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2014 (9) TMI 261 - AT - Income TaxClaim of deduction u/s 80IC disallowed – Cutting and polishing amounts to manufacture/production or not – Held that:- In Aspin Wall & Co. Ltd. v/s CIT [2001 (9) TMI 3 - SUPREME Court] it has been held that in the absence of a definition of the word “manufacture” it has to be given a meaning as it is understood in common parlance - the production of article for use from raw material or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines - If the change made in the article results in a new and different articles, then it would amount to manufacturing activities - going by the new definition of “manufacture” as envisaged in section 2(29BA), the process of transformation of rough diamond into polished diamond, results into a new and distinct or article having different name and use - the entire process of transformation in this case can be held as manufacturing within the ambit of section 80IC. what is required to be examined is the process undertaken for conversion of raw / rough diamonds into superior or polished diamond - the assessee has duly placed on record the entire process and the stages through which the rough diamond undergoes for becoming the polished diamond, which is a separate and distinct product and has a different usage - Such a process has neither been rebutted by the Revenue nor any other counter opinion have been sought to contradict the assessee’s version of the process - once the entire process of cutting and polishing of diamond have not been rebutted and also the fact that the rough and polished diamond are two distinct commodity having different usage, not only in the common parlance but also in real sense, then it has to be understood that the cutting and polishing of diamond amounts to manufacturing or production of article or thing as envisaged for the purpose of claiming deduction u/s 80IC - the order of the CIT(A) is set aside and assessee’s claim for deduction u/s 80IC is allowed – Decided in favour of assessee.
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