ITAT allows deduction for marble firm under sec. 80IB, directs A.O. to verify for correct calculation

The ITAT ruled in favor of the assessee, a firm engaged in cutting and polishing marble stones, allowing the deduction u/s. 80IB. The ITAT held that the activities constituted manufacturing, based on precedents from previous years, directing the A.O. to verify and grant the deduction in accordance with the law. The Revenue's appeal was partly allowed for statistical purposes, with instructions to the A.O. to ensure the correct calculation and allowance of the deduction u/s. 80IB.

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Issues:
- Disallowance of deduction u/s. 80IB of Rs. 23,24,717

Analysis:
1. The appeal was filed by the Revenue against the order of CIT (A), Valsad for the assessment year 2006-07, specifically challenging the disallowance of deduction u/s. 80IB amounting to Rs. 23,24,717.

2. The assessee, a firm engaged in cutting and polishing marble stones, claimed the deduction u/s. 80IB in its return of income. The Assessing Officer (A.O.) disallowed the claim, stating that the activities performed by the assessee did not qualify as "manufacture" under u/s. 80IB. The A.O. referred to the process involving cutting, chiseling, polishing, and cutting edges of rough stone slabs as activities not meeting the criteria for the deduction.

3. The CIT (A) disagreed with the A.O. and allowed the deduction u/s. 80IB, citing relevant case laws to support the assessee's eligibility. The Revenue, aggrieved by the CIT (A)'s decision, appealed to the ITAT, Ahmedabad.

4. During the appeal before the ITAT, the Revenue argued that the assessee did not fulfill all conditions necessary for claiming deduction u/s. 80IB as the activity did not constitute manufacturing. The Revenue supported the A.O.'s decision to disallow the deduction.

5. In response, the assessee's representative contended that the issue had been favorably decided in the assessee's own case for A.Y. 2005-06 by the Hon'ble Tribunal. The representative presented the relevant order to support the claim.

6. The ITAT referred to the decision of the Co-ordinate Bench in the assessee's previous cases for A.Y. 2003-04 and 2004-05, where it was held that the assessee was engaged in manufacturing activities and thus entitled to deduction u/s. 80IB. The ITAT directed the A.O. to verify the calculation of the deduction and allow it in accordance with the law.

7. Given the similarity of facts with previous years and in line with the earlier decisions, the ITAT ruled that the assessee's activities constituted manufacturing, entitling them to claim deduction u/s. 80IB. The ITAT directed the A.O. to verify the calculation and allow the deduction accordingly, similar to the previous cases.

8. Consequently, the ITAT partly allowed the Revenue's appeal for statistical purposes, instructing the A.O. to verify the calculation of the deduction u/s. 80IB and grant it to the assessee as per the law.

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