TMI Blog2017 (2) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA, HON BLE ACCOUNTANT MEMBER For The Assessee : Shri T. Chaitanya Kumar Adv. For The Department : Shri M.N.M. Naik Sr. DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals-1), Guntur, dated 27/03/2015 for the Assessment Year 2006-07. 2. Facts of the case, in brief, are that the assessee is in the business of granite quarry, cutting and polishing of slabs tiles, filed its return of income by claiming additional depreciation on plant machinery to the tune of ₹ 62,78,247/-. The Assessing Officer has disallowed the claim of the assessee on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the assessee s activities would fall within the meaning of manufacture or production of article or thing has been considered by the Hon'ble Supreme Court in the case of M/s. Arihant Tiles Marbles (P) Ltd. (supra) wherein it has been held as under:- 15. In the present case, we have extracted in detail the process undertaken by each of the respondents before us. In the present case, we are not concerned only with cutting of marble blocks into slabs. In the present case we are also concerned with the activity of polishing and ultimate conversion of blocks into polished slabs and tiles. What we find from the process indicated herein-above is that there are various stages through which the blocks have to go through before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or production of any article or thing. The High Court in Sesa Goa case,(2004) 13 SCC 548:271 ITR 331 (SC) while dismissing the appeal preferred by the Revenue, held that extraction and processing of iron ore did not amount to manufacture . However, it came to the conclusion that extraction of iron ore and the various processes would involve production within the meaning of Section 32A(2)(b)(iii) of the Income Tax Act, 1961 and consequently, the assessee was entitled to the benefit of investment allowance under Section 32A of the Income Tax Act. In that matter, it was argued on behalf of the Revenue that extraction and processing of iron ore did not produce any new product whereas it was argued on behalf of the assessee that it did produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Central Excise and the Sales Tax laws. The test for determining whether manufacture can be said to have taken place is whether the commodity, which is subjected to a process can no longer be regarded as the original commodity but is recognised in trade as a new and distinct commodity. The word production , when used in juxtaposition with the word manufacture , takes in bringing into existence new goods by a process which may or may not amount to manufacture. The word production takes in all the byproducts, intermediate products and residual products which emerge in the course of manufacture of goods. 20. Applying the above tests laid down by this Court in Budharaja's case 1994 Supp (1) SCC 280 : (1993) 204 ITR 412 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and cutting to size marbles before export would not amount to manufacture-CIT(A) opined that Assessee was entitled to additional depreciation as he was engaged in manufacture or production of an article or thing-Held, as per S. 32(l)(ii)(a)/ Assessee must be engaged in business of manufacture or production of any article or thing-Chemical and physical composition of raw iron ore was transformed into export and marketable commodity with required acceptability of foreign buyer by Assessee-Process of changing original product with chemical composition and physical changes would amount to manufacture or production-Conclusion of AO that Assessee did not carry on manufacture or production activity was erroneous-As per case of CIT v. Sesa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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