TMI Blog2010 (12) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... REME Court) is distinguishable on the facts of that case - Held that: conversion of marble blocks into slabs and tiles amounts to manufacture of thing or article within the meaning of section 80-IA/80-IB entitled to claim deduction thereunder - The undertaking of the assessee employed 10 or more workers which carried on the manufacturing process with the aid of power and where the manufacturing activity is carried out with the aid of power, then requirement as per section 80-IB is to employ workers 10 or more. In the case of the assessee there are 15 workers employed. Copies of power bills are also placed in the compilation - Decided in the favour of assessee - I.T.A. No. 671/JP/2009 - - - Dated:- 10-12-2010 - R.K. Gupta M.L. Gusia, JJ. Sanjay Kumar for the Appellant Siddarth Ranka for the Respondent ORDER R.K. Gupta (Judicial Member).- This is an appeal by the Department and the cross-objection by the assessee against the order of the learned Commissioner of Income-tax (Appeals) relating to the assessment year 2002-03. First we will take the cross-objection, filed by the assessee whereby reopening of the assessment by issuing notice under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Lucky Minmat P. Ltd. [2000] 245 ITR 830, the deduction was claimed under section 80HH whereas in the instant case the claim of deduction is under section 80-IA/80-IB. It was further submitted that the assessee in the case of Gem India Manufacturing Co. [2001] 249 ITR 307 deals with diamonds, where minor cutting and polishing is applied and which do not undergo the process of sawing, whereas in the instant case the whole process of sawing by using state of the art high technology is required. The assessee has already fulfilled all the conditions laid down under section 80-IA/80-IB of the Act. Therefore, reopening of assessments is bad in law. It was also stated that in various other decisions, the hon'ble Supreme Court has held that such activities are manufacturing activities. Reliance is placed on the decision in the cases of CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC), Chowgule and Co. P. Ltd. v. Union of India [1981] 47 STC 124 (SC). It was further submitted that in a recent decision, i.e., in the case of ITO v. Arihant Tiles and Marbles P. Ltd. [2010] 320 ITR 79 the hon'ble Supreme Court after taking into consideration the decision in the case of Lucky Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that reopening of the assessment was bad in law. Accordingly we confirm the action of the Assessing Officer in reopening of the assessment. Accordingly, the ground of the assessee raised by way of cross-objection is rejected. Now we will take up the appeal of the Department. Ground No. 1 in appeal of the Department is against deleting the addition of Rs.13,17,337 made by way of disallowance of deduction under section 80-IB of the Income-tax Act. The Assessing Officer disallowed the deduction claimed under section 80-IB as in his view the decision of the hon'ble Supreme Court in the case of Lucky Minmat P. Ltd. [2000] 245 ITR 830 squarely applicable on the facts of the present case where similar activities were done as in case of assessee. The Assessing Officer also placed reliance on the order of Gem India Manufacturing Co. [2001] 249 ITR 307 and according to him the ratio of this decision is also applicable on the facts of the present case. The Assessing Officer also disallowed deduction for the reason that required conditions are not satisfied as nothing has been filed in support. Before the learned Commissioner of Income-tax (Appeals) it was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l No.212 of 2007-08 vide order dated November 23, 2007 following the decision in the case of Arihant Tiles and Marbles P. Ltd. [2007] 295 ITR 148 (Raj), the issue has been decided in favour of the assessee. Copy of that order was also filed. In respect of the remand report sent by the Assessing Officer, it was submitted that the Assessing Officer has failed to controvert any of the objections raised and the submission made by the assessee, which would evidently lead to only one conclusion that the activity of the assessee is of manufacturing. The learned Commissioner of Income-tax (Appeals) after considering the submissions and perusing the order of the Assessing Officer along with remand report held that the assessee deserves to succeed on this issue. Accordingly, he allowed the deduction claimed by the assessee. The learned Departmental representative placed reliance on the order of the Assessing Officer. It was further, submitted that though the decision of the hon'ble Rajasthan High Court in the case of Arihant Tiles and Marbles P. Ltd. [2007] 295 ITR 148 has been affirmed by the hon'ble Supreme Court in 320 ITR 79, however, the facts involved in the case of the assessee ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required by the Bench. We have heard the rival submissions and considered them carefully. After considering the submissions and perusing the material on record, we feel that the order of the learned Commissioner of Income-tax (Appeals) does not suffer from any infirmity. The Assessing Officer disallowed the claim of the assessee for deduction under section 80-IB relying on the decision of the hon'ble Supreme Court in the cases of Lucky Minmat P. Ltd. [2000] 245 ITR 830 and Gem India Manufacturing Co. [2001] 249 ITR 307 holding that the business of the assessee was similar to the Lucky Minmat and Gem India Manufacturing Co. It is noticed that the Assessing Officer has not demonstrated the nature and extent of similarity between the business of Lucky Minmat and Gem India Manufacturing Co. The hon'ble Rajasthan High Court in the case of Arihant Tiles and Marbles P. Ltd. [2007] 295 ITR 148 has examined the issue in depth and found that the decision of Lucky Minmat P. Ltd. [2000] 245 ITR 830 is distinguishable on the facts of that case. In that case the assessee was doing business of sawing marble stones, thereafter cutting and polishing the same converting into tiles for a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab 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, the High Court was right in coming to the conclusion that the activity undertaken by the respondents did constitute manufacture or production in terms of section 80-IA ?" While holding as above, the hon'ble Supreme Court has taken into consideration the decisions in the cases of CIT v. Sesa Goa Ltd. [2004] 271 ITR 331, CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 the decision of Lucky Minmat P. Ltd. [2000] 245 ITR 830 and other decisions were found distinguishable by the hon'ble apex court. The distinguishable features have been explained by the court in paragraph 11 of its order. It has been clearly mentioned that in the case of Lucky Minmat P. Ltd. [2000] 245 ITR 830 there was mere mining of limestone activity. It has been further observed in the last line of paragraph 11 that (page 84 of 320 ITR) "The activity of conversion into lime and lime dust, according to this court, in the case of Lucky Minmat P. Ltd. [2000] 245 ITR 830 certainly constituted a manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [2010] 320 ITR 79 and in the case of Lucky Minmat P. Ltd. [2000] 245 ITR 830, we find that the hon'ble apex court in the case of Arihant Tiles and Marbles P. Ltd. [2010] 320 ITR 79 has clearly held that the conversion of marble blocks into polished slabs is activity of manufacture or production. The facts of the assessee's case are similar to the facts involved in the case of Arihant Tiles and Marbles P. Ltd. [2010] 320 ITR 79. Therefore, we see no reason to interfere with the finding of the learned Commissioner of Income-tax (Appeals) who, following the decision in the case of Arihant Tiles which has been affirmed by the hon'ble Supreme Court, has allowed the claim of the assessee. We have seen that other conditions are also satisfied in this case. Copy of ledger account showing list of workers is placed on record. The undertaking of the assessee employed 10 or more workers which carried on the manufacturing process with the aid of power and where the manufacturing activity is carried out with the aid of power, then requirement as per section 80-IB is to employ workers 10 or more. In the case of the assessee there are 15 workers employed. Copies of power bills are also p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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