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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 ..... 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 U/s 10BA has been claimed, therefore, no profit remains for the deduction U/s 80 IB. The AO has specified that about 76% of the expenditure other than purchases were on packing and polishing which shows that the appellant was not engaged in the manufacturing activity in the real sense. He had also given a chart of the assessment order showing that the appellant is making ready-made purchase of furniture items and export the same after polishing and packing. The AO has given a finding that no new item was manufactured or produced by the assessee for export. He has discussed that since stock of finished goods was more as compared to consumable material, therefore, it is clear that the appellant is purchasin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contradictory in as much as with regard to the certification by the custom authorities as to the nature of the export of the disputed articles of being of artistic value, whereas by drawing inferences only, it is argued that no activity was carried out and it was a matter of simple purchases. Such an approach of the Revenue is disapproved. We further agree with the contention of the ld. Counsel that the use of the machinery is only to prepare the wood purchased by the appellant with a view to make it fit for further technical steps to be carried out by artisions. It is nothing but a prepatory stage, before handwork is commenced. The machine work is confined to seasoning of wood which normally contains moistur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 view of the observations made by the Supreme court in the case of Income Tax Officer, Udaipur Vs. Arihant Tiles and Marbles (P) Ltd. (supra), we are of the opinion that the process which has been prescribed by the Tribunal in para 10 clearly covers the process and will cover under section 10BA. Therefore, in our view, the view taken by the Tribunal is just and proper and no interference in the judgment of the Tribunal is called for. The issue is answered in favour of the assessee and against the department." 7. He also relied upon the following decisions:- (i) In Income Tax Officer vs. Arihant Tiles & Marbles (P) Ltd. reported in (2010) 320 ITR 0079 (SC) holding as under:- "At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove 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 the scheme of the Act also while deciding the question as to whether the activity constitutes manufacture or production. Therefore, looking to the nature of the activity stepwise, we are of the view that the subject activity certainly constitutes "manufacture or production" in terms of Section 80IA. In this connection, our view is also fortified by the following judgments of this Court which have been fairly pointed out to us by learned Counsel appearing for the Department. Applying the above tests laid down by this Court in Budharaja's case (supra) to the facts of the present cases, we are of the view that blocks converted into polished slab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular, 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 brought here while interpreting the expression under the Income Tax Act. Apart from that, we find that even under the Central Excise Act, the Legislature quickly intervened and inserted in Chapter XXV Note 6 declaring that process of cutting, sawing, sizing or polishing or any other process of converting block into slabs and tiles shall amount to manufacture. Thus, the activity of cutting marble blocks into slabs under the Central Excise Act too now governed by Statutory provisions, and amounts to manufacturing. The principle aptly applies to present case. Here also, the original commodity namely marble block could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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