TMI Blog2013 (4) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... istinct and different from the original raw material. After conversion of raw material assembling of parts and after testing the machineries the same are packed in various parts and dispatched to the customers where the erection is done. The aforesaid facts could not be controverted by Revenue by bringing any contrary material on record. What is find from the process indicated hereinabove is that there are various stages through which the blocks have to go through before they become polished slabs addition tiles. In the circumstances there is certainly an activity which will come in the category of 'manufacture' or 'production' under section 80-IA of the Income Tax Act. As find from the facts of the case in the year under appeal are identical to that of A.Y. 2005-06 also find that certain new facts were brought on record by the Assessing Officer like on production of lorry receipts by assessee before A.O. to prove that the goods have not been manufactured by the assessee. CIT (A) has followed the order of A.Y. 2005-06 while deciding the appeal of A.Y. 2006-07. Thus the additional facts brought on record by A.O. should have been considered by CIT (A) while passing the order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Rs.3,01,948/-. Further he also observed that the major expenses incurred by the assessee was on account of labour charges payment which amounted to Rs. 1,63,48,399/- which according to A.O. proved that the work was done outside the assessee's own factory. A.O. further observed that the various machineries sold by the assessee were assembled at the processing unit of the customers and not manufactured by the assessee. A.O. asked the assessee to justify its claim of deduction. In response to the show cause notice issued by the A.O., assessee interalia submitted complete manufacturing process. It was further submitted that the assessee was paying excise duty on the goods manufactured by it. With respect to the lower electricity expenses the assessee submitted that it was due to the defective electrical meters installed by the electricity department. After considering the submissions made by the assessee A.O. concluded that whatever processing is claimed to have been done by the assessee was in the nature of assembling and the assessee was not engaged in manufacturing activity. A.O. further concluded that assembling is neither manufacturing nor production. A.O. thus concluded that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the business of the appellant is shown as a manufacturing activity. Further, the A.O's objection that the appellant got SSI Registration on 21-7-2005 only and therefore no manufacturing activity could have been undertaken by the appellant before that date is also not in order. It is seen that the appellant was granted a provisional SSI Registration dated 9-12-2003 which was subsequently converted to a permanent certificate and so the business activity of appellant could very well have started prior to 31- 3-2004. A perusal of the remand report indicates that the A.O. has not commented on the submissions of the appellant but has only given details of questionnaire issued for A.Y. 2006-07 and has stated that details called for by the Assessing Officer were not furnished. This has no relevance to the year under appeal. Therefore, it is seen that the A.O. has not deliberated upon the submissions made by the appellant. The appellant has also been granted an electrical connection vide letter dated 30-12-2003 with a load of 50 HP. The appellant is in the business of manufacture and sale of Textile Machineries and Texturising and Winding Machines which are the end products of conversion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be packed into manageable pieces to be installed at the premises of the buyers and for this installation; the appellant's contractor would be the most appropriate persons. Therefore, this activity leads to the conclusion that no manufacturing activity was carried out by the appellant at its own premises. Therefore, I am of the considered view that the appellant's activity is a manufacturing activity and deduction u/s. 80IB of the Act has to be allowed as per the provisions of the Act. In the result, the appeal is allowed." 8. Aggrieved by the aforesaid order of CIT (A), the Revenue is now in appeal before us. 9. Before us the Ld. D.R. submitted that though the assessee has claimed to have sold goods worth more than Rs.14.63 crores, its investment in the plant and machineries was only to the extent of Rs.7 lakhs. He further pointed out that the total expenditure incurred on power and fuel was to the extent of Rs. 61,000/-. He thus submitted that on the basis of the machineries which the assessee owns and the expenditure incurred on power and fuel it cannot be said that the assessee was having capacity to assemble the machineries at its premises. He further submitted out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to be engaged in the assembling and not manufacturing. CIT (A) while granting the deduction has held that the goods manufactured by the assessee are subject to payment of Excise Duty. He has further given a finding that as per the Registration Certificate for the Sales Tax and Central Sales Tax Act the business of the is shown to be "manufacturing activity", the assessee has been granted provisional SSI Registration prior to 31st March, 2004 the assessee has been granted electrical connection vide letter dated 30-12-2003 with load of 50 HP. He has further given a finding that though most of the job has been got done by the assessee from outside parties final process has been undertaken at the assessee's factory premises and which is evident from the Excise Duty payment made by the assessee. He has also given a finding after considering the bills of raw material used and the sales bills that the product sold by the assessee is distinct and different from the original raw material. After conversion of raw material assembling of parts and after testing the machineries the same are packed in various parts and dispatched to the customers where the erection is done. The aforesaid fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, we are also concerned with the activity of polishing and ultimate conversion of blocks into polished slabs addition tiles. What we find from the process indicated hereinabove is that there are various stages through which the blocks have to go through before they become polished slabs addition tiles. In the circumstances, we are of the view that o the facts of the cases in hand, there is certainly an activity which will come in the category of 'manufacture' or 'production' under section 80-IA of the Income Tax Act. As stated hereinabove, the judgment of this Court in Aman Marble Industries (P) Ltd.'s case (supra) 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 80-IA. In this connection, our view is also fortified by the following judgments of this Court which have been fairly pointed out to us by Ld. Counsel appearing for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, viz., rim, tyre, tube, bearing, drum, spoke, nipple and collar, by carrying out intermittent processes - Whether process of assembling carried out by assessee amounted to manufacture or production of an article and, accordingly, he would be entitled to deduction under section 80-IB - Held, yes." 17. In the case of CIT vs. Sophisticated Marbles Granite Industries (2010) 187 Taxman 251 (Delhi) has held as under:- Head Note:-"Section 80-IB of the Income Tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings - Assessee was engaged in manufacture and sale of marble stones - For that purpose, it after purchasing of blocks of marble slabs and getting them cut by cutting machines from outside, put full sized fibre on one sale of slabs which was technically required to give support to slabs; filled holes and cracks in those slabs to make them marketable by applying chemicals on holes and cracks; polished slabs by different machines for bringing shine o slabs and thereafter cut finished slabs to proper sizes and shapes from which marketable size of slabs, molded pieces, edged pieces and tiles were made -whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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