Assessee's Marble Polishing Qualifies as Manufacturing for Tax Deduction

The Tribunal found that the assessee's cutting and polishing of marble stones constituted manufacturing activity, entitling them to a deduction under section 80IB of the Income Tax Act, 1961 for the assessment year 2005-06. The matter was remanded to the Assessing Officer for verification of calculations and proper allowance of the deduction in accordance with the law. The appeal was treated as allowed for statistical purposes.

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Issues involved: Determination of manufacturing activity for the purpose of deduction u/s 80IB of the Income Tax Act, 1961 for the assessment year 2005-06.

Summary:

Issue 1: Manufacturing activity determination

The appeal was filed against the order treating the activities of the assessee as non-manufacturing for the purpose of deduction u/s 80IB. The Tribunal referred to the decision in the case of ITO vs. Arihant Tiles and Marbles P. Ltd., where it was held that the assessee is engaged in the manufacture and production of articles. The Tribunal found that the assessee's activities of cutting and polishing marble stones qualified as manufacturing. The matter was restored to the Assessing Officer for verification of the calculation and to allow the deduction under section 80IB in accordance with the law.

Issue 2: Verification of calculation

The Tribunal, based on its previous decisions for the assessment years 2003-04 and 2004-05, held that the assessee was entitled to deduction u/s 80IB as the activity was deemed as manufacturing. However, it emphasized the need for the Assessing Officer to verify the calculation and ensure the deduction is allowed in accordance with the law. The appeal filed by the assessee was treated as allowed for statistical purposes.

The Order was pronounced in the Court on 16.12.2010.

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