M/s Southern Rocks & Minerals P Ltd., Ongole v. The ACIT, Circle-2(1), Guntur

ITA 432/VIZ/2007 | 2004-2005
Pronouncement Date: 19-01-2010 | Result: Allowed

Appeal Details

RSA Number 43225314 RSA 2007
Bench Visakhapatnam
Appeal Number ITA 432/VIZ/2007
Duration Of Justice 2 year(s) 2 month(s) 14 day(s)
Appellant M/s Southern Rocks & Minerals P Ltd., Ongole
Respondent The ACIT, Circle-2(1), Guntur
Appeal Type Income Tax Appeal
Pronouncement Date 19-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 19-01-2010
Assessment Year 2004-2005
Appeal Filed On 05-11-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.19 & 432/VIZAG/2007 ASSESSMENT YEAR : 2003-04 & 2004-05 RESPECTIVELY SOUTHERN ROCKS & MINERALS (PVT) LTD. ONGOLE ACIT CIRCLE-2(1) GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AADCS 1378K ITA NO.466/VIZAG/2008 ASSESSMENT YEAR : 2005-06 JCIT RANGE-2 GUNTUR SOUTHERN ROCKS & MINERALS (PVT) LTD. ONGOLE (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI S. RAMA RAO CA RESPONDENT BY: SHRI SUBRATA SARKAR DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDER OF THE CIT(A) ON COMMON GROUNDS RELATING TO D EDUCTION CLAIMED U/S 80IB OF THE I.T. ACT. 2. DURING THE COURSE OF HEARING OF THE APPEAL THE L D. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT THE ASSESSEE HAS THREE UNITS MAINLY GRANITE QUARRY UNIT GRANITE PROCESSIN G FACTORY AND MONUMENTS FACTORY. GRANITE QUARRY UNIT IS ENGAGED IN THE ACT IVITY OF MINING AND EXTRACTION OF GRANITE BLOCKS GRANITE PROCESSING FA CTORY ENGAGED IN THE ACTIVITY OF PROCESSING OF GRANITE BLOCKS INTO SLABS AND TILE S. THE MONUMENT FACTORY AT PELLUR IS ENGAGED IN THE ACTIVITY OF PROCESSING THE GRANITE BLOCKS INTO MONUMENT SLABS. THE SALES MADE BY THE ASSESSEE INC LUDE GRANITE BLOCKS PROCESSED SLABS AND TILES AND PROCESSED MONUMENTS. ON THESE ACTIVITIES THE ASSESSEE CLAIMED DEDUCTION U/S 80IB WHICH WAS NOT A LLOWED BY THE REVENUE 2 AUTHORITIES. NOW THIS ISSUE IS SQUARELY COVERED BY THE JUDGEMENT OF THE APEX COURT IN THE CASE OF ITO VS. ARIHANT TILES & MARBLE S (P) LTD. (2009) 32 DTR (SC) 161 IN FAVOUR OF THE ASSESSEE IN WHICH THEIR L ORDSHIP HAVE CATEGORICALLY HELD THAT CONVERSION OF MARBLE BLOCKS INTO SLABS AN D TILES REQUIRES A PROCESS OF NOT ONLY CUTTING OF MARBLE BLOCKS INTO SLABS BUT ALSO THE ACTIVITY OF POLISHING AND ULTIMATE CONVERSION OF BLOCKS INTO POLISHED SLA BS AND TILES AS SUCH IT AMOUNTS TO MANUFACTURE OR PRODUCTION AND THE ASSESS EE IS ENTITLED OF THE BENEFIT U/S 80IA. 3. THE SIMILAR VIEW WAS ALSO EXPRESSED BY THE TRIBU NAL IN THE CASE OF SOUTHERN BLOCKS & MINERALS PRIVATE LIMITED VS. JCIT IN ITA NO.604 605/V/04 AND 374/H/04 FOLLOWING THIS JUDGEMENT OF THE RAJAST HAN HIGH COURT IN THE CASE OF ARIHANT TILES & MARBLES PRIVATE LIMITED WHI CH HAS BEEN LATER ON UPHELD BY THE SUPREME COURT. COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. 4. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE TRIB UNAL IN THE CASE OF SOUTHERN BLOCKS AND THE JUDGEMENT OF THE APEX COURT IN THE CASE OF ARIHANT TILES & MARBLES PRIVATE LIMITED AND WE FIND THAT IM PUGNED ISSUE IS SQUARELY COVERED BY THE AFORESAID JUDGEMENT OF THE APEX COUR T IN WHICH IT HAS BEEN CATEGORICALLY HELD THAT ACTIVITY OF CONVERSION OF M ARBLE BLOCKS INTO SLABS AND TILES FALL IN THE CATEGORY OF MANUFACTURE OR PRODUC TION U/S 80IA. THE RELEVANT OBSERVATION OF THE APEX COURT IN THE CASE OF ARIHAN T TILES & MARBLES PRIVATE LIMITED ARE EXTRACTED HEREUNDER: IN THE PRESENT CASE THE COURT IS NOT ONLY CONCER NED WITH THE WORD MANUFACTURE BUT ALSO CONCERNED WITH THE CONNOTATION OF THE WORD PRODUCTION IN S. 80-IA WHICH HAS A WI DER MEANING AS COMPARED TO THE WORD \MANUFACTURE\. FURTHER WHE N ONE REFERS TO THE WORD \PRODUCTION\ IT MEANS MANUFACTURE PL US SOMETHING IN ADDITION THERETO. THE PROCESS UNDERTAKEN BY EAC H OF THE RESPONDENTS INCLUDES NOT ONLY CUTTING OF MARBLE BLO CKS INTO SLABS BUT ALSO THE ACTIVITY OF POLISHING AND ULTIMATE CON VERSION OF BLOCKS INTO POLISHED SLABS AND TILES. THERE ARE VARIOUS S TAGES THROUGH WHICH THE BLOCKS HAVE TO GO THROUGH BEFORE THEY BEC OME POLISHED SLABS AND TILES. IN THE CIRCUMSTANCES ON THE FACT S OF THE CASES IN HAND THERE IS CERTAINLY AN ACTIVITY WHICH WILL COM E IN THE CATEGORY OF \MANUFACTURE\ OR \PRODUCTION\ UNDER S. 80-IA . LOOKING TO 3 THE NATURE OF THE ACTIVITY STEPWISE THE SUBJECT AC TIVITY CERTAINLY CONSTITUTES \MANUFACTURE OR PRODUCTION\ IN TERMS OF S.80-IA. BLOCKS CONVERTED INTO POLISHED SLABS AND TILES AFTE R UNDERGOING THE PROCESS CERTAINLY RESULTS IN EMERGENCE OF A NEW AND DISTINCT COMMODITY. THE ORIGINAL BLOCK DOES NOT REMAIN THE MARBLE BLOCK IT BECOMES A SLAB OR TILE. IN THE CIRCUMSTANCES NOT ONLY THERE IS MANUFACTURE BUT ALSO AN ACTIVITY WHICH IS SOMETHING BEYOND MANUFACTURE AND WHICH BRINGS A NEW PRODUCT INTO EXI STENCE AND THEREFORE ON THE FACTS OF THESE CASES THE HIGH CO URT WAS RIGHT IN COMING TO THE CONCLUSION THAT THE ACTIVITY UNDERTAK EN BY THE RESPONDENTS DID CONSTITUTE MANUFACTURE OR PRODUCTIO N IN TERMS OF S.80-IA. 5. SINCE THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE AFORESAID JUDGEMENTS OF THE APEX COURT WE FOLLOWING THE SAM E SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O. TO ALLOW DEDUCTION U /S 80IB CLAIMED BY THE ASSESSEE. 6. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE A LLOWED. PRONOUNCED IN THE OPEN COURT ON 19.1.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 19 TH JANUARY 2010 COPY TO 1 M/S. SOUTHERN ROCKS & MINERALS (P) LTD. INDUSTRI AL ESTATE KURNOOL ROAD ONGOLE. 2 THE ACIT CIRCLE-2(1) GUNTUR 3 THE CIT GUNTUR 4 THE CIT(A) GUNTUR 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM