- (1.) HEARD Shri Shambhu Chopra, learned counsel for the appellants, Shri R.R. Agarwal and Shri Suyash Agarwal for the respondent. It is sufficient to refer to the pleadings of Income Tax Appeal No.9 of 2003, for deciding both the appeals.
(2.) THIS appeal under Section 260 -A of the Income Tax Act, 1961 (hereinafter called the "Act, 1961") has been filed against the judgment and order dated 25/1/2002, passed by the Income Tax Appellate Tribunal, Delhi (hereinafter called the "Tribunal") in I.T.A. Nos.6810 & 8864 (Del)/81 for the Assessment Years 1987 -88 and 88 -89. The Assessing Officer by the assessment order dated 31/3/1987 rejected the claim of the assessee under Sections 80HH and 80I of the Act, 1961. The assessee filed an appeal before the Commissioner of (Appeals) which was decided by order of the Commissioner dated 29/8/1991 allowing the appeal partly. Insofar as deductions under Section 80 -HH and 80 -I of the Act are concerned, the said ground was not allowed by the appellate authority. Feeling aggrieved by the said order, an appeal was filed before the Tribunal which has been allowed by the judgment and order dated 25/1/2002 by the Tribunal against which the appellanthas come up in the appeal. The appeal was admitted on the following two questions of law: "(i) Whether on the facts and in the circumstances of the case, extracting stones and then cutting them into the required size and weight, is the Tribunal justified in law in holding that the assessee is engaged in a manufacturing activity as contemplated under Section 80HH and 80 -I of the Act? (2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that the assessee is entitled to deductions under Section 80HH and 80 -I of the Income Tax Act?" The Tribunal while considering the Ground no. 3, which was against the rejection of the claim of deduction of Rs.1,04,492/ - under Sections 80 -HH and 80 -I of the Income Tax Act, noted that the assessee is engaged in the business of excavating stone boulders of specific size and weight and supplying the same to M/s Hindustan Construction Co. Ltd. for their project at Chandil Bar. As per the note of the assessee this activity involved certain process and it employed considerable labour, machinery and capital. For the manufacture of boulders from Quarries located nearby the dam site, first of all overburden (rough earth and soft stone) is removed to develop the face of the quarry. With the help of Rock drill machines, the holes are made in the rock and blasting material is filled in the holes and after the blasting, big boulders are excavated from the quarry. These big boulders are broken into small ones of specific weight and size which are supplied. The Tribunal while accepting the ground urged by the appellant that they are entitled for deduction under Sections 80 -HH and 80 -I of the Act, held as under: "In the instant case the facts are similar as in the case of Best Chem& Lime Stone Industries (P) Ltd. and accordingly we hold that extracting stone and then cutting into the required size and weight is a manufacturing activity. Therefore, the assessee qualifies for deduction under Sections 80 -HH and 80 -I of the Income Tax Act. Accordingly the AO is directed to allow thededuction u/s 80 -HH and 80 -I to the assessee after quantifying the amount of deduction on the basis of work done by the assessee in regard to cutting of stone into pieces etc. We order accordingly."
(3.) THE submission which has been pressed by the learned counsel for the Department is that the appellant is not engaged in manufacturing process and is not producing any article and conditions which were mentioned in sub -section 2 of Section 80 - HH of the Act, are not present. No production activities are being carried out and the condition precedent being not fulfilled, the benefit to the assessee under Section 80 -HH of the Act has been erroneously granted.;