl. (c) of the said notification, the State of Rajasthan reduced the duty on the energy consumed in industries, other than those mentioned in cl. (a) of the notification which are in the manufacture, production, processing or repair of goods. 13. The basic controversy which arose for determination in the said case was whether the activity of pumping out water from the mines came within the meaning of the words "manufacture", "production", "processing or repair of goods". While disposing of the matter, this Court, vide paras 1 and 10, stated that the specific case of the company was that the electrical energy was consumed for pumping out water from mines to make mines ready ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly under the excise law, the Court has to go by the facts of each case. In each case one has to examine the nature of the activity undertaken by an assessee. Mere extraction of stones may not constitute manufacture. Similarly, after extraction, if marble blocks are cut into slabs per se will not amount to the activity of manufacture. 15. In the present case, we have extracted in detail the process undertaken by each of the respondents before us. In the present case, we are not concerned only with cutting of marble blocks into slabs. In the present case we are also concerned with the activity of polishing and ultimate conversion of blocks into polished slabs and tiles. What we find from the process indicated herein-above is that there are various stages through which the blocks have to go through before they become polished slabs and tiles. In the circumstances, we are of the view that on the facts of the cases in hand, there is certainly an activity which will come in the category of "manufacture" or "production" under s. 80-IA of the IT Act. As stated herein-above, the judgment of this Court in Aman Marble Industries (P) Ltd. (supra) was not required to cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase (supra) and applying it to the activities undertaken by the respondents herein (reproduced hereinabove), it is clear that the said activities would come within the meaning of the word "production". 18. One more aspect needs to be highlighted. By the said judgment, this Court affirmed the decision of the Karnataka High Court in the case of CIT vs. Mysore Minerals Ltd. (2001) 166 CTR (Kar) 142 : (2001) 250 ITR 725 (Kar). 19. In the case of CIT vs. N.C. Budharaja & Co. & Anr. (1993) 114 CTR (SC) 420 : (1993) 204 ITR 412 (SC), the question which arose for determination before this Court was whether construction of a dam to store water (reservoir) can be characterised as amounting to manufacturing or producing an article. It was held that the word "manufacture" and the word "production" have received extensive judicial attention both under the income-tax as well as under the central excise and the salestax laws. The test for determining whether "manufacture" can be said to have taken place is whether the commodity, which is subjected to a process can no longer be regarded as the original commodity but is recognised in trade as a new and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mineral, cut and polished marble blocks shall be covered by entry (x) in the 12th Schedule, the assessees have filed copies of invoices, certificates etc. in support of polishing and value addition and hence, deleted disallowance/addition made by the assessing authority on this point. 16. The Revenue thereafter took the matter further before learned Tribunal but the learned Tribunal dismissed appeals of the Revenue on those grounds and averments and on the finding of learned CIT(A) upheld claim of the assessee-respondents for allowing deduction under s. 80HHC of the Act. 17. Thus, two appellate authorities below have concurrently held in favour of assessee-respondents that there was no breach of any of the conditions of s. 80HHC of the Act for grant of said benefit to the assessees. The fact remains that the assessees exported marble blocks, which were cut and polished and thus, satisfied requisite conditions for grant of benefit of deduction under s. 80HHC of the Act during the relevant years. 18. In the backdrop of these findings of facts, it is clear that the marble clocks come under the purview of item (x) of the Twelfth Schedule and the assessees had produced vouchers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was such as could not reasonably have been arrived at on the material placed before the Tribunal. In the absence of such a question, the High Court had to accept the finding of fact arrived at by the Tribunal and then proceed to decide the question of law referred The Tribunal is the final Court of fact. The decision of the Tribunal on the facts can be gone into by the High Court in the reference jurisdiction only if a question has been referred to it whether the finding arrived at by the Tribunal on the facts was perverse in the sense that no reasonable person could have taken such a view." 22. In the present case, finding of the learned Tribunal is in favour of assessee-respondents and it has been categorically held that the assessee-respondents are eligible for deduction under s. 80HHC of the Act for export of marble blocks, which were cut and polished. These findings are, indisputably, binding on this Court in view of law laid down by Hon'ble Supreme Court in the case of Sudarshan Silks & Sarees (supra). The appellant-Revenue has also not controverted that the findings arrived at by the learned Tribunal on facts are not correct or are perverse. Therefore, the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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