- (1.) We are concerned with the assessment Years 1983-1984 and 1984- 85 in this appeal against the order of a division Bench of the High Court at bombay. By that order the following question was answered in the affirmative and in favour of the assessee: "Whether on the facts and in the circumstances of the case and in law, the tribunal was right of confirming the order of the Commissioner of Income Tax (Appeals) holding that the assessee, engaged in cutting and polishing of diamonds, amounts to manufacturing or production of goods and is entitled to deduction under Section 80-I of the income-tax Act 1961 -the High Court gave this answer because counsel for the parties were agreed that the issue stood covered by the High court's decision in commissioner of Income Tax v. London Star Diamond Co. , 213 itr 517.
(2.) Section 80-1 gives a deduction in respect of profits and gains from industrial undertakings which, among other conditions, manufacture or produce any article or thing. The question therefore, is whether the assessee, in cutting and polishing diamonds manufactures or produces any article or thing.
(3.) The Tribunal took the view that it did because in "common parlance and commercial sense raw diamonds are not the same thing as polished and cut diamonds. The two are different entities in the commercial world. Though the chemical composition remains the same the physical characteristics of shape and class etc. are substantially different". It would appear that no material had been placed on the record before the Tribunal upon which it could have reached the conclusions that, either in common or in commercial parlance, raw diamonds were not the same thing as polished and cut diamonds, and that they were different entities in the commercial world. An ipse dixit of the Tribunal is not the best foundation for a decision.;