TaxTMI 
TaxTMI 
2019 (5) TMI 1308
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....ds of appeal at or before the hearing." 2. The assessee HUF is the proprietor of M/s S. Zoraster & Co which runs two grinding units for soap stone. The assessee claimed deduction U/s 80I & IA which was allowed by the AO while completing assessment U/s 143(3) of the Act. Subsequently the assessment was reopened on the ground that the Hon'ble Bombay High Court in case of CIT vs. Premier Construction Co. 242 ITR 654 has held that grinding of soap stone is not manufacture so as to entitle the assessee for deduction U/s 80J. In the reassessment proceeding, the AO denied the claim of deduction U/s 80I and 80IA of the Act to the assessee by holding that the process of crushing boulders to obtain stones of smaller size termed as "gitti" cannot be regarded as a process manufacturing or production. 3. Before us, the ld. AR of the assessee has submitted that in this connection it is stated that the mixed soapstone lumps were purchased by assessee in the form of big builders. Thereafter segregation of soapstone lumps and unwanted material like dolomite, stone etc. is done and whole of ore is sorted and re-handled. The manually sorted soap stone lumps are cleaned by brushes & checals etc.....
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....of deduction U/s 80-I and 80IA of the Act. In the set aside the proceeding the ld. CIT(A) has discussed this issue in detail for the assessment year 1997-98 in para 3 (iii) to (viii) as under:- "(iii) I have duly considered the assessment order, submission of the appellant and the material placed on record. It may be mentioned that during the year under consideration, the appellant was doing the business in the name of M/s S. Soraster & Co. and it had claimed to have two grinding units i.e. Unit No. 1 and Unit No. 2. It has claimed deduction u/s 80I and 80IA of the Act in respect of unit no. 1 and unit no. 2 for the year under consideration at Rs. 1,46,730/- being 20% of Rs. 7,33,650/- and Rs. 7,51,274/- being 25% of Rs. 30,05,095/- respectively. During the appellate proceedings, the appellant has stated the various processes in the manufacturing of talc ore soap stone power as under:- * Purchase of Talc ore. * Segregation of Talc and unwanted material lime dolomite, stone etc. manually. * Sorted talc lumps cleaned by brushes & checals etc. to remove the surface impurities. * Big boulders to talc are reduced in smaller size or around 1 f....
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.... of the Act. It is noted that it has claimed 'Dressing and Sorting Charges' at Rs. nil. It is interesting to note that as per depreciation chart of Unit No. 2 submitted by the appellant there was only a pulveriser having opening WDV of Rs. 2,59,534/- as on 01.04.1996 and no other plant and machinery for crushing, conveying, washing etc., was available as is evident from the details of fixed assets as on 31.03.1997 furnished by the appellant during the appellate proceedings, which is being reproduced as under: S.No. Assets Amount ( in Rs.) 1. Wxhaust & Cooler 5,443/- 2. Fan 1,077/- 3. Pulveriser 1,94,650/- 4. Weighing Scale 25,397/- Total 2,26,567/- (vi)(b) These facts itself prove that the appellant at least in Unit No. 2, was not having the required plant and machinery for converting the soap stone crude into soap stone powder. It was the contention of the appellant that it was mixing the different types of soap stone chips to produce the desired quality of soap stone powder. However, no evidence was furnished by the appellant to support such contention. It is noted from the profit and ....
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.... the totality of facts and circumstances of the case, as discussed above, and in the absence of complete certificate from a chartered accountant in Form 10CCB, it is held that the appellant was not eligible for deduction u/s 80I and 80IA of the Act." For the other two years, the ld. CIT(A) passed the identical orders. Thus, the ld. CIT(A) has denied the claim of unit No. 1 on the ground that primarily the certificate in Form No. 10CCB was incomplete to the extent of computing of amount of deduction was not mentioned in the said certificate and secondly unit no. 2 was not having the necessary infrastructure to carry out the activity has been claimed by the assessee. It is pertinent to note that as regards objecting of incomplete certificate in Form No. 10CCB it is only a minor mistake/error on the part of the Auditor for not giving the amount of deduction U/s 80I & IA of the Act, however neither the AO nor the ld. CIT(A) has disputed the correctness of computation of deduction as claimed by the assessee in the return of income. Further once, the books of accounts of the assessee are audited then the computation of deduction cannot be questioned without find out any apparent mi....
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....ssee is being used by various industries including paper, insecticide, cosmetic, textile, rubber, ceramic, paints, fertilizer etc. Thus the requirement of each industry is different as far as the size of the powder grain is concerned. Even otherwise the process of converting the stone which are boulders into soap stone power of different grade involved a series of activities and after undergoing this process the output is entirely distinct from the input. It is also a different marketable product/ article and in the process the assessee has added the marketable value. Though the process has not changed any chemical property of the goods, however the outcome is altogether distinct from the input. The Hon'ble Supreme Court in case of Lucky Minmat vs CIT 245 ITR 830 has upheld the decision of Hon'ble Jurisdiction High Court reported in 226 ITR 245. The Hon'ble Supreme Court in case of CIT vs. Arihant Tile and Marbles Pvt. Ltd. 320 ITR 79 (supra) while considering an identical issue held in para 11 to 20 as under:- "11. The main judgment on which the Department has placed reliance is the judgment of this Court in Lucky Minmat (P) Ltd. vs. CIT (2000) 162 CTR (SC) 404 : (2001....
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....pumping out water from the mines came within the meaning of the word manufacture, production, processing or repair of goods so as to claim exemption from duty under notifications issued under s. 3(3) of the Rajasthan Electricity Duty Act, 1962. In that case, the first respondent was a registered public limited company, engaged in excavating stones from collieries and thereafter cutting and polishing them into slabs. The Rajasthan State Government levied excise duty under the provisions of the Act. A notification dt. 23rd March, 1962 was issued by the State under s. 3(3) of the Act granting exemption from tax on the energy consumed by a consumer in any industry in the manufacture, production, processing or repair of goods and by or in respect of any mine as defined in the Indian Mines Act, 1923. This notification was later on superseded on 2nd March, 1963 by which electricity duty came to be remitted in certain cases. One more notification was issued on 1st Nov., 1965 once again superseding earlier notifications. By cl. (c) of the said notification, the State of Rajasthan reduced the duty on the energy consumed in industries, other than those mentioned in cl. (a) of the notification....
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....at case, it was held that "cutting" of marble blocks into slabs per se did not amount to "manufacture". This conclusion was based on the observations made by this Court in the case of Rajasthan State Electricity Board (supra). In our view, the judgment of this Court in Aman Marble Industries (P) Ltd. (supra) also has no application to the facts of the present case. One of the most important reasons for saying so is that in all such cases, particularly under the excise law, the Court has to go by the facts of each case. In each case one has to examine the nature of the activity undertaken by an assessee. Mere extraction of stones may not constitute manufacture. Similarly, after extraction, if marble blocks are cut into slabs per se will not amount to the activity of manufacture. 15. In the present case, we have extracted in detail the process undertaken 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 and tiles. What we find from the process indicated herein-above is that ....
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.... opinion was unimpeachable. It was held by this Court that the word "production" is wider in ambit and it has a wider connotation than the word "manufacture". It was held that while every manufacture can constitute production, every production did not amount to manufacture. 17. In our view, applying the tests laid down by this Court in Sesa Goa's case (supra) and applying it to the activities undertaken by the respondents herein (reproduced hereinabove), it is clear that the said activities would come within the meaning of the word "production". 18. One more aspect needs to be highlighted. By the said judgment, this Court affirmed the decision of the Karnataka High Court in the case of CIT vs. Mysore Minerals Ltd. (2001) 166 CTR (Kar) 142 : (2001) 250 ITR 725 (Kar). 19. In the case of CIT vs. N.C. Budharaja & Co. & Anr. (1993) 114 CTR (SC) 420 : (1993) 204 ITR 412 (SC), the question which arose for determination before this Court was whether construction of a dam to store water (reservoir) can be characterised as amounting to manufacturing or producing an article. It was held that the word "manufacture" and the word "production" have received extensiv....
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....hed before export. Thus, a finding was given that the export of the marble blocks by the assessee is not eligible for the deduction under s. 80HHC of the Act and claim of the assessees under s. 80HHC of the Act was disallowed. 15. The CIT(A) allowed appeals of the assessees by observing that as the marble is a mineral, cut and polished marble blocks shall be covered by entry (x) in the 12th Schedule, the assessees have filed copies of invoices, certificates etc. in support of polishing and value addition and hence, deleted disallowance/addition made by the assessing authority on this point. 16. The Revenue thereafter took the matter further before learned Tribunal but the learned Tribunal dismissed appeals of the Revenue on those grounds and averments and on the finding of learned CIT(A) upheld claim of the assessee-respondents for allowing deduction under s. 80HHC of the Act. 17. Thus, two appellate authorities below have concurrently held in favour of assessee-respondents that there was no breach of any of the conditions of s. 80HHC of the Act for grant of said benefit to the assessees. The fact remains that the assessees exported marble blocks, which w....
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....t in the case of Sudarshan Silks & Sarees (supra), in which it was held as follows : "... Reversing the decision of the High Court, that the final factfinding authority was the Tribunal and its decision on the facts could be gone into by the High Court only if a question had been referred on whether the finding of the Tribunal was perverse, in the sense that it was such as could not reasonably have been arrived at on the material placed before the Tribunal. In the absence of such a question, the High Court had to accept the finding of fact arrived at by the Tribunal and then proceed to decide the question of law referred The Tribunal is the final Court of fact. The decision of the Tribunal on the facts can be gone into by the High Court in the reference jurisdiction only if a question has been referred to it whether the finding arrived at by the Tribunal on the facts was perverse in the sense that no reasonable person could have taken such a view." 22. In the present case, finding of the learned Tribunal is in favour of assessee-respondents and it has been categorically held that the assessee-respondents are eligible for deduction under s. 80HHC of the Ac....