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TMI Blog2017 (3) TMI 1951X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Tribunal whereby Tribunal has dismissed the appeal preferred by the department and allowed the appeal preferred by the assessee. 2. This court while admitting the appeal on 26.8.2009 has framed following substantial question of law:- Whether in the facts and circumstances of law, the ITAT was justified in holding that the assessee was eligible for exemption u/s 10BA of the IT Act inspite of the fact that the assessee was not fulfilling the required conditions which was proved during the course of survey proceedings and was evident from the purchases made through form No.17 of sales tax? 3. The facts of the case are that the appellant was proprietor of M/s. Alokik which carried out the business of manufacturing and trading of wooden furniture. The entire turnover of Rs.11,79,38,952/- was the export turnover and a net profit of Rs.2,77,58,643/- has been shown thereupon. The appellant has claimed exemption of the said profit u/s 10BA. The appellant in the return of income has further made a note that the profits and gain of such undertaking are exempt U/s 10BA from A.Y. 2004-05 and such profits are also eligible for the deduction U/s 80 IB of the I.T. Act but since exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (seller) is entitled not to make payment of sale tax on such goods. The use of such goods is simply to identify the goods sold by the dealer (seller) and the one exported by the buyer appellant are the same. There is no requirement as such in the Rule and Form that the goods so purchased by the buyer appellant has to be exported as such i.e. in the same condition in which it was purchased without any change. Such goods can not he read as the same. The certificate page 14 given by the buyer appellant in Form ST 17B also supports this interpretation wherein the goods purchased by the buyer appellant has to be identified with reference to purchase order no., challan no. Etc. Otherwise also, instead of drawing inference to reach to the conclusion whether the activities tantamount to manufacturing/production, the better course for the authorities below was, to consider the various activates undertaken by the appellant after the purchases of the raw material, which has been discussed in detail in the earlier part. There was no warrant to jump to the provisions of the Sales Tax laws which otherwise do not support the case of the Revenue. We find the contention of the ld. CIT DR contradict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 27. It was held that Section 80HHC was incorporated with the object of granting incentive to earners of foreign exchange. This court is Sea Pearl Industries vs CIT (2001)2 SCC 33 also observed that the object of selection 80HHC is to grant incentive to earners of foreign exchange. In IPCA Laboratory Ltd vs Dy. CIT(2004) 12 SCC 742 this court has taken the same view. This court in the said judgment observed that S. 80 HHC has been incorporated with a view to provide incentive to export house and this section must receive liberal interpretation. The totality of facts and circumstances and in view of the factual position and evidences, we are fully satisfied that the appellant was engaged in the manufacturing and production of the eligible articles under the provision of 10BA and hence the appellant is fully to entitled to get the deductions. The AO is therefore directed to allow the same. Thus Ground No. 2 of the assessee is allowed. 6. He further contended that in view of the decision of this court in D.B. Income Tax Appeal No.25/2009 other connected cases (Commissioner of Income Tax, Jaipur-II vs. M/s Manglam Arts ), decided on 14.2.2017 wherein it has been held as under:- In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 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 Section 80IA of the Income Tax Act. As stated herein- above, the judgment of this Court in Aman Marble Industries Pvt. Ltd. was not required to construe the word production in addition to the word manufacture . One has to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anite blocks into slabs and polishing them for bringing them to the stage of usability as an activity of industrial undertaking engaged in manufacture and production of articles or things. Rules framed under the Act are statutory and became part of Statute. Thus under the Scheme of Income Tax Act and Rules framed thereunder for the purpose of said Act cutting and polishing of marble and granite blocks have been held to be an industrial activity of manufacture. As a block, it is not of any use and has been held to be a manufacturing industry for the purpose of Income Tax Act. It may be pertinent to notice that even as per its circular, the Central Board of Direct Taxes (vide Circular No. 729 dt: 1st November, 1995) has considered granite as a mineral, and any process applied makes it valuable marketable commodity. Board has clarified that: The Board is, therefore, of the view that white granite can alone be 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. As we have already noticed that the interpretation given under Excise Act cannot ipso facto be bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitute manufacture or production in terms of Section 80-IA of the Act. The learned counsel for the revenue is not in a position to controvert the submissions so made on behalf of the assessee-appellant. Having gone through the decision of the Hon ble Supreme Court in Arihant Tiles and Marbles (Supra), the view as taken by the ITAT cannot be sustained. Accordingly, the Tribunal was not justified in disallowing the benefit available to the assessee under Section 10-B of the Income Tax Act; and the view as taken by the Tribunal does not stand in conformity with the law declared by the Hon ble Surpeme Court in the case of Income Tax Officer Vs. M/s Arihant Tiles Marbles P. Ltd. (2010) 320 ITR 79. Accordingly, the appeal as filed by the revenue before ITAT (ITA No.357/JU/2008) for the assessment year 2004-05 shall stand dismissed as regards the claim under Section 10-B of the Act. 8. We have heard counsel for the parties. 9. The contentions which are raised by the department regarding error being committed by the Tribunal, in our opinion, is not sustainable. The analogy which has been adopted by the tribunal is required to be affirmed and decision of earlier judgment of Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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