AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 231
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed the assessee's claim of deduction u/s. 80IB. Aggrieved by the order of A.O., assessee carried the matter before the CIT (A). 3. CIT (A) vide his order dated 26-11-2008 allowed the appeal of the assessee. Aggrieved by the order of CIT (A) the Revenue is now in appeal before us. 4. Before us only ground raised by the Revenue is with respect to allowance of deduction u/s. 80IB of the Act. 5. On perusing the details A.O. noticed that assessee has claimed its entire profit as deduction u/s. 80IB. He noted that the assessee had sold goods worth Rs. 14.63 crores which was claimed to have been manufactured at its plant and against which the assessee has incurred power and fuel expenses of Rs.61,064/- and electricity expenses of Rs.2,189/- only. He further observed that the main plant and machineries utilized by the assessee were Centre Lathe Machine having value of Rs.1,54,419/-, Grinding Machine Rs.2,04,750/- and Polishing machine Rs.3,01,948/-. Further he also observed that the major expenses incurred by the assessee was on account of labour charges payment which amounted to Rs. 1,63,48,399/- which according to A.O. proved that the work was done outside the assessee's own factory. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and the rejoinder thereof. The A.O's objections are in respect of the appellant not having a Central Excise Registration before the end of the year. The Assessing Officer's contention and the comments of the Addl. CIT in their remand report dated 13-6-2008 is that the appellant applied to Central Excise on 26-4-2004 and received permission only on that very date. Therefore, the appellant's claim of starting manufacturing activities on 27-3-2004 could not be accepted. However, I find that the excise duty is applicable on the small scale industry only after achieving a turnover of Rs.1 crore. The manufacturer has to obtain the license after achieving this turnover and that is why the appellant did not obtain the license before 31-3-2004.The excise records produced by the appellant clearly indicate the levy of excise duty. It is also seen that as per registration certificate under the Sales-tax Act and the Central Sales Tax Act, the business of the appellant is shown as a manufacturing activity. Further, the A.O's objection that the appellant got SSI Registration on 21-7-2005 only and therefore no manufacturing activity could have been undertaken by the appellant before that date is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e raw material used and the sale bills is indicative of the fact that the product finally sold by the appellant is distinct and different from the original raw material. The Assessing Officer's observation that electricity consumed during the year was only worth Rs.61,064/- and therefore manufacturing activity could not have taken place is also not correct since a part of the work is got done through outside vendors as per the required specification of the buyer of the machineries. It is also seen that the appellant's claim that once the machine becomes complete, it is packed in various parts and dispatched to the customers and finally assembled there has also been misconstrued by the A.O. who has concluded that the persons to whom erection and installing work was entrusted were the contractors of the appellant which would mean that the appellant was not having the installed capacity to manufacture the items sold by it. It would be packed into manageable pieces to be installed at the premises of the buyers and for this installation; the appellant's contractor would be the most appropriate persons. Therefore, this activity leads to the conclusion that no manufacturing activity was c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-Head 45. 11. Before us Ld. A.R. also pointed out to the complete manufacturing process undertaken by the assessee and which was submitted before A.O. He thus submitted that even if the assessee is assumed to be assembling the goods it is still entitled to deduction u/s. 80IB and for which he relied on the following decisions:- (1) CIT vs. Sunilbhai S.Kakad (Tax Appeal No.1287 of 2010) (2) ITO vs. Arihant Tiles & Marbles (P) Ltd. (2010) 186 Taxman 439(SC). (3) CIT vs. Chiranjeevi Wind Energy Ltd. (2011) 243 CTR (Mad.)195. (4) CIT vs. Prabhudas Kishordas Tobacco Products (P)Ltd., 154T axman 404 (Guj.) He thus submitted that in view of the aforesaid facts CIT (A) had upheld the deduction u/s. 80IB of the Act and he thus supported the order of CIT (A) 12. We have heard the rival submissions and perused the material on record. On perusal of the assessment order passed by the A.O. we find that he has held the assessee to be engaged in the assembling and not manufacturing. CIT (A) while granting the deduction has held that the goods manufactured by the assessee are subject to payment of Excise Duty. He has further given a finding that as per the Registration Certificate for the Sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... amount to 'manufacture'. This conclusion was based on the observation s made by the Court in the case of Rajasthan Electricity Board (supra).In our view, the judgment of this Court in Aman Marble Industries (P) Ltd.'s case (supra) also has no application to the facts of the preset case. One of the most important reasons for saying so is that in all such cases, particularly uder the Excise law, the Court has to go by the facts of each case. In each case on e has to examine the nature of the activity undertaken by an assessee. Mere extraction of stores may not constitute manufacture. Similarly, after extraction, if marble blocks are cut into slabs per se will not amount to the activity of manufacture." 14. In the present case, we have extracted in detail the process undertake by each of the respondents before us. in the present case, we are not concerned only with cutting of marble blocks into slabs. In the present case, we are also concerned with the activity of polishing and ultimate conversion of blocks into polished slabs addition tiles. What we find from the process indicated hereinabove is that there are various stages through which the blocks have to go through before they b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....veral stages of processing and perhaps, a different kind of process at every stage. That with every process the commodity would experience a change, but ultimately, it is only when the change, or a series of changes, bring about a result so as to produce a new and distinct article, can it be said that the commodity used as raw material has been consumed in the manufacture of the end-produce. To put it differently, the final product does not retain identity of raw material after it has undergone the processes of manufacture." 16. In the case of CIT vs. Maheshchandra Sharma (2009) 178 Taxman 22 (P & H) has held as under:- Head Note - "Section 80-IB of the Income Tax, 1961 - Deductions - profits and gains from industrial undertakings other than infrastructure development undertakings - Assessment Year 2001-02 - assessee was engaged in manufacturing of motorcycle wheels by assembling raw materials/components, viz., rim, tyre, tube, bearing, drum, spoke, nipple and collar, by carrying out intermittent processes - Whether process of assembling carried out by assessee amounted to manufacture or production of an article and, accordingly, he would be entitled to deduction under section ....