TMI Blog2001 (11) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to deduction under section 80-1 of the Act?" Although the questions are required to be answered separately, it may be profitable to note the facts of the matter at the outset. The respondent is a company engaged in the business of manufacture of cement production for which limestone has to be extracted. It has its own refractories division. The company during the assessment year 1972-73 claimed depreciation on the scientific equipment of the value of Rs.1,47,305. The said claim was allowed. In relation thereto the first question has been referred to this court for its opinion. As regards the question it may be noticed that there is no dispute with regard to the fact that the respondent industry is a priority industry. Its claim for relief under section 80-1 of the Act read with item No. 12 of Schedule VI appended thereto have been rejected on the ground that the said provision was not applicable. On appeal, the Appellate Assistant Commissioner pointed out that no doubt the profits of the assessee had arisen from the sale of cement but the profits of the assessee for commercial purpose should be computed at the various stages of production, namely, production of limesto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubtedly be computed separately in respect of the two activities carried on by the assessee which was already in existence in earlier year. Business of the assessee itself was production of limestone and manufacture and sale of cement. In the light of the principles laid down in the various cases cited by learned counsel and in particular the two decisions, one in the case of Tata Iron and Steel Limited [1963] 48 ITR 123 (SC) and the other of the Gujarat High Court in the case of Anil Starch Products Ltd. v. CIT [1966] 59 ITR 514, 1 am of the view that the assessee was entitled to relief under section 80-1 and the claim made by the assessee should have been allowed by the Income-tax Officer accordingly. The Income-tax Officer will now compute the admissible relief on the basis of the claim made by the assessee." Mr. Pandey, learned counsel appearing on behalf of the Revenue, would submit that having regard to the provisions contained in section 35(1)(iv) of the Act as the assessee had taken the benefit thereof, the question of claiming depreciation therefor in terms of section 35(2)(iv), which was inserted by the amending Act of 1971, with effect from April 1, 1972, item No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Assistant Commissioner, it is dear that mining of quarries of limestone and manufacture of cement constitute an integrated process. Learned counsel would urge that the said question stands squarely covered by a Supreme Court decision in the case of Tata Iron and Steel Co. Ltd. v. State of Bihar [1963] 48 ITR 123 (SC), as also the decisions of the Gujarat High Court in the case of CIT v. Saurashtra Cement and Chemical Industries Ltd. [1973] 91 ITR 170, the Calcutta High Court in the case of CIT v. Hindusthan Motors Ltd. [1981] 127 ITR 210 and the Madras High Court in the case of CIT v. Chitram and Co. Pvt. Ltd. [1991] 191 ITR 96. The fact that in the instant case, the assessee had been carrying on the mining operation of limestone for the purpose of manufacture of cement is not in dispute. From the order of the Appellate Assistant Commissioner, it stands admitted that not only a finding of fact has been arrived at to the effect that the activity of the assessee is not only confined to sale of cement but also production of limestone and manufacture of cement. It has further been found that it was not a case where the question arose in regard to earning of profit by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in order to determine the taxable income of an assessee. It is on account of this situation that section 59(2) of the Income-tax Act provides for rules being made for prescribing the manner in which and the procedure by which incomes derived in part from agriculture and in part from business shall be arrived at." We may notice that the learned Tribunal categorically held that the decision of the Supreme Court in Tata Iron and Steel Co. Ltd.'s case [1963] 48 ITR 123 (SC), fully covers the case of the assessee. It proceeded to hold: "Since it is common ground that the assessee excavates and produces limestone from its quarries, this is a business activity in which the assessee was engaged for purposes of earning profit. Section 80B(7) does not require that the business of producing an article or thing mentioned in the Sixth Schedule should be an independent business by itself and that it should not be an adjunct of some other business carried on by the assessee. We are, therefore, of the view that the production of limestone is an activity incidental to the assessee's business and, therefore, the assessee has to be held to be engaged in the business of producing limestone." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, quite right in holding that the manufacture of gears by the assessee which formed a component part in the cranes and winches manufactured by the assessee would entitle the assessee to relief under section 80-1 of the Act in respect of the portion of the profits attributable to such manufacture." In the aforementioned backdrop, the unreported decision of the Division Bench of this court in Dalmia Cement (Bharat) Limited (since reported in [2002] 253 ITR 725), has to be considered. Before this court a contention was raised that the assessee's business in quarrying the limestone was not covered by the activity envisaged under section 80-I of the Act. It was contended that what was utilised in the manufacture of cement is lime and admittedly limestone was not the product, which goes into the composition of cement. On the basis of the material on record, the Bench came to the conclusion that the assessee's activity was quarrying of the limestone and there was no material on record as there was some integrated and/or continuous process from which both lime and limestone came out. It is on the aforementioned ground alone that the decision of the Calcutta High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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