TaxTMI 
TaxTMI 
2009 (12) TMI 1
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....essment Year 2001-2002, was engaged in the business of manufacture/production of polished slabs and tiles which the assessee exported (partly). The prime condition for allowing deduction under Section 80IA, as it stood at the material time, was that industrial undertakings should manufacture or produce any article or thing, not being any article or thing specified in the list in Eleventh Schedule of the Income Tax Act, 1961. 5. The question before us is: whether on facts and circumstances of the case(s) the activities undertaken by the respondent(s) herein would fall within the meaning of the words "manufacture or production" in Section 80IA of the 1961 Act? 6. To answer the above issue, it is necessary to reproduce the details of stepwise activities undertaken by the assessee(s) which read as follows:- "i) Marble blocks excavated/extracted by the mine owners being in raw uneven shapes have to be properly sorted out and marked; ii) Such blocks are then processed on single blade/wire saw machines using advanced technology to square them by separating waster material; iii) Squared up blocks are sawed for making slabs by using the gang saw machine or single/multi ....
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....nt case, polished slabs and tiles stood manufactured / produced from the marble blocks and, consequently, each of the assessee was entitled to the benefit of deduction under Section 80IA. Hence, these Civil Appeals have been filed by the Department. 11. Incidentally, it may be noted that some of the assessees before us are also job workers duly registered under the provisions of the Excise Act/Rules framed thereunder. It may also be clarified that in these cases, we are concerned with assessees who are basically factory owners and not mine owners. This distinction is of some relevance when we analyse the various judgments cited before us fairly by the learned counsel on behalf of the Department. 12. The main judgment on which the Department has placed reliance is the judgment of this Court in Lucky Minmat Pvt. Ltd. Vs. Commissioner of Income Tax, Jaipur, reported in (2001) 9 SCC 669. In that case, the following question came up for consideration before the Tribunal: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that business activity of the assessee was in the nature of manufacturing or production so as to be entitled for....
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.... 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 dated 23rd March, 1962 was issued by the State under Section 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 November, 1965 once again superseding earlier notifications. By clause (c) of the said notification, the State of Rajasthan reduced the duty on the energy consumed in industries, other than those mentioned in clause (a) of the notification which are in the manufacture, production, processing or repair of goods. 15.The basic controversy which arose for determination in the said case was whether the activity of pumping out water from the mines came within the meaning of the words "manufacture"....
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....t of this Court in man Marble Industries Pvt. 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. 17. 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 there are various stages through which the blocks have to go through before they become polished slabs and tiles. In the circumstances, we are of the view that on the facts of the cases in hand, there is certainly an activity which will come in the category o....
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....duction did not amount to manufacture. 19. 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 herein-above), it is clear that the said activities would come within the meaning of the word "production". 20. 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 Commissioner of Income Tax vs. Mysore Minerals Ltd, (2001) 250 ITR 725 (Kar). 21. In the case of Commissioner of Income Tax Vs. N.C. Budharaja & Co., reported in 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 extensive judicial attention both under the Income Tax as well as under the Central Excise and the Sales Tax laws. The test for determining whether "manufacture" can be said to have taken place is whether the commodity, which is subjected to a proce....