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TMI Blog2009 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Bhattacaharya , Arjit Prasad , Rupesh Kumar, B.V. Balaram Das for the appellants. S. Ganesh and Shyam Divan , for the repndents. JUDGMENT S.H. KAPADIA, J. Leave granted. 2. In this batch of Civil Appeals, a common question of law which arises for determination is: whether conversion of marble blocks by sawing into slabs and tiles and polishing amounts to "manufacture or production of article or thing" so as to make the respondent(s)-assessee(s) entitled to the benefit of Section 80IA of the Income Tax Act, 1961, as it stood at the material time. 3. The lead matter is Civil Appeal arising out of S.L.P. (C) No.9812/2008 in the case of Income Tax Officer, Udaipur Vs. M/s. Arihant Tiles Marbles (P) Ltd. 4. The assessee, during the relevant Assessment Year 2001-2002, was engaged in the business of manufacture/production of polished slabs and tiles which the assessee exported (partly). The prime condition for allowing deduction under Section 80IA, as it stood at the material time, was that industrial undertakings should manufacture or produce any article or thing, not being any article or thing specified in the list in Eleventh Schedule of the Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle or thing with a different chemical composition or integral structure;" "80IA(2) (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." 10. The Authorities below rejected the contention of the assessee(s) that its activities of polishing slabs and making of tiles from marble blocks constituted "manufacture" or "production" under Section 80IA of the Income Tax Act. There was difference of opinion in this connection between the Members of the ITAT. However, by the impugned judgment, the High Court has accepted the contention of the assessee(s) holding that in the present case, polished slabs and tiles stood manufactured / produced from the marble blocks and, consequently, each of the assessee was entitled to the benefit of deduction under Section 80IA. Hence, these Civil Appeals have been filed by the Department. 11. Incidentally, it may be noted that some of the assessees before us are also job workers duly registered under the provisions of the Excise Act/Rules framed thereunder. It may also be clarified that in thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction under Section 80IA of the Income Tax Act, 1961. 14. There is one more judgment of which Shri Bhattacharya, learned Additional Solicitor General, appearing on behalf of the Department, has placed reliance. That is the judgment of this Court in Rajasthan State Electricity Board Vs. Associated Industries Anr., reported in AIR 2000 SC 2382. In that case, the only question that arose for consideration was whether pumping out water from the mines came within the meaning of the word manufacture, production, processing or repair of goods so as to claim exemption from duty under Notifications issued under Section 3(3) of the Rajasthan Electricity Duty Act, 1962. In that case, the first respondent was a registered public limited company, engaged in excavating stones from collieries and thereafter cutting and polishing them into slabs. The Rajasthan State Government levied excise duty under the provisions of the Act. A Notification dated 23rd March, 1962 was issued by the State under Section 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also concerned with the connotation of the word "production" in Section 80IA of the Income Tax Act, 1961, which, as stated herein-above, has a wider meaning as compared to the word "manufacture". Further, when one refers to the word "production", it means manufacture plus something in addition thereto. The word "production" was not under consideration before this Court in the case of Aman Marble Industries Pvt. Ltd. (supra). Be that as it may, in that case, it was held that "cutting" of marble blocks into slabs per se did not amount to "manufacture". This conclusion was based on the observations made by this court in the case of Rajasthan State Electricity Board (supra).In our view, the judgment of this Court in man Marble Industries Pvt. Ltd.(supra) also has no application to the facts of the present case.One of the most important reasons for saying so is that in all such cases, particularly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of investment allowance under Section 32A of the Income Tax Act. In that matter, it was argued on behalf of the Revenue that extraction and processing of iron ore did not produce any new product whereas it was argued on behalf of the assessee that it did produce a distinct new product. The view expressed by the High Court that the activity in question constituted "production" has been affirmed by this Court in Sesa Goa's case saying that the High Court's opinion was unimpeachable. It was held by this Court that the word "production" is wider in ambit and it has a wider connotation than the word "manufacture". It was held that while every manufacture can constitute production, every production did not amount to manufacture. 19. In our view, applying the tests laid down by this Court in Sesa Goa's case (supra) and applying it to the activities undertaken by the respondents herein, reproduced herein-above), it is clear that the said activities would come within the meaning of the word "production". 20. 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 Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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