2017 (9) TMI 1885

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....n its appeal however the crux of the issue is that the Ld.CIT(A) has erred in allowing the claim of deduction U/s.10AA of the Act by holding that the activity of the assessee is manufacturing. 3. The brief facts of the case are that the assessee is a firm engaged in the business of manufacture and exporting of Pulverized garnet abrasive grit, filed its return of income for the assessment year 2013-14 electronically on 27.09.2013, declaring total income of Rs. 3,16,61,350/-. The case was selected for scrutiny under CASS and finally assessment order U/s.143(3) of the Act was passed on 30.03.2016, wherein amongst certain other additions and disallowances the Ld.AO disallowed the claim of deduction U/s.10AA of the Act. 4. During the cours....

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....ss is explained in detail as below: o Heavy minerals are the one with a density that is greater than 2.9 g/cm3 o The spiral separator is a device used for separating the solid components in slurry, based on the density. o The larger and heavier particles sink to the bottom of the sluice faster and experience more drag from the bottom. They travel slower and so move towards the centre of the spiral. o Conversely, light particles stay towards the outside of the spiral, with the water and quickly reach the bottom. o At the bottom, a cut is made with adjustable bars, channels or slots, separating the low and high density parts. * The mined sand after this process is being bought as raw mater....

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....et will be called Garnet where as our Garnet superior than International standard. * This pure Garnet will be transported to sieve system which containing up to 5 decks depends upon customer requirements. * In the sieve system, Garnet will be separated based on the grain size as each grade has special character and special use. * For example: bigger grain size is used for water filtration, medium and small grain size is used for sand blasting, fine grain size and micro grain sizes are used for water jet cutting. Very fine grain size is used for grinding for polishing TV picture tube and glasses etc. * Based on the requirement of the customer the mesh size deck will be changed. * The final product....

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....e SEZ unit is devoid of merits. (iii) As per the "Application of removal of excisable goods" maintained by the assessee with the Central Excise Department shows that the assessee was importing Ilmenite ores from the domestic tariff area to the SEZ unit and also exporting the same product as per the sales invoices furnished by the assessee during the course of scrutiny proceedings. (iv) It was therefore clear that the raw materials and the finished products are the same. (v) It was evident that the nature of product imported to the SEZ unit from DTA and the product exported are similar, being concentrates of Ilmenite ore. (vi) Therefore this activity of the assessee does not amount to manufacture in terms ....

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....exported was Iluminate of 50% grade which establish the fact that a distinct material has emerged from the manufacturing activity of the assessee, which cannot be disputed. (iii) The claim of the assessee that the pre-engineered metal building was erected before 31.03.2012, though the bill was raised on 28.04.2012 is justifiable because the concerned SEZ Authorities had certified that the SEZ unit had commenced production on 29.02.2012. Thus it is evident that the assessee had pre-fabricated the building well before 31.03.2012. (iv) It also establishes the fact that the SEZ unit has not formed by splitting up or reconstruction of building as claimed by the Ld.AO. Moreover, the Ld.AO has not proved the claim of the assessee....

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....ued in support of the same, while as the Ld.AR relied on the order of the Ld.CIT(A). 8. We have heard the rival submissions and carefully perused the materials on record. From the facts of the case, it is apparent that the SEZ Authorities has recognized the SEZ unit of the assessee and also held that the activity of the assessee is manufacturing as per the SEZ Act. Further, the findings of the Ld.CIT(A) that the materials exported by the assessee is Ilminate consisting of 50% grade is also not in dispute. The SEZ Authorities had also certified that assessee's SEZ unit has commenced production on 29.02.2012 and this establishes the fact that the pre-fabricated building of the assessee was completed earlier to 29.02.2012. Further the Ld.AO....