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2021 (7) TMI 185 - AT - Income TaxDeduction u/s 80IC - whether process of deriving the finished products amount to manufacture? - HELD THAT:- It is very much clear that the assessee is a manufacturer of finished products eligible for deduction under section 80IC of the Act. The revenue has not controverted the various factual findings of Commissioner (Appeals) regarding the manufacturing process undertaken by the assessee. In any case of the matter, it is a fact on record that the aforesaid manufacturing activity is being carried on by the assessee from the preceding assessment years. As decided in own case [2020 (5) TMI 683 - ITAT MUMBAI] applying the tests laid down by this Court in CIT Vs. N.C. Budharaja and Co. [1993 (9) TMI 6 - SUPREME COURT] to the facts of the present cases, we are of the view that blocks converted into polished slabs and tiles after undergoing the process indicated above certainly results in emergence of a new and distinct commodity. The original block does not remain the marble block, it becomes a slab or tile. In the circumstances, not only there is manufacture but also an activity which is something beyond manufacture and which brings a new product into existence and, therefore, on the facts of these cases, we are of the view that the High Court was right in coming to the conclusion that the activity undertaken by the respondents-assessees did constitute manufacture or production in terms of Section 80IA of the Income Tax Act, 1961. Also If the contention of the Department is to be accepted, namely that the activity undertaken by the respondents herein is not a manufacture, then, it would have serious revenue consequences. As stated above, each of the respondents is paying excise duty, some of the respondents are job workers and the activity undertaken by them has been recognized by various Government Authorities as manufacture. To say that the activity will not amount to manufacture or production under Section 80IA will have disastrous consequences, particularly in view of the fact that the assessees in all the cases would plead that they were not liable to pay excise duty, sales tax etc. because the activity did not constitute manufacture. Keeping in mind the above factors, we are of the view that in the present cases, the activity undertaken by each of the respondents constitutes manufacture or production and, therefore, they would be entitled to the benefit of Section 80IA of the Income Tax Act, 1961 Thus we hold that assessee is engaged in manufacturing and production of an article and therefore, the assessee shall be entitled for the deduction available u/s 80IC - Decided in favour of assessee.
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