- (1.) THIS appeal under Section 260 -A of the Income Tax Act, 1961 ('the Act') is directed against the judgment and order dated 13.07.2009 as passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ('the ITAT') in ITA No.357/JU/2008 for the assessment year 2004 -05. This appeal has been admitted on the following substantial questions of law: - "(1) Whether the Tribunal was justified in disallowing the benefit available to assessee under Section 10B of the Income Tax Act and if so whether the view taken by the Tribunal is in conformity with the law laid down by their lordships of the Supreme Court in Income Tax Officer Vs. Arihant Tiles reported in (2010) 320 ITR - 79 (SC)? (2) Having granted the benefit to the assessee under Section 10B in the base year, whether it could be denied to the assessee for the subsequent 9 years? (3) Whether the Tribunal was justified on facts found by holding that the assessee is not entitled to claim the benefit under Section 80HHC on the goods in question?"
(2.) THE factual aspects so far relevant for the purpose of determination of the questions aforesaid could be noticed in brief as follows: The appellant -assessee, said to be engaged in the business of manufacture and export of finished marble slabs and tiles, in its return for the assessment year 2004 -05 claimed exemption under Section 10 -B of the Act in respect of its Unit -2 as being 100 percent Export Oriented Undertaking with the essential submissions that it had been engaged in the activity of manufacturing, producing and processing of marble slabs and tiles from its own plants and machineries and whole of the manufactured material was sold outside the country. The claim of the assessee before the Assessing Officer was that the definition as given in EXIM Policy would be applicable in respect of 'manufacturing' for the purpose of Section 10 -B of the Act but the same was not accepted by the Assessing Officer with the observations that the conversion of marble blocks by sawing into slabs, tiles and polishing did not amount to manufacture of article or things while relying, inter alia, on the decision of the Hon'ble Supreme Court in Aman Marble's case: 257 ELT 393 and that of this Court in Lucky Minmet's case: 226 ITR 245. The Assessing Officer also relied on a decision of ITAT in ITA No.86 -87/JU/2004 in the case of Arihant Tiles and Marble. In appeal, the Commissioner of Income -Tax (Appeals), Udaipur ['the CIT(A)'] accepted the contention as urged on behalf of the assessee for allowing the claim under Section 10 -B of the Act with reference to the fact that such claim had been allowed in respect of the assessee in the appellate orders passed for the assessment years 2001 -02 and 2003 -04. The ITAT, however, proceeded to accept the appeal filed by the revenue with the following observations and findings: - "8. On careful analysis of the material made available before the Tribunal in the light of the submissions made by ld. D.R., it is found that undisputedly the assessee is carrying on the activity of processing of rough marble slabs by edge -cutting them and polishing them before exporting and it is an EOU not trading in domestic market. The assessee is contending that by activity of processing marble slabs by edge -cutting and polishing them amounts to manufacture in the light of the decision of the Hon'ble Apex Court rendered in the case of Sesa Goa Ltd [supra] wherein it was held that extraction and processing of mineral ore amounts to production within the meaning of the word in section 32A(20)(b) (iii) of the I.T. Act. It was further held that excavating and processing of ore amount to production within the meaning of sec. 80I of the Act and the ld. CIT(A) while agreeing to the contentions of the assessee, gained further support from the definition of 'produce' mentioned in sub -section (1) of section 10B which included from F.Y. 1.4.2000 to 31.3.2001, the word 'manufacture' includes any process from the F.Y. 1.4.2000 to 31.3.2001 onwards this term 'manufacture' has been replaced by the word 'produce'. The said word 'produce' is not defined anywhere in the section. Therefore, taking into consideration in the normal sense of the word produce which is derived from the word 'production' is taken by the ld. CIT(A) as normal meaning of production which is involvement of manpower, skill and some degree of complexity. However, the Hon'ble Apex Court in the case of Lucky Minmat P. ltd [supra] has unambiguously held that mining of lime stones, marble blocks and cutting and sizing the same do not involve any manufacturing process. In the present case on hand, undisputedly the assessee is carrying on the activity of processing of rough marble slabs by edge cutting and polishing them before their export. So, in view of similarity of the facts in the present case on hand with that of the facts in the case of Lucky Minmat P. Ltd [supra], it is to be held that the activity of the assessee will not amount to manufacture, which word is used in sec. 10B. Therefore, under these facts and circumstances of the case, we are of the considered view that the reasoning given by the ld. CIT (A) is going contra to the dictum laid by the Hon'ble Apex Court in the case of Lucky Minmat P. ltd [supra] and relied on by the Assessing Officer. Therefore, we are of the considered view that the ld. CIT(A)'s finding on this issue is not sustainable for legal scrutiny and hence the same is hereby set aside by restoring that of the Assessing Officer by allowing the ground raised by the department."
(3.) ANOTHER issue involved in the matter had been in relation to the claim of benefit under Section 80 -HHC of the Act that had also been decided by the CIT(A) in favour of the assessee but the ITAT proceeded to rule in favour of the revenue. The amount involved on this score had been Rs.33,426/ - and the learned counsel for the appellant has frankly not pressed on this ground for meagre financial implication and further for the fact that on the other part of issue, the revenue has not filed any appeal. Thus, the claim for benefit under Section 80 -HHC would not require adjudication in the present matter.;