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2019 (5) TMI 1308 - AT - Income TaxAddition u/s 80-I &80-IA - in respect of industrial unit No. 1 & 2 - grinding units for soap stone - AO denied the claim 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 - CIT(A) upheld on the ground that primarily the certificate in Form No. 10CCB was incomplete to the extent of computing of amount of deduction was not mentioned in the said certificate and secondly unit no. 2 was not having the necessary infrastructure to carry out the activity has been claimed by the assessee - proof of production or manufacturing HELD THAT:- 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 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 desired size and grade of soap stone powder. These different grades of soap powder is being used by different industries and the assessee is accordingly converting raw soap stone into powder as per requirement of industries. Therefore, the outcome being the soap stone powder of different grades is a different and distinct marketable article from the input which is raw boulder soap stone. Accordingly, the process which is undertaken by the assessee is production and manufactured eligible for deduction U/s 80I & IA of the Act. AR has also filed the balance sheet of these years to show the closing stock of the preceding year is reflected as opening stock of the subsequent year in the financial accounts of the assessee and therefore, the assessee has produced all the requisite details and material to show that the claim of deduction under the provisions of U/s U/s 80I & IA of the Act is in order. Accordingly, we set aside the orders of the authorities below and allow the claim of the assessee - Decided in favour of assessee.
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