TMI Blog2005 (8) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... al under section 260A of the Income-tax Act, 1961, is at the instance of the Revenue. The appeal has been admitted on the following substantial questions of law: "I. Whether, on the facts and in the circumstances, the Income-tax Appellate Tribunal was justified in holding that the assessee is entitled for deduction on account of investment allowance, by ignoring the fact that the assessee is engaged only in processing activity and not in production and manufacturing of any article or thing, ignoring the decision of the hon'ble Supreme Court in the case of CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412? II. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal, was justified in allowing the claim of the assessee of Rs. 90,000 being fees paid to the Registrar of Companies for increasing the authorised capital of the company for the purpose of issuing bonus shares, based on the decision of the hon'ble Bombay High Court in the case of Bombay Burmah Trading Corporation Ltd. v. CIT [1984] 145 ITR 793, ignoring the decision of the hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. v. CIT [1997] 225 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial from one form to another altogether and does not continue to be in the same form, as was found in the earth before excavation. When such complicated process is involved, it cannot be said that there is no manufacturing activity because what is brought into existence is iron ore. Thus it must be stated that the process involved is a manufacturing activity. It may be noted that what the Division Bench of the Karnataka High Court observed was that mere removing from the earth by itself is not manufacture, but various processes which thereafter are applied would amount to manufacture. The next judgment we have is the case of CIT v. Mysore Minerals Ltd, (No. 1) [2001] 250 ITR 725 (Karn). This was a case in respect of mining of granite. The Division Bench held that it would amount to manufacture relying on an earlier judgment in the case of CIT v. Mysore Minerals Ltd. [1994] 205 ITR 461 (Karn). The criticism against this judgment is that this judgment relied upon an earlier judgment in the case of Mysore Minerals, which has been reversed by the apex court in CIT v. Mysore Minerals Ltd. [2001] 247 ITR 301, and as such would no longer be a good law. Considering that aspect, we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Budharaja and Co. [1993] 204 ITR 412. The apex court noted in the said judgment that the word 'production' or 'produce' 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. Three High Courts, at least, have taken the view that the extraction of ore would amount to 'production'. We first have the judgment of the Andhra Pradesh High Court in CIT v. Singareni Colleries Co. Ltd. [1996] 221 ITR 48. A Division Bench of the Andhra Pradesh High Court was considering the expression 'production'. The Andhra Pradesh High Court noted the argument of the Revenue against the finding of the Tribunal which had held that extracting coal or winning coal from a coal mine is an article or thing produced. The argument was then noted that the contention of the Revenue that coal which is extracted from the mine is not an article or thing. What was contended is that winning or excavating coal is not an activity of production. The learned Division Bench then relied on the judgment in the case of CIT v. N.C. Budharaja and Co. [1993] 204 ITR 412 (SC) and also placing reliance on Webster's New Internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that earlier under section 33 of the said Act, an assessee would have been entitled to the benefit of development rebate, which is no longer available. Iron ore was specifically included in the Fifth Schedule and, consequently, was entitled to the development rebate. The Act also contains internal evidence to show that the Legislature has treated raw ore differently from processed ore. A Division Bench of this court in CIT v. Emirates Commercial Bank Ltd. [2003] 262 ITR 55, has given the benefit even in respect of data processing done on computers. In other words, the legislation being a beneficial piece of legislation, an expanded meaning should be so given and has to be given." In view of the aforesaid decision with which we concur, it cannot be said that the extraction of ore would not amount to "production". The assessee, was therefore, entitled for deduction on account of investment allowance. As regards the substantial question of law No. II, learned counsel for the Revenue heavily relied upon the judgment of the Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. v. CIT [1997] 225 ITR 792. In that case, the question before the apex court was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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