TaxTMI 
TaxTMI 
2013 (12) TMI 252
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....in holding that the assessee's profits could be allocated between two activities/undertakings of the assessee, namely that of mining and that of manufacturing cement? and 3. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee would be entitled to deduction under Section 80HH only with respect to the profits attributable to the manufacture of cement and not with respect to profits attributable to mining activity? 2. The short admitted fact, as it is found from the records, is as follows: The assessee-company has been carrying on business of manufacturing cement, and such manufacturing unit is situated in a backward area in the State of Andhra Pradesh. The assessee has also a mine having deposit of large quantity of lime. Hence, the assessee also carries on mining operation of the lime and the same is used as a raw material in manufacturing cement. In this matter, the opinion of this Court is sought for in relation to the assessment year 1987-88. Before the Assessing Officer, the assessee-company claimed deduction under Section 80HH of the said Act as it is carrying on the business of manufacturing cement in th....
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....is having two separate business activities in division for granting deduction under Section 80HH of the said Act. He contends that the learned Tribunal factually held that the main business activity of the assessee-company is manufacturing of cement and the mining operation carried on by it is not meant for sale in the market and the same is used as a raw material in manufacturing of cement. Therefore, the question of deriving profit on this mining operation does not and cannot arise. Had the assessee sold the product of mining operation in the market, then profit would have been derived from the mining activity. He further contends that the entire output of the mining operation of lime is charged as a raw material for the manufacture of a different product than the cement. Therefore, the entire profit derived from manufacturing of cement should have been taken into consideration for the purpose of granting deduction under Section 80HH of the said Act and a portion of the profit should not have been taken in order to deprive the benefit of deduction as far as the mining operation is concerned. He also submits that actually no profit is derived for mining operation. He further su....
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....case of TATA IRON & STEEL CO. LTD v. STATE OF BIHAR [1963] 48 ITR 123 and another decision in case of PANDIAN CHEMICALS LTD v. COMMISSIONER OF INCOME-TAX [2003] 262 ITR 278. 5. After hearing the learned counsel for the parties and after taking note of the factual aspect of the matter and in order to give opinion on the questions referred to us, we think that the following two points are required to be decided: 1. Whether the assessee's mining operation of lime is separate and independent industrial activity from that of cement manufacturing activity or not? and 2. Whether because of the use of entire product of mining activity as raw material in the manufacture of cement by the assessee, the mining operation looses its independent identity so as to disentitle the benefit of deduction by virtue of sub-section (10) of Section 80HH of the said Act or not. 6. From the records we find, as has been rightly contended by Mr. S.R. Ashok, that in the previous assessment years, namely 1984-85 and 1985-86, the Tribunal found on fact that the assessee has been running two industrial undertakings, one is mining of lime and another is manufacturing of cement. It is an admitted positio....
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....mbedded in the profit realised from the sale of the end product. A simple illustration would demonstrate this. Let us assume that the cost of winning the ore is Rs.50 a ton and the market price of similar ore which would have to be used in the absence of the ore mined is Rs.60 per ton. There could not be any doubt that this difference of Rs.10 per ton of ore would be reflected in the profit or loss resulting from the sale of the steel." At page-142 of the report, it is observed again as follows: "As we have pointed out earlier, what we are concerned with in these appeals is merely whether there could in law be an annual profit from the mine in cases where the ore produced from the mine is sold not as ore but is utilised as the raw material for the manufacture of other products which are sold. When once it is conceded, as it has to be, that in order that profit may result from the mining activity, it is not necessary that the ore should be the subject of sale in the same condition as it was when it came out of the mine, but that, even if the won ore is subjected to processes to make it more useful or attractive to a buyer and then sold, there would be a profit, and that in ....