TMI Blog2017 (2) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matters has dismissed the appeals of the Department as well as in some of the cases where cross-objections were filed by the assessee, dismissed the same. 2. This court while admitting Appeal No. 25 of 2009 on April 11, 2012 has framed the following substantial question of law : Whether in the fact and circumstances of the case the Income-tax Appellate Tribunal was justified in law in directing to allow deduction under section 10BA in spite of the fact that the assessee was not fulfilling the conditions laid down in the Act for claiming the said deduction ? 2.1. This court while admitting Appeal No. 2 of 2012 on April 25, 2012 has framed the following substantial question of law : (i) Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the asses see was eligible for exemption under section 10BA of the Income-tax Act despite the fact that the assessee was not fulfilling the required conditions which was proved during the course of survey proceedings and was evident from the purchases made through form 17B of sales tax ? (ii) Whether in the facts and circumstances of law, the Income-tax Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also taken us to the provisions of section 10BA which reads as under : 10BA. Special provisions in respect of export of certain articles or things.-(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export out of India of eligible articles or things, shall be allowed from the total income of the assessee : Provided that where in computing the total income of the under taking for any assessment year, deduction under section 10A or section 10B has been claimed, the undertaking shall not be entitled to the deduction under this section : Provided further that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years. (2) This section applies to any undertaking which fulfils the following conditions, namely :- (a) it manufactures or produces the eligible articles or things without the use of imported raw materials ; (b) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no deduction shall be allowed under any other section in respect of its export profits. (7) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the undertaking referred to in this section as they apply for the purposes of the under taking referred to in section 80-IA. Explanation.-For the purposes of this section,- (a) 'convertible foreign exchange' means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999), and any rules made thereunder or any other corresponding law for the time being in force ; (b) 'eligible articles or things' means all hand-made articles or things, which are of artistic value and which require the use of wood as the main raw material ; (c) 'export turnover' means the consideration in respect of export by the undertaking of eligible articles or things received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (3), but does not include freight, tele communica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... little difficulty in holding that the raw and uncut diamond is subjected to a process of cutting and polishing which yields the polished diamond, but that is not to say that the polished diamond is a new article or thing which is the result of manufacture or production. There is no material on the record upon which such a conclusion can be reached. The appeal is, therefore, allowed. The order under challenge is set aside. The question quoted above is answered in the negative and in favour of the Revenue. The assessee shall pay to the Revenue the costs of the appeal. 5. He has contended that the view taken by the Tribunal is required to be reversed in view of the observations made by the Supreme Court. 6. Mr. Jhanwar, counsel for the respondent has taken us to the judgment of the Tribunal and contended that while considering the process which has been undertaken by the assessee, the Tribunal has observed as under : The various activities carried out by the appellant, are as under : (i) Firstly, the appellant purchases wood, semi-finished material which requires further wood and other work of beautification and of artistic value. There apart, the other raw mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se did not amount to 'manufacture'. This conclusion was based on the observations made by this court in the case of Rajasthan State Electricity Board v. Associated Stone Industries, AIR 2000 SC 2382. In our view, the judgment of this court in Aman Marble Industries P. Ltd. [2003] 157 ELT 393 (SC) also has no application to the facts of the present case. One of the most important reasons for saying so is that in all such cases, particularly under the excise law, the court has to go by the facts of each case. In each case one has to examine the nature of the activity undertaken by an assessee. Mere extraction of stones may not constitute manufacture. Similarly, after extraction, if marble blocks are cut into slabs that per se will not amount to the activity of manufacture. In the present case, we have extracted in detail the process under taken 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 hereinabove is that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question constituted 'production' has been affirmed by this court in Sesa Goa's case [2004] 271 ITR 331 saying that the High Court's opinion was unimpeachable. It was held by this court that the word 'production' is wider in ambit and it has a wider connotation than the word 'manufacture'. It was held that while every manufacture can constitute production, every production did not amount to manufacture. 8. He has contended that the word production is to be construed as a wider meaning than manufacture and in view of the observations made by the Supreme Court, the view taken by the Tribunal is just and proper. 9. Mr. Mathur has also contended that regarding second issue with regard to ESI and PF, however, the same is covered by the decision of this court in the case of CIT v. State Bank of Bikaner and Jaipur D. B. Income Tax Appeal No. 177 of 2011 decided on January 6, 2014 - [2014] 363 ITR 70 (Raj) wherein it has been held as under (page 81) : Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Acts but before filing of the return of income under section 139(1), cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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