TaxTMI 
TaxTMI 
2006 (8) TMI 447
X X X X Extracts X X X X
X X X X Extracts X X X X
....4,33,566. The said deduction was claimed in respect of industrial undertaking located in an area specified in the Eighth Schedule, i.e., Silvasa. The return was processed under section 143(1) of the Act on 5th Feb., 2002. Subsequently, the notice under section 148 of the Act was issued to the assessee on 8th July, 2002 proposing to reopen the assessment of the assessee-company under section 147 of the Act. The assessment under section 143(3) read with section 147 of the Act was finally completed on 26th Sept., 2003 disallowing deduction under section 80-IB of the Act. The CIT(A) confirmed the same which has been agitated before us. The learned Authroised Representative of the assessee reiterated the submission made before and oppose the order of the CIT(A). 3. The relevant section under which deduction has been claimed by the assessee is reproduced as hereunder: Sec. 80-IB(2) "This section applies to any industrial undertaking which fulfils all the following conditions, namely: (i) it is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an industri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hing in terms of section 80-IB(2)(iii) of the Act. The assessee claims that it is engaged in the business of manufacturing polished marble slabs, tiles, table tops etc. from imported and indigenous rough marble block. A rough marble block is a solid piece of hard material especially of stone or a portion of land excavated from mountains and/or quarries, which is covered with mud, cavities and other particles. The said raw block is used by the assessee as raw material and subjected to various processes with the help of machines and manual labour to produce finished products like polished marble slabs, tiles, table tops, etc. 5. The various processes involved in this regard have been mentioned by the assessee, which are summarised as under : (i) Blocks of similar appearances and quality are identified; (ii) Rough marble block is cleaned with water; (iii) To give marble block cubical and dimensional form, it is peeled and dressed manually and mechanically; (iv) The dressed marble block is then inspected by an expert to find our natural flaws in the marble block such as hairline cracks, holes etc.; (v) The natural flaws are corrected by a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....les etc.; (xiv) During the above processes, slurry, cupchi are generated which have no use like a marble slab. 6. From the above, it is claimed that the assessee is engaged in manufacturing/production of polished marble slabs, tiles etc., and for the same it obtained permission/approval from different Government authorities and registered itself as manufacturer with the following authorities : (i) Sales-tax Department of Dadra and Nagar Haveli; (ii) Administration of Dadra & Nagar Haveli (Directorate of Industries); (iii) Administration of Dadra & Nagar Haveli (Electricity Department); (iv) Pollution Control Committee (Daman & Diu and Dadra & Nagar Haveli); (v) Administration of Dadra & Nagar Haveli (Town and Country Planning Department); (vi) Central Excise Department; and (vii) Director General of Foreign Trade (Issuing authority for actual user license). 7. In support of the aforesaid, copies of various registration certificates were enclosed in the paper book of the assessee : (i) Factory license; (ii) Permanent SSI registration; (iii) Central Excise registration; (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g process. The assessee was held entitled to special deduction under section 80-IB of the Act. In the case of Supreme Graphics Creations (P.) Ltd. (supra), the Hon'ble jurisdictional High Court has followed the decision of Empire Industries Ltd. v. Union of India [1986] 162 ITR 846 (SC). 10. The Hon'ble Punjab & Haryana High Court in the case of East India Cotton Mfg. Co. (P.) Ltd. v. Assessing Authority-cum-Excise & Taxation Officer [1972] 30 STC 489 while dealing with the provision of Central Sales-tax Act, 1956, held that bleaching, sizing and dyeing of gray cloth terms into a commercially different marketable commodity and it as such amounted to "manufacture" of new commercial product. The ratio of East India Cotton Manufacturing Co. (P.) Ltd. (supra ) was impliedly affirmed in Assessing Authority v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239 (SC), Empire Industries Ltd.'s case (supra) and Ujagar Prints v. Union of India [1989] 179 ITR 317 (SC). 11. In the instant case also, the assessee transforms rough raw marble blocks into finished polished slabs by subjecting the raw blocks to several processes like peeling, dressing, correcting natural flaws, padding, sorting....
X X X X Extracts X X X X
X X X X Extracts X X X X
....polished granites' with effect from 1st April, 1991 by virtue of insertion of item (x) in the Twelfth Schedule to the IT Act, 1961. The export of dimensional blocks of granite is presently ineligible for the benefit of section 80HHC, in view of the CBDT Circular No. 693, dated 17th Nov., 1994 [(1994) 122 CTR (St) 8 : (1995) 211 ITR (St) 25]. 2. On the representation made by the Granite Association and CAPEXIL, the issue has been reconsidered. The representation basically brings to light that rough granite is cut to dimensional blocks in uniform colour and dimension and export proceeds are realised on volume and dimensional basis. Thus, the dimensional blocks of granite are exported only after going through a mechanical process, involving substantial value addition to rough granite. 3. The Board is, therefore, of the view that while granite can alone be considered as mineral, any process applied to granite would deprive the quality of rough mineral from the dimensional blocks of granite, which is a value added marketable commodity. When rough granite is cut to dimensional blocks of uniform colour and size, it not only undergoes mechanical process of cutting, but al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alue addition before export is high and to discourage export of raw blocks where value addition is low". As such, as distinguished from the case of Lucky Minmat (P.) Ltd. (supra) relied upon by the Assessing Officer, wherein there was negligible or insignificant value addition to raw marble blocks. In the instant case, the assessee is producing a high value added marketable commodity having a distinctive name, character and use. In view of the above, we agree with the contention of the learned Authorised Representative on behalf of the assessee that it has carried out manufacturing process on raw blocks. This view is fortified by the judgments and CBDT circular as discussed above. Accordingly, we hold that the assessee is engaged in manufacture/production of polished marble slabs, tiles, table tops, etc. in terms of section 80-IB(2)(iii) of the Act. The compliance with other conditions under section 80-IB has not been disputed by the Revenue authorities. As such, we agree with the contention of the assessee that it is entitled for deduction under the provisions of section 80-IB of the IT Act, 1961. 15. Without prejudice to the above, we find that the Hon'ble Supreme Court in the....