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TMI Blog2017 (9) TMI 1885X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Ld.CIT(A) has erred in allowing the claim of deduction U/s.10AA of the Act by holding that the activity of the assessee is manufacturing. 3. The brief facts of the case are that the assessee is a firm engaged in the business of manufacture and exporting of Pulverized garnet abrasive grit, filed its return of income for the assessment year 2013-14 electronically on 27.09.2013, declaring total income of Rs. 3,16,61,350/-. The case was selected for scrutiny under CASS and finally assessment order U/s.143(3) of the Act was passed on 30.03.2016, wherein amongst certain other additions and disallowances the Ld.AO disallowed the claim of deduction U/s.10AA of the Act. 4. During the course of assessment proceedings, the assessee had made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor is a device used for separating the solid components in slurry, based on the density. o The larger and heavier particles sink to the bottom of the sluice faster and experience more drag from the bottom. They travel slower and so move towards the centre of the spiral. o Conversely, light particles stay towards the outside of the spiral, with the water and quickly reach the bottom. o At the bottom, a cut is made with adjustable bars, channels or slots, separating the low and high density parts. * The mined sand after this process is being bought as raw material by VV Minerals SEZ Units. * The process upto this stage is termed as mining activity and the output material at this stage will contain 90% to 95% heavy minerals. * The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n size as each grade has special character and special use. * For example: bigger grain size is used for water filtration, medium and small grain size is used for sand blasting, fine grain size and micro grain sizes are used for water jet cutting. Very fine grain size is used for grinding for polishing TV picture tube and glasses etc. * Based on the requirement of the customer the mesh size deck will be changed. * The final product will be packed either 25 kg bags or 50 kg bags or 1 ton/2 ton jumbo bags with or without liner depending on the customer's requirement. * The same method of process will be used for production of llmenite. * Ilmenite is used for the production of Titanium pigments, synthetic rutile, Titanium metals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs. (iv) It was therefore clear that the raw materials and the finished products are the same. (v) It was evident that the nature of product imported to the SEZ unit from DTA and the product exported are similar, being concentrates of Ilmenite ore. (vi) Therefore this activity of the assessee does not amount to manufacture in terms of the SEZ Act. (vii) It was also evident that the assessee was routing a part of the regular sales of the unit in the domestic tariff area through the SEZ unit even before installation of the machinery and plant. (viii) A minor activity of sieving to separate dust particles is only carried out in the SEZ unit thereby qualifying the establishment of the SEZ unit as a resultant of splitting up or recons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had pre-fabricated the building well before 31.03.2012. (iv) It also establishes the fact that the SEZ unit has not formed by splitting up or reconstruction of building as claimed by the Ld.AO. Moreover, the Ld.AO has not proved the claim of the assessee to be incorrect. (v) The opinion of the Ld.AO that the SEZ unit of the assessee in Vishakhapatnam could not have been commenced operations before 31.03.2012 because the invoice issued by M/s. Interarch Building Products Pvt. Ltd. is dated 28.04.2012 is not acceptable because the concerned Assistant Development Commissioner of the SEZ unit had certified that the unit had commenced production on 29.02.2012 itself. (vi) The Ld.AO could not prove that the certificate issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties had also certified that assessee's SEZ unit has commenced production on 29.02.2012 and this establishes the fact that the pre-fabricated building of the assessee was completed earlier to 29.02.2012. Further the Ld.AO could not establish that the assessee had formed its SEZ unit by splitting up or by reconstruction with cogent evidence. The Ld.AO has also accepted that the assessee's unit processed the raw materials by removing 10 to 20% of the impurities. The comparison of the market price and invoice price by the Ld.AO were proved to be incorrect because the price of the finished product was stated as Rs. 15,269/- in the year book 2013 while as the appellant has sold the same at the price of Rs. 17,098/-. The Ld.AO could also not esta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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