Manufacture or production test for marble processing: converting raw blocks into marketable slabs and tiles qualifies for tax deduction.

Cutting, sawing, sizing and polishing marble blocks into slabs and tiles is treated as manufacture or, at least, production for deduction purposes under Sections 80IA and 80IB. The governing test is whether the process converts an original material into a commercially usable or marketable commodity with a distinct character and utility. Raw marble blocks are not usable in their extracted form for building purposes, but processing them creates slabs and tiles that are marketable and usable. On that reasoning, such activity falls within the scope of manufacture or production under the income-tax deduction provisions.

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Issues: Whether cutting, sawing, sizing and polishing marble blocks into slabs and tiles amounts to manufacture or production for the purpose of deduction under Section 80IA / Section 80IB of the Income-tax Act, 1961.

Analysis: The expression "production" is of wider amplitude than "manufacture", and the two expressions are not interchangeable in every statutory context. The decisive test is whether the process converts the original material into a commercially usable or marketable commodity with a different character and utility. Marble blocks, as extracted, are not usable for the intended building purpose in their raw form. The process of cutting and polishing them brings them to a usable and marketable stage as slabs and tiles. The reasoning drawn from income-tax authorities, the statutory treatment under the Income-tax Rules, and the relevant judicial principles supports the view that bringing an otherwise unusable mineral block to a usable commodity constitutes manufacture, and at the least falls within production.

Conclusion: The activity amounts to manufacture or production within Section 80IA / Section 80IB, and the deduction is allowable to the assessee.

Ratio Decidendi: Where processing transforms an unserviceable raw mineral into a marketable and usable commodity with a distinct commercial identity, the activity constitutes manufacture or production for income-tax deduction provisions using those expressions.

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