Jumbo Mining Limited, Hyderabad V. ACIT, Hyderabad

ITA 43/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61942 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAO
• Keywords: Reopening of assessment; Tangible material
• Section: 43B; 143(3); 234B; 115JB; 80IB; 80G; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 43/HYD/2010 A.Y. 2006-07 M/S. IMERYS CERAMICS (INDIA) PVT. LTD., (FORMERLY M/S. JUMBO MINING LTD.), HYDERABAD PAN: AAACJ7424Q VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(1) HYDERABAD APPELLANT RESPONDENT ITA NO. 870/HYD/2010 A.Y. 2005-06 ITA NO. 1056/HYD/2010 A.Y. 2007-08 M/S. IMERYS CERAMICS (INDIA) PVT. LTD., (FORMERLY M/S. JUMBO MINING LTD.), HYDERABAD PAN: AAACJ7424Q VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI K.C. DEVDAS RESPONDENT BY: SHRI M.S. RAO DATE OF HEARING: 02.05.2012 DATE OF PRONOUNCEMENT: 02.07.2012 O R D E R PER CHANDRA POOJARI, AM: THE ABOVE THREE APPEALS BY THE ASSESSEE ARE DIRECT ED AGAINST DIFFERENT ORDERS OF THE CIT-III, HYDERABAD FOR ASSE SSMENT YEARS 2005-06 TO 2007-08. SINCE CERTAIN ISSUES INVOLVED IN THESE APPEALS ARE COMMON IN NATURE, THESE APPEALS ARE CLU BBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY, WE WILL TAKE UP THE ISSUE WITH REGARD TO V ALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S. 147 OF INCOME-TAX ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 2 ACT, 1961 IN I.T.A. NO. 870/HYD/2010 FOR ASSESSMENT YEAR 2005- 06. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS A COMPANY WHICH DERIVES INCOME FROM EXTRACTION OF MINERAL ORE S AND EXPORT. IN THIS CASE THE ORIGINAL ASSESSMENT FOR A.Y. 2005- 06 WAS COMPLETED ON 31.12.2007 ON AN INCOME (BOOK PROFIT) OF RS. 69,41,578. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE SAID ASSESSMENT YEAR ON 1.11.2005 SHOWING INCOME AT NIL UNDER NORMAL PROVISIONS, AFTER CLAIMING DEDUCTION U/S. 80 IB(5) OF THE ACT. ON SCRUTINY, THE ASSESSMENT WAS COMPLETED ON THE ABOVE BOOK PROFIT AMOUNT ON 31.12.2007. HOWEVER, LATER, THE ASSESSING OFFICER NOTICED THAT IN THE SAID ASSESSMENT THE ASS ESSEE HAS BEEN ALLOWED EXCESS DEDUCTION TO THE EXTENT OF RS. 51,91 ,951. THEREFORE, SHE RE-OPENED. THE U/S. 147 OF THE ACT AND ACCORDIN GLY, HAS ISSUED A NOTICE U/S. 148 FOR THIS ASSESSMENT YEAR ON 24.3. 2009. IN RESPONSE TO THIS NOTICE, THE ASSESSEE HAS SUBMITTED THAT THE ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILE D IN RESPONSE TO NOTICE U/S., 148 OF THE ACT. 4. DURING THE RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS OBJECTED TO SUCH PROCEEDINGS STATING THAT ALL FACTS NECESSARY FOR ASSESSMENT HAVE BEEN DISCLOSED BY THEM AND SUCH PRE SENT ACTION OF THE ASSESSING OFFICER IS A MERE CHANGE OF OPINIO N. HOWEVER, AFTER DISCUSSING THE FACTUAL POSITION AND REFERRING TO THE PROVISO TO SECTION 147 OF THE ACT, THE ASSESSING OFFICER REJEC TED SUCH CONTENTION. SHE FURTHER NOTED THAT DURING THE ASSE SSMENT PROCEEDINGS FOR A.Y. 2006-07, WHILE CALLING FOR DET AILS OF EXCISE DUTY LIABILITY, THE ASSESSEE HAS FILED A LETTER ON 17.11.2008 STATING THAT JUMBO MINING LTD., PURCHASES/ EXCAVATES MINERALS AND PROCESS THE SAME FOR DIFFERENT SIZES AND THE FINAL PRODUCT IS SAME AS INPUT AND NO OTHER MATERIALS ARE ADDED IN SUCH P ROCESS. HENCE, ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 3 IT IS NOT SUBJECTED TO EXCISE DUTY. SHE FURTHER NO TED THAT SUCH SUBMISSION LED TO THE NEW FACT THAT THE GOODS PRODU CED BY THE ASSESSEE COMPANY ARE NOT SUBJECTED TO EXCISE DUTY A ND THE SAME CAUSED THE ASSESSING OFFICER TO BELIEVE THAT INCOME IN THIS CASE HAS ESCAPED ASSESSMENT BY ALLOWANCE OF EXCESS DEDUC TION U/S. 80IB(5) FOR A.Y. 2005-06. 5. DURING THE ASSESSMENT PROCEEDINGS, IN RESPONSE TO Q UERY FROM THE ASSESSING OFFICER TO SUBSTANTIATE THEIR CL AIM OF DEDUCTION MADE U/S. 80IB(5), THE ASSESSEE HAS SUBMITTED THAT THEIR COMPANY IS INTO THE BUSINESS OF PRODUCTION OF PF LUMPS, FE LUMPS, PF POWDER, CLAY, PF QUARTZ AND CHIPS FROM MINED FELDSP AR, QUARTZ WHICH IS SALEABLE IN THE MARKET. THE MANUFACTURING PROCESSES CARRIED OUT BY THEIR COMPANY RESULTS IN FE CHIPS, G RANULES/LUMPS AND POWDER OF POTASSIUM FELDSPAR, CLAY ETC. THESE GOODS ARE CLASSIFIED UNDER CHAPTER 25 OF THE CENTRAL EXCISE T ARIFF ACT. IT WAS SUBMITTED THAT RAW MATERIALS WHEN EXTRACTED FROM MI NES ARE OF INSIGNIFICANT VALUE AND ONLY WHEN PROCESSED THEY BE COME VALUABLE MARKETABLE COMMODITIES. IT WAS FURTHER SUBMITTED TH AT PLANT AND MACHINERY WORTH RS. 2 GORES IS USED FOR THE PURPOSE OF PROCESSING AND, THEREFORE, THE ACTIVITY IS TO BE TREATED AS MA NUFACTURING. IT WAS STATED, PRODUCTION OF PF LUMPS, FE LUMPS, PF PO WDER, CLAY, PF QUARTZ AND CHIPS FROM MINED FELDSPAR, QUARTZ, IS A MANUFACTURING ACTIVITY. AFTER CONSIDERING SUCH SUB MISSIONS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY I S SIMPLY CARRYING OUT THREE ACTIVITIES VIZ., I) CRUSHING, II ) SORTING FOR SEPARATION OF BIGGER LUMPS FROM SMALLER ONES AND II I) TESTING FOR MOISTURE CONTENT. BIGGER LUMPS EXTRACTED FROM MINE S, AFTER PASSING THROUGH CRUSHER, BALL MILL ETC., ARE CONVER TED TO CHIPS OR GRANULES OR POWDER WITHOUT LOSING THEIR MINERALOGIC AL IDENTITY. SHE NOTED THAT NO CHANGE OCCURS IN ITS PHYSICAL AS WELL AS CHEMICAL PROPERTIES AND THIS FACT IS CONFIRMED BY THE ASSESS EE COMPANY ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 4 ITSELF IN THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS FOR A.Y. 2006-07 BY FILING A LETTER DATED 17.11.2008 . SHE FURTHER NOTED, FROM THE ABOVE, IT CAN BE CONCLUDED THAT THE ASSESS EE IS NOT DOING ANY MANUFACTURING OR PRODUCING ANY ARTICLE OR THING WHICH IS ESSENTIAL CONDITION FOR CLAIMING DEDUCTION U/S. 80I B. SHE CLEARLY NOTED THAT THE ASSESSEE IS SIMPLY EXTRACTING THE MI NERAL FROM THE EARTH AND THEN SIMPLY CRUSHES THE SAME INTO SMALLER PIECES OF VARIOUS SIZES. 6. THE ASSESSING OFFICER FURTHER NOTED THAT AS PER THE P&L ACCOUNT OF THE ASSESSEE, IT IS NOT INCURRING ANY DI RECT EXPENSES FOR THE PURPOSE OF MANUFACTURE OF ANYTHING WHICH IS NEW IN NAME AND CHARACTER. SHE NOTED THAT UNDER THE HEAD 'DIRECT E XPENSES', THE ASSESSEE HAS CLAIMED EXPENSES JUST FOR MINING, TRAN SPORTATION, LOADING AND UNLOADING ETC., WHICH CANNOT BE CONSTRU ED AS MANUFACTURING EXPENSES. FURTHER COMPARING THE FIGU RES OF TURN OVER SHOWN IN RESPECT OF PF LUMPS, PF CHIPS AND PF GRANULES AND THE SALE PRICE OF EACH ITEM PER METRIC TONNE, S HE NOTED THAT THE RAW MATERIAL EXTRACTED FROM THE MINES I.E., PF LUMPS WERE SOLD AT A HIGHER PRICE THAN THE OTHER TWO ITEMS, OB TAINED DURING CRUSHING ACTIVITY. SHE FURTHER MENTIONED THAT, THE ABOVE FACT CONTRADICTS THE CLAIM OF THE ASSESSEE THAT RAW MATE RIALS WHEN EXTRACTED FROM MINES ARE OF INSIGNIFICANT VALUE. W ITH THE ABOVE OBSERVATIONS, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE COMPANY IS NOT INVOLVED IN MANUFACTURING OF ANY PRO DUCT AS REQUIRED U/S. 80IB(5) OF THE ACT. SHE THUS HELD THA T THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 80IB OF THE ACT. THE REFORE, SHE DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB FOR AN AMOUNT OF RS. 51,91,951 AND COMPLETED THE ASSESSMEN T ACCORDINGLY U/S. 143(3) R.W.S. 147 OF THE ACT. ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 5 7. THE LEARNED AR SUBMITTED THAT THE ASSESSEE COMPAN Y IS ENGAGED IN THE BUSINESS OF EXTRACTION, PROCESSING A ND TRADING OF MINERAL ORES. IT HAS SET UP A UNIT TOR PROCESSING A ND MANUFACTURE OF ORES AT KADTHAL, MAHBOOBNAGAR DISTRICT, ANDHRA P RADESH. THE COMMERCIAL PRODUCTION STARTED IN FINANCIAL YEAR 200 4-05. FOR A.Y. 2005-06, THE ASSESSEE COMPANY HAS FILED RETURN OF I NCOME ON 1.11.2005 SHOWING INCOME AT NIL, AFTER CLAIMING DED UCTION U/S. 80IB(5) OF THE ACT, UNDER THE NORMAL PROVISIONS AND TOTAL INCOME OF RS. 69,41,576 COMPUTED U/S. 115JB OF THE ACT. IT WAS SUBMITTED THAT SCRUTINY ASSESSMENT WAS COMPLETED U/ S. 143(3) AFTER DUE VERIFICATION OF RECORDS. IT WAS STATED, THERE IS NO NEW MATERIAL FACT BEFORE THE ASSESSING OFFICER AND THE PRESENT DISALLOWANCE MADE BY HER IS ON A MERE CHANGE OF OPI NION. IT WAS SUBMITTED THAT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., (2010) 320 ITR 561, IT WAS HELD BY THE SUPREME COUR T THAT THERE MUST BE TANGIBLE MATERIAL FOR THE FORMATION OF BELI EF THAT INCOME HAS ESCAPED ASSESSMENT. THE AR SUBMITTED THAT IN T HE INSTANT CASE, THERE WAS NO TANGIBLE MATERIAL AT THE TIME OF ISSUING THE NOTICE BY THE ASSESSING OFFICER U/S. 148 TO COME TO A CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT IN THIS CASE. TH E AR SUBMITTED THAT THE ONLY BASIS FOR REOPENING THE ASS ESSMENT IN THIS CASE IS THE SAID LETTER FILED BY THE ASSESSEE DURIN G THE ASSESSMENT PROCEEDINGS FOR A.Y. 2006-07, WHEREIN IT WAS SUBMIT TED THAT THE FINAL PRODUCT OF THE COMPANY IS SAME AS INPUT AND N O OTHER MATERIALS ARE ADDED IN THE PROCESS. IT WAS STATED THAT THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THIS REGARD IS NOT CORRECT. THE ASSESSING OFFICER FAILED TO APPRE CIATE AND TAKE ON RECORDS THAT THE COMPANY'S GOODS ARE SUBJEC T TO EXCISE DUTY UNDER THE INDIAN EXCISE LAWS. HOWEVER, VIDE NOTIFICATION NO. 36/ 2001-CE(NT), DATED JUNE 26 TH , 2001, THE COMPANY ENJOYS EXCISE DUTY EXEMPTION. THE AR SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIF IED IN REOPENING THE ASSESSMENT IN THIS CASE. IT WAS FURT HER CONTENDED THAT SUCH ACTION OF THE ASSESSING OFFICER IS AB ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 6 INITIO VOID BOTH UNDER LAW AND FACTS. IN THIS REGARD, THE AR RELIED ON SEVERAL DECISIONS. 8. THE LEARNED DR SUBMITTED THAT HE IS NOT AGREEING WI TH THE CONTENTION OF THE AR. IN THE LETTER DT. 17.11.2008 FILED DURING ASSESSMENT PROCEEDINGS FOR A.Y. 2006-07, THE ASSESS EE HAS STATED THAT THE FINAL PRODUCT IS SAME AS INPUT AND NO OTHE R MATERIALS ARE ADDED IN THE PROCESS, AND THE ASSESSING OFFICER HAS REFERRED TO SUCH SUBMISSION TO PRIMA FACIE REACH THE CONCLUSION THAT THE ASSESSEE IS NOT ENGAGED IN MANUFACTURING OR PRODUCT ION OF ANY ARTICLE OR THING HOW CAN THE AR SUBMIT THAT SUCH O BSERVATIONS MADE BY THE ASSESSING OFFICER ARE NOT CORRECT? SECO NDLY, FROM THE ASSESSMENT ORDER, MADE IN THIS CASE ON 31.12.2007 U /S. 143(3) OF THE ACT, THE CLAIM OF SUCH DEDUCTION U/S. 80IB MADE BY THE ASSESSEE HAS NOT BEEN EXAMINED BY THE THEN ASSESSIN G OFFICER. IN THIS CONTEXT, IT IS PERTINENT TO REPRODUCE THE ENTI RE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE SAID ASSESSMEN T ORDER, BEFORE COMPUTATION OF TOTAL INCOME AND TAX CALCULATION MAD E IN THAT ORDER: THE ASSESSEE, M/S. JUMBO MINING LIMITED, HYDERABAD, IN THE ACTIVITY OF EXTRACTING AND PROCESSING OF MIN ES, HAS FILED RETURN OF INCOME FOR THE A.Y. 2005-06 ON 1.11.2005 DECLARING NIL INCOME UNDER NORMAL PROVISIONS AND A BOOK PROFIT OF RS. 69,41,578/- AS PER SECTION 115JB OF THE INCOME TAX ACT, 1961. THE SAME WAS PROCESSED U/S. 143(1) ON 28.3.2007. SUBSEQUENTLY, THE CASE HAS BEEN SELECTED FOR SCRUTINY BY CASS AND NOT ICE U/S. 143(2) WAS ISSUED ON 16.3.2007. IN RESPONSE TO NOTICES U/S, 143(2), ASSESSEE'S AUTHORISED REPRESENTATIVE SHRI MANOJ PATEL, ITP, HAS APPEARED FROM TIME TO TIME AND PRODUCED DETAILS CALLED FOR. THE INFORMATION PRODUCED HAS BEEN EXAMINED. AFTER VERIFICATION OF DETAILS FILED AND DISCUSSION WITH T HE ASSESSEE'S A.R., THE ASSESSMENT IS COMPLETED ACCEPT ING INCOME RETURNED. 9. ACCORDING TO AR, FROM THE ABOVE, IT MAY BE SEEN TH AT THERE IS NO REFERENCE AT ALL TO SECTION 80IB OF THE ACT I N THE SAID ASSESSMENT ORDER. THERE IS NO MENTION REGARDING VER IFICATION OF ANY CLAIM MADE BY THE ASSESSEE. EVEN THERE IS NO R EFERENCE TO ANY ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 7 MANUFACTURE OR PRODUCTION OF ANY ARTICLE BY THE ASS ESSEE. UNDER THE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE THEN ASSESSING OFFICER HAS FORMED AN OPINION DURING SUCH ASSESSMEN T PROCEEDINGS. CONSEQUENTLY, IT CANNOT BE SAID THAT THE PRESENT ACTION OF THE ASSESSING OFFICER IN THIS CASE TANTAM OUNT TO CHANGE 'OF SUCH OPINION. RATHER, HAVING REGARD TO THE REAS ONS RECORDED BY THE ASSESSING OFFICER, FOR ENTERTAINING THE BELIEF, REGARDING ESCAPEMENT OF TAXABLE INCOME IN THE HANDS OF THE AS SESSEE THE REOPENING OF ASSESSMENT IN THIS CASE U/S. 147 OF TH E ACT IS JUSTIFIED. 10. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PE RUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF M/S. KERNEX MIC RO SYSTEMS (INDIA) LTD., IN I.T.A. NO. 882/HYD/2006 & ORS. TH E TRIBUNAL VIDE ORDER DATED 30.3.2012 HELD AS UNDER: '5. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED T HE MATERIAL AVAILABLE ON RECORD. IN THIS CASE THERE I S NO ASSESSMENT U/S. 143(3) OF THE ACT AND ONLY THE RETU RN WAS PROCESSED U/S. 143(1) OF THE ACT. THE REOPENIN G OF THE ASSESSMENT IS WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. AS PER CLAUSE (B) OF EXPLANATION 2 TO PROVISO TO SECTION 147 WHERE A RET URN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION , ALLOWANCE OR RELIEF IN THE RETURN, THE ASSESSING OF FICER IS ENTITLED TO REOPEN THE ASSESSMENT. FURTHER IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA), IT WAS HELD THAT THE ASSESSING OFFICER IS HAVING JURISDICTION TO ISSUE NOTICE U/S. 148 FOR BRINGING TO TAX INCOME ESCAPING ASSESSMENT ON THE GROUND THAT THE ASSESSEE CLAIMED EXCESSIVE RELIEF OR DEDUCTION. IN THE PRESENT CASE CONSIDERING THE EXCESSIVE CLAIM OF THE ASSESSEE U/S. 80HHE, WE ARE OF THE OPINION THAT REOPENING OF ASSESSMENT IS VALID. 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF H.V. TRANSMISSIONS LTD. (SUPRA). IN THIS CASE THE ASSES SEE ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 8 INCURRED EXPENSES TOWARDS ENTERPRISE RESOURCE PLANNING SOFTWARE AMOUNTING TO RS. 95.14 LAKHS. IN THE ACCOUNTS THE ASSESSEE HAS DEBITED 25% OF THIS AMOUN T I.E., RS. 23,78,500 WHEREAS IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED THE ENTIRE AMOUNT OF RS. 95.14 LAKHS AS DEDUCTION. THE EXPENSES INCURRE D BY THE ASSESSEE IS PAYMENT FOR ACQUISITION OF SOFTW ARE WHICH IS CAPITAL IN NATURE. HENCE THE ASSESSMENT I S REOPENED TO DISALLOW THE SAME. ON APPEAL TO THE TRIBUNAL, IT WAS HELD THAT THERE WAS NO MATERIAL CO MING TO THE POSSESSION OF THE ASSESSING OFFICER ON THE B ASIS OF WHICH THE ASSESSMENT COMPLETED U/S. 143(1) WAS REOPENED AND THIS POSITION HAS NOT BEEN DISPUTED EV EN BY THE DR. BEING SO, IN THE PRESENT CASE WE ARE N OT IN A POSITION TO APPLY THE RATIO LAID DOWN BY THAT DEC ISION BECAUSE CLAUSE (B) TO EXPLANATION 2 TO PROVISO 2 OF SECTION 147 CLEARLY AUTHORISES THE ASSESSING OFFICE R TO REOPEN THE ASSESSMENT. THIS PROVISION IS TO BE CONSIDERED FOR THE PURPOSE OF ADJUDICATING THIS ISS UE. THIS GROUND RELATING TO REOPENING OF ASSESSMENT IS DECIDED AGAINST THE ASSESSEE.' 11. IN THE PRESENT CASE THE ASSESSMENT WAS REOPENED ON NOTICING THAT EXCESS DEDUCTION TO THE EXTENT OF RS. 51,91,951 WAS GRANTED TO THE ASSESSEE. THIS RE-OPENING OF ASSESS MENT IS FALLING UNDER THE PURVIEW OF CLAUSE (B) TO EXPLANATION 2 T O PROVISO 2 OF SECTION 147 OF THE ACT. BEING SO, CONSIDERING THIS FACT AND FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL IN TH E CASE OF M/S. KERNEX MICRO SYSTEMS (INDIA) LTD., CITED (SUPRA), W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SA ME IS UPHELD. THIS GROUND OF THE ASSESSEE FAILS. 12. THE NEXT COMMON GROUND ALL THESE APPEALS IS WITH RE GARD TO DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U /S. 80IB OF INCOME-TAX ACT, 1961. 13. FACTS OF THE ISSUE, IN BRIEF, ARE THAT THE ASSESSEE CARRIED OUT BASICALLY THREE TYPES OF ACTIVITIES, VIZ., (I) EXTR ACTING RAW MATERIAL FROM ITS OWN MINES, (II) MANUFACTURING FINISHED PRO DUCT AT THE KADTHAL PLANT AND (III) TRADING OF RAW MATERIALS. BASICALLY MINING ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 9 ACTIVITY IS CARRIED OUT AT VARIOUS MINES SITUATED A T DINDICHINTAPALLY VILLAGE, KORATIKAL VILLAGE, MUDHI MANIKYAM VILLAGE AND RANGAPUR VILLAGE. MANUFACTURING ACTIVITY WAS CARRIED OUT AT FACTORY SITUATED AT KADTHAL VILLAGE, MAHABOOBNAGAR DISTRICT., A.P. N OTIFIED AS AN INDUSTRIALLY BACKWARD AREA. BESIDES THE ABOVE EXTR ACTING AND MANUFACTURING ACTIVITIES, THE ASSESSEE IS DOING TRA DING ACTIVITY IN RAW MATERIAL. THE ASSESSEE CLAIMED EXEMPTION U/S. 80IB ON THE PROFITS OF MANUFACTURING ACTIVITY. ACCORDING TO TH E ASSESSEE IT WAS ENGAGED IN MANUFACTURING OF DIFFERENT MINERAL PRODU CTS AND IN ORDER TO HAVE REGULAR AND UNINTERRUPTED SUPPLY OF R AW MATERIAL IT STARTED ITS OWN MINING. 14. FOR BREVITY, WE WILL NOW CONSIDER THE FACTS RELATIN G TO ASSESSMENT YEAR 2006-07. THE ASSESSEE IS A COMPANY WHICH IS ENGAGED IN EXTRACTING AND PROCESSING OF MINES. FOR THE A.Y. 2006- 07, IT HAS FILED ITS RETURN OF INCOME ON 26/11/2006 SHOWING INCOME OF RS ,46,91,230, AFTER CLAIMING DEDUCTION F OR RS. 1,00,78,425 U/S, 80-IB AND FOR RS. 1,200 U/S. 80G O F THE ACT. AFTER PROCESSING OF THE RETURN U/S. 143(1) OF THE A CT, THE SAME WAS SELECTED FOR SCRUTINY ASSESSMENT. FROM THE AUDIT R EPORT IN FORM 3CD FILED WITH THE RETURN, THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE HAS PAID A SUM OF RS, 49,93,369 TOWARDS SE RVICE TAX, WHICH ACCORDING TO HIM IS NOT ALLOWABLE U/S, 40A(9) OF THE ACT. FURTHER STATING THAT NO CLARIFICATION HAS BEEN FILE D BY THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT. F ROM THE SAID AUDIT REPORT THE ASSESSING OFFICER FURTHER NOTICED THAT A SUM OF RS. 82,624 TOWARDS EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND, WAS PAID BY THE ASSESSEE AFTER THE DUE DATES, AS DEFINED UNDER SAID ACT / REGULATION. SINCE THE SAID CONTRI BUTION HAS NOT BEEN PAID BY THE DUE DATE, REFERRING TO PROVISIONS OF SEC. 36(1)(VA) OF THE ACT, THE ASSESSING OFFICER DISALLOWED THE SA ID AMOUNT. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAS DEBITED AN ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 10 AMOUNT OF RS, 43,909/- TO P&L A/C. TOWARDS LOSS ON SALE OF ASSETS. THE SAME BEING A CAPITAL LOSS, THE ASSESSING OFFICE R DISALLOWED THE SAID AMOUNT. HE FURTHER NOTED THAT THOUGH THE ASSES SEE HAS DEBITED AN AMOUNT OF RS. 52,950 TOWARDS DONATIONS, IT HAS DISALLOWED ONLY A SUM OF RS. 51,750, IN THE COMPUTA TION OF INCOME. SINCE THE BALANCE AMOUNT OF RS. 1,200 HAS NOT BEEN ADDED BACK, THE ASSESSING OFFICER DISALLOWED THE SA ME. FURTHER, THOUGH THE ASSESSEE HAS CLAIMED DEDUCTION FOR A SUM OF RS. 1,200 U/S. 80G OF THE ACT, STATING THAT IT HAS NOT PRODUC ED ANY DOCUMENTARY EVIDENCE FOR SUCH DONATION, THE ASSESSI NG OFFICER DISALLOWED THE SAME. 15. AS STATED ABOVE, IN THE RETURN THE ASSESSEE HAS CLA IMED DEDUCTION FOR AN AMOUNT OF RS. 1,00,78,425 U/S. 80- IB. HOWEVER, ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE WAS NOT MANUFACTURING ANY NEW ARTICLE OR THING AS REQUIRED U/S. 80IB OF THE ACT. THEREFORE, DURING THE ASSESSMENT PROCEEDIN GS, HE HAS ASKED THE ASSESSEE TO EXPLAIN AS TO WHY SUCH CLAIM SHOULD NOT BE DISALLOWED. IN RESPONSE TO THIS, THE ASSESSEE HAS SUBMITTED THAT THEIR COMPANY IS ENGAGED IN BUSINESS OF MANUFACTURI NG CHIPS, GRANULES AND POWDER POTASSIUM FELDSPAR, QUARTZ AND NATURAL CALCIUM BENTONITE AT THEIR PLANT AT KADTHAL VILLAGE , MAHABOOBNAGAR DIST. EXPLAINING ABOUT ITS MANUFACTUR ING PROCESS, THE ASSESSEE HAS SUBMITTED THAT THE RAW MATERIAL EX TRACTED FROM THE EARTH IS PASSED THROUGH PRIMARY CRUSHER AND THE N SENT TO IMPACTOR FOR FURTHER CRUSHING INTO SMALLER PIECES. LATER, THE METAL IS SEPARATED USING VIBRATOR AND CONVEYER SYSTEM. TH E LUMPS THAT ARE FORMED AFTER SEPARATION, ARE CRUSHED AND REDUCE D TO VARIOUS SIZES. STATING THAT THEIR KADTHAL UNIT IS A MANUFAC TURING PLANT, THE ASSESSEE HAS SUBMITTED THAT IT IS ELIGIBLE FOR DEDU CTION U/S. 80IB. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: 1. M/S. ARIHANT TILES AND MARBLES (P) LTD. VS. ITO (29 5 ITR 148) (RAJ.) 2. CIT VS. GOPAL (M.R.) (58 ITR 598) (MAD.) ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 11 3. CIT VS. KUTCH OIL AND ALLIED INDUSTRIES PVT. LTD. ( 163 ITR 237 (GUJ.) 4. CIT VS. SREE KRISHNA PULVERISING MILLS (241 ITR 262 ) (AP) 5. ABDUL AHAD NAJAR (248 ITR 744) (J&K) 6. CIT VS. JAMAL PHOTO INDUSTRIES (I) (P) LTD. (285 IT R 209) (MAD.) 16. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED SUC H SUBMISSIONS OF THE ASSESSEE. HE NOTED THAT THE ASSE SSEE IS NOT IN THE BUSINESS OF MANUFACTURING OR PRODUCING ANY ARTI CLES OR THINGS. IT IS IN THE BUSINESS OF MINING THE STONES AND EXPO RTING THE STONES. IT IS NOT MANUFACTURING ANY NEW ARTICLE OR THING WH ICH IS HAVING ITS OWN CHARACTER, USE AND NAME. REFERRING TO THE CLAR IFICATION FURNISHED BY THE ASSESSEE ON MANUFACTURING PROCESS IN ITS CASE, THE ASSESSING OFFICER OBSERVED THAT THE BUSINESS AC TIVITY IN THE CASE OF THE ASSESSEE IS NOT A MANUFACTURING ACTIVIT Y BECAUSE THE FINAL OUTCOME OF SUCH ACTIVITY IS NOT A NEW ARTICLE OR THING WHICH IS HAVING DISTINCT INDIVIDUAL IDENTITY, NAME AND USE. HE NOTED THAT BECAUSE OF ITS BLASTING ACTIVITY, THE ASSESSEE IS G ETTING DIFFERENT ITEMS, VIZ., PF LUMPS, FA LUMPS, PF POWER, CLAY, PF QUARTS AND CHIPS. HOWEVER, THESE ITEMS ARE NOT NEW ARTICLES O R THINGS AND THEY DO NOT HAVE ANY NEW IDENTITY OR NAME WHICH IS DISTINCT FROM THE ORIGINAL MATERIAL. HE FURTHER NOTED THAT THE A SSESSEE IS NOT USING SKILLED LABOUR AND IS NOT MAKING SIGNIFICANT VALUE ADDITION WHICH IS ESSENTIAL IN THE MANUFACTURING ACTIVITY. T HE ASSESSEE INCURRED EXPENDITURE TOWARDS 'DIRECT EXPENSES', THA T WAS FOR THE PURPOSE OF SIMPLE MINING, TRANSPORTATION, LOADING A ND UNLOADING ETC. THE SAME CANNOT BE CONSTRUED AS MANUFACTURING EXPENSES. HE NOTED THAT THE ASSESSEE IS SIMPLY ENGAGED IN PRO CESSING ACTIVITY. IN THIS REGARD, HE RELIED ON THE FOLLOWI NG DECISIONS- 1. BHARAT FORGE AND PRESS INDUSTRIES PVT. LTD. CCE (1 SCC 532) 2. UNION OF INDIA VS. J.G. GLASS INDUSTRIES LTD., (199 8) (2 SCC 32) 3. DEVI DASS GOPAL KRISHNAN VS. STATE OF PUNJAB (AIR 1 967 SC 1895) 4. EMPIRE INDUSTRIES LTD. VS. UNION OF INDIA (1985) (3 SCC 314) 5. GRAMOPHONE CO. OF INDIA LTD. VS. COLLECTOR OF CUSTO MS (1 SCC 549) 6. COLLECTOR OF CENTRAL EXCISE VS. RAJASTHAN STATE CHE MICAL WORKS (4 SCC 473) 7. NILGIRI'S CASE (10 STC 500)(BOM) 8. CHOWGULE'S CASE (1981)(1 SCC 653) ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 12 17. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESS EE IS NOT ASSESSABLE TO CENTRAL EXCISE DUTY BECAUSE ITS BUSIN ESS ACTIVITY DOES NOT FALL UNDER PURVIEW OF 'MANUFACTURE OF ANY THING OR ARTICLE', THAT ATTRACTS THE PROVISION OF CENTRAL EXCISE ACT. HE FURTHER NOTED THAT THE ASSESSEE IS SIMPLY EXTRACTING THE MINERAL FROM THE EARTH AND THEN SIMPLY CRUSHING THE SAME INTO SMALLER PIEC ES OF VARIOUS SIZES. SUCH ACTIVITY CANNOT BE CONSIDERED AS MANUFA CTURING ACTIVITY. HE NOTED THAT THE ASSESSEE IS ONLY DOING BUSINESS OF MINING OF FELDSPAR AND AFTER CUTTING / SIZING THE S AME INTO CHIPS, GRANULES AND POWDER, IS SELLING SUCH PRODUCTS IN TH E MARKET. WITH THESE OBSERVATIONS, HE HELD THAT THE ACTIVITY OF TH E ASSESSEE CANNOT BE CONSTRUED AS MANUFACTURE / PRODUCTION. IN THIS R EGARD, HE RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF LUCKY MINERALS PVT. LTD, VS. CIT (116 TAXMAN 1) (SC). ST ATING THAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF MANUFACT URE OR PRODUCTION OF ANY ARTICLE OR THING, HE HELD THAT TH E ASSESSEE CANNOT BE ALLOWED DEDUCTION U/S. 80IB OF THE ACT. ACCORDINGLY, HE DISALLOWED SUCH CLAIM OF THE ASSESSEE AND WITH THE OTHER DISALLOWANCES DISCUSSED ABOVE, COMPLETED THE ASSESS MENT ON A TOTAL INCOME OF RS. 1,98,92,852 VIDE ORDER DATED 26 /12/2008 PASSED U/S. 143(3) OF THE ACT. 18. BEFORE THE CIT(A) IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSING OFFICER ERRED IN DISALLOWING SERVICE TAX OF RS, 49,93,369/- U/S. 40A(9) OF THE ACT, AFTER NOTICIN G THE ITEM NO. 17 IN 3CD REPORT, WITHOUT SEEKING ANY CLARIFICATION ON THE SAID MATTER DURING THE ASSESSMENT PROCEEDINGS. THE SAME WAS AL READY DISCLOSED IN THE ANNUAL REPORT UNDER THE ACCOUNTING POLICY AND NOTES TO ACCOUNTS, IN SCHEDULE 'Q' IN PARA 4 OF NOT ES TO ACCOUNTS, WHICH FORMS PART OF ACCOUNT FURNISHED. IT WAS FURTH ER SUBMITTED THAT SAID SERVICE TAX OF RS. 49,93,369 IS A CONTING ENT LIABILITY, AS THE SAME HAS BEEN DISPUTED BY THE COMPANY VIDE THEI R LETTER DATED ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 13 12/06/2007, AGAINST THE SHOW CAUSE NOTICE DATED 28/ 09/2006, RECEIVED FROM COMMISSIONER OF CUSTOMS & CENTRAL EXC ISE, HYDERABAD. IT WAS FURTHER SUBMITTED THAT THE SAME H AS NO IMPACT OVER THE FINANCIAL STATEMENT AS NO ENTRY FOR THE SA ID CONTINGENT LIABILITY IS PASSED IN THE BOOKS OF ACCOUNT. IT WA S CONTENDED, THEREFORE, THERE CANNOT BE ANY DISALLOWANCE ON THAT ACCOUNT. 19. THE LOWER AUTHORITIES DISALLOWED THE CLAIM OF THE A SSESSEE ON THE REASON THAT THE ASSESSEE IS ONLY EXTRACTING AND PROCESSING OF MINERALS FROM MINES. IT WAS FURTHER OBSERVED THAT THE NATURE OF ACTIVITY CARRIED OUT BY THE ASSESSEE IS ONLY CRUSHI NG THE LUMP ORES EXTRACTED FROM THE MINES FOR OBTAINING SMALLER PIEC ES OF VARIOUS SIZES. EVEN THOUGH IT HAS REFERRED USING OF VIBRAT OR, CONVEYER SYSTEM AND BALL MILL ETC. IN ITS PLANT, IT MAY BE S EEN THAT THE END PRODUCTS ARE ONLY THE SAME MINERALS OF SMALLER SIZE S. THERE IS NO CHANGE IN PHYSICAL AND CHEMICAL COMPOSITION, AFTER SUBJECTING THE ORIGINAL ORES TO DIFFERENT STAGES OF PROCESSING AT ITS PLANT AT KADTHAL VILLAGE. IN THE LETTER DATED 17/11/2008, FI LED BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS ADMITTED THAT J UMBO MINING LTD., PURCHASE / EXCAVATE MINERAL AND PROCESS IT FO R THE DIFFERENT SIZES. IT IS FURTHER STATED THAT THE FINAL PRODUCT IS SAME AS INPUT AND NO OTHER MATERIALS ARE ADDED IN THE .PROCESS, T HUS, THE ENTIRE ACTIVITY AT THEIR PLANT AT KADTHAL VILLAGE, CAN BE CATEGORIZED AS CRUSHING OF THE ORES/ MINERALS, EXTRACTED FROM THE MINES. IT IS NOT ENGAGED IN ANY MANUFACTURING ACTIVITY. IT IS NOT MA NUFACTURING ANY NEW ARTICLE OR THING INVOLVING CHANGE BOTH IN P HYSICAL AND CHEMICALS COMPOSITION. IN CLAUSE (A) TO THE NEWLY I NSERTED SECTION 2(29BA), WHILE DEFINING 'MANUFACTURE', THERE IS REF ERENCE TO THE WORD TRANSFORMATION. HOWEVER, EVEN THOUGH, FOLLOWIN G THE CRUSHING OF THE ORE AT THE PLANT AT KADTHAL, THERE IS TRANSFORMATION TO THE ORIGINAL RAW MATERIAL, SINCE THE ABOVE NEWLY INSERTED SECTION (INSERTED VIDE FINANCE ACT, 2009) SHALL BE EFFECTIV E FROM ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 14 01/04/2009 THE SAME IS NOT APPLICABLE TO THE CASE OF THE ASSES SEE FOR THIS ASSESSMENT YEAR, I.E., 2006-07. THUS, THE ASSESSEE CANNOT CONTEND THAT IT WAS DOING BUSINESS OF MANUFACTURE D URING THE PREVIOUS YEAR RELEVANT TO A.Y. 2006-07. ACCORDINGL Y, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 20. THE LEARNED AR SUBMITTED THAT THE RAW MINERAL EXTRA CTED FROM THE EARTH IS PASSED THROUGH THE PRIMARY CRUSHE R AND THEN IT IS SENT TO THE IMPACTOR WHERE IT IS FURTHER CRUSHED INTO SMALLER PIECES. THE METAL IS THEN SEPARATED USING VIBRATOR AND THE CONVERTOR. THE LUMPS THAT ARE FORMED AFTER THE SEPA RATION ARE CRUSHED AND REDUCED INTO VARIOUS SIZES RANGING FROM 2 MM TO 12 MM. THE LUMPS COULD EITHER BE PROCESSED INTO CHIPS OR CONVERTED INTO POWDER IN THE BALL MILL. THEREAFTER, THE PRODU CT IS TESTED FOR ITS QUALITY AND MOISTURE, AFTER WHICH IT IS PACKED FOR DISTRIBUTION. IT WAS FURTHER STATED THAT IN ITS MANUFACTURING PROCES S, RAW- MATERIALS OF INSIGNIFICANT VALUE IS PROCESSED TO GE T VALUABLE MARKETABLE COMMODITY. IT WAS CONTENDED THAT THE PR OCESSES UNDERTAKEN BY THE ASSESSEE FULFILS ALL THE CRITERIA FOR 'MANUFACTURE'. IT WAS FURTHER CONTENDED THAT BY NO STRETCH OF IMAGINATION, THE POTASH FELDSPAR LUMPS, FULLERS EAR TH LUMPS, QUARTZ ETC. BE REGARDED AS THE SAME COMMERCIAL COMM ODITY AS POTASH FELDSPAR CHIPS, POTASH FELDSPAR GRANULES, PO TASH FELDSPAR POWDER, FULLERS EARTH CHIPS QUARTZ GRANULE S AND QUARTER POWER. STATING THAT THE ASSESSEE IS ENGAGE D IN MANUFACTURE/PRODUCTION OF POTASH FELDSPAR CHIPS, PO TASH FELDSPAR GRANULES, POTASH FELDSPAR POWDER, FULLERS EARTH CHIPS, QUARTZ GRANULES AND QUARTZ POWDER, THE ASSESSEE HAS CONTENDED THAT IT IS ENTITLED FOR DEDUCTION U/S. 80IB OF THE ACT. IN SUPPORT OF THEIR CLAIM FOR DEDUCTION UNDER THIS SECTION THE AR HAS RELIED ON ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 15 SEVERAL DECISIONS STATED ABOVE. FURTHER HE RELIED ON THE FOLLOWING JUDGEMENTS: 1. CIT V. CHIRANJEEVI WIND ENERGY LTD. (333 ITR 192) (MAD). 2. CIT VS. ZAINAB TRADING PVT. LTD. (333 ITR 144) (MAD) 3. CIT V. JACKSON ENGINEERS LTD. (341 ITR 518) (DEL) 4. CIT V. I. TECH ELECTRONICS (341 ITR 533) (GAU.) 5. CIT VS. MALLIKARJUN GEORESOURCES ASSOCIATES (341 ITR 581) (UTTARAKHAND) 6. CIT V. SESA GOA LTD (271 ITR 331) (SC) 7. BAJAJ TEMPO LTD V. CIT (196 ITR 188) (SC) 8. ASPINWALL AND CO V. CIT (251 ITR 323) (SC) 9. INDIA CINE AGENCIES V. CIT(308 ITR 98) (SC) 10. CIT V. EMPTEE POLY-YARN P .LTD. (320 ITR 665) (SC) 11. CIT V. ORACLE SOFTWARE INDIA LTD. (320 ITR 546) (SC) 12. ITO V. ARIHANT TILES AND MARBLES P. LTD. (320 ITR 79) ( SC) 13. VIJAY SHIP BREAKING CORPN. & ORS.V. CIT (314 ITR 309) (SC ) 14. ORISSA STATE WAREHOUSING CORPORATION V. CIT (237 ITR 589) (S C) 15. CIT V. EASTERN BOOK COMPANY (322 ITR 605) (ALL) 16. CIT V. DIMAC INDUSTRIES (2 DTR 355) (BOM) 17. CIT V. MERCANTILE CONSTRUCTION CO. (74 TAXMAN 41) (CAL) 18. CIT V. RAMSONS ORGANICS LTD. (31 DTR 83) (DEL) 19. CIT V. UNIVMINES PVT. LTD. (202 ITR 825) (DEL) 20. CIT V. R.C. CONSTRUCTION (222 ITR 658) (GAUHATI) 21. CIT V. SHRI JANAK RAJ BANSAL (2010-TIOL-10-HC-HP-IT) 22. CIT V. M/S. SHIV RAM VEG FOOD INDUSTRIES (2010-TIOL-114-HC-HP- IT) 23. D.J. STONE CRUSHER V. CIT. (33 DTR 267) (HP) 24. CIT VS. MYSORE MINERALS LTD. (250 ITR 725) (KARN) 25. CIT V. GOPAL (MR) (58 ITR 598) (MAD) 26. CIT V. TATA LOCOMOTIVE AND ENGINEERING CO. LTD. (68 ITR 325) (BOM) 27. CIT V. GOGTE MINERALS (NO. 2) (225 ITR 60) (KARN) 28. CIT V. AIR SURVEY CO. OF INDIA (P) LTD. (232 ITR 707) (CA L) 29. CIT V. TAMIL NADU HEAT TREATMENT AND FETTING SERVICE S (P) LTD. (NO. 1) (238 ITR 529) (MAD) 30. CIT V. JALNA SEEDS PROCESSING AND REFRIGERATION CO. LTD. (246 ITR 156) (BOM) 31. CIT V. COMP-HELP SERVICES P. LTD. (246 ITR 722) (MAD) 32. CIT V. DARSHAK LTD. (247 ITR 489) (KARN) 33. CIT V. J.K.K. TEXTILE PROCESSING MILLS (249 ITR 487) (MA D) 34. CIT V. LAXMI ART STUDIO (249 ITR 710) (RAJ) 35. CIT V. HEMSONS INDUSTRIES (251 ITR 693) (AP) 36. CIT V. KASHIRAM TEXTILE MILLS (P) LTD. (252 ITR 162) (GUJ ) , 37. CIT VS. GORDHANBHAI JETHABHAI TOBACCO INDUSTRIES LTD. (258 ITR 727) (GUJ) 38. CIT V. VINAY KUMAR SIGTIA (262 ITR 686) (ORISSA) 39. CIT V. SESA GOA LTD (266 ITR 126) (BOM) 40. CIT V. SULTAN AND SONS RICE MILL (272 ITR 181) (ALL) 41. CIT V. PROFESSIONAL INFORMATION SYSTEMS AND MANAGEMENT ( 274 ITR 242) (GUJ) 42. CIT V. SUPREME GRAPHICS CREATIONS P. LTD. (276 ITR 668) (BOM) 43. CIT V. SHRI SWASAN CHEMICALS (M) P. LTD. (300 ITR 115) (MA D) 44. ANDAMAN & NICOBAR ISLANDS FOREST & PLANTATION DEVELOPMENT CORPN. LTD. V. CIT (280 ITR 118) (CAL) 45. CIT V. SESA GOA (INDIA) LTD. (282 ITR 197) (BOM) 46. CIT V. P. DAMODARAN (282 ITR 446) (MAD) 47. CIT V. PRABHUDAS KISHORDAS TOBACCO PRODUCTS P. LTD. (282 ITR 568 ) (GUJ) 48. CIT V. JANSONS AND CO. (283 ITR 175) (ALL) 49. CIT V. PREMIER TOBACCO PACKERS P. LTD. (284 ITR 222) (MAD) 50. CIT V. JAMAL PHOTO INDUSTRIES (I) P. LTD. (285 ITR 209) (M AD) 51. GENERAL CONTRACTS CO. V. CIT (287 ITR 416) (GUJ) 52. CIT V. SURESH AMIN FAMILY TRUST (288 ITR 101) (GUJ) ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 16 53. CIT V. JAMAL PHOTO INDUSTRIES (I) P. LTD. (287 ITR 620) (M AD) 54. CIT V. BEST CHEM & LIMESTONE INDUSTRIES P. LTD. (210 ITR 883) ( RAJ) 55. CIT V. SREE KRISHNA PULVERISING MILLS. (241 ITR 262) (AP) 56. ARIHANT TILES AND MARBLES P. LTD V. I.T.O. (295 ITR 148W) (RAJ) 57. CIT V. VIJAY SHIP BREAKING CORPORATION (261 ITR 113W) (GUJ) 58. SRI BALAJI METAL FINISHERS V. I.T.O. (15 ITD 26) (HYD) (TM) 59. DCIT VS. SRI SAI ROLLER FLOUR MILLS PVT. LTD. 2 ITR (TR IB) 490 (HYD) 60. ACIT V. PANACHAYIL INDUSTRIES (7 SOT 96) (COCH) 61. ACIT V. M/S.VINAYAGAR SILKS PVT. LTD. (2010-TIOL-99-ITAT-M AD) 62. VINBROS AND CO. V. ITO (297 ITR (AT) 280) (CHENN) 63. CIT V. BALAJI HOTELS AND ENTERPRISES LTD. (311 ITR 389) (MAD) 64. NEYVELI LIGNITE CORPORATION LTD V. ACIT (2 SOT 863) (CHENN) 65. DCIT VS. GEM GRANITES (64 ITD (MAD) 296) 66. ITO V. PUNCHLINE FORMS (278 ITR 165) (MUM) 67. ITO V. AGARWAL STONE INDUSTRIES (21 ITD 622) (JAIPUR) 68. SURAJ MARBLES (P) LTD AND ORS V. ITO (104 TTJ 192) (JAIPUR ) 69. ITO VS. WORLD WIDE STONES (115 TTJ 613) (JAIPUR) 70. ARAVALI MINERALS AND CHEMICALS INDUSTRIES (P) LTD. V. ACI T (108 ITD 163) (JODH) 71. ACIT V. WOLKEM INDIA LTD. (107 TTJ 439) (JODH) 72. ACIT V. TIRUPATI MICROTECH (P) LTD. (111 TTJ 149) (JODH) 73. KUSHAL BAGH MARBLES I(P) LTD V. ACIT (111 TTJ 122) (JODH) 74. ACIT V. NATIONAL LAMINATION INDUSTRIES (AHD.) 75. V.M. JOG ENGG. LTD. V. JT. CIT (104 TTJ 487) (PUNE) 76. DY. CIT V. SOCIEDADEDE FOMENTO INDUSTRIAL LTD. (59 TTJ 4 81) (PUNE) 77. CIT V. OSWAL WOOLLEN MILLS LTD. (289 ITR 261) (P&H) 78. CIT V. SHRI MAHESH CHANDRA SHARMA (308 ITR 222) (P&H) 79. M/S. MIDAS POLYMER COMPOUNDS (P) LTD. V. ACIT (ITA NO. 84 OF 2009) (KER) 21. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS STAT ED THAT IT HAS CLAIMED DEDUCTION IN RESPECT OF THE PROFIT D ERIVED FROM THE MANUFACTURING ACTIVITY AT THE PLANT AT KADTHAL VILL AGE. SINCE THE ENTIRE ACTIVITY IN THE SAID PLANT, IS IN THE NATURE OF CRUSHING OF MINERALS, NOW IT HAS TO BE SEEN WHETHER THE ASSESSE E IS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT FROM SUCH OPERATION / ACTIVITY, CARRIED OUT AT THE SAID PLANT. IN THE CASE OF DIVIS IONAL DEPUTY COMMISSIONER OF SALES TAX VS. BHERHAGHAT MINERAL IN DUSTRIES (2000) (246 ITR 230), IT WAS HELD BY THE HON'BLE SU PREME COURT THAT CRUSHING OF DOLOMITE LUMPS INTO CHIPS SAND POW DER IS NOT A PROCESS OF MANUFACTURE THAT BRINGS ABOUT A NEW COMM ERCIAL COMMODITY. 22. THE LEARNED DR RELIED IN THE CASE OF ACIT VS. G.T.C . ENTERPRISES (2003) (87 ITD 188), WHEREIN THE TRIBUNAL, CHENNAI BENCH, HELD THAT CONVERSION OF LARGE MASS OF QUARTZ INTO SMALLER PIECES / SIZES OF REQUIRED DIMENSION CANNOT BE CONS IDERED AS ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 17 MANUFACTURE AS NO CONSUMPTION IS INVOLVED IN SUCH P ROCESS, AND THEREFORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTIO N U/S. 80-I. IN THAT CASE, FOR OBTAINING THE END PRODUCT OF REQUIRE D SMALLER SIZE, THE ASSESSEE WAS CRUSHING THE QUARTZ MASS BY USING COMPRESSOR AND FURTHER CRUSHING THE SAME BY FEEDING INTO THE C RUSHER. THE DECISION OF THE TRIBUNAL IN THIS REGARD (AS PER HE AD NOTE), IS AS FOLLOWS: 'COMING TO DEDUCTION UNDER SECTION 80-I, TO BE AN ' INDUSTRIAL UNDERTAKING' THE ASSESSEE SHOULD BE ENGAGED IN THE 'MANUFACTURE OF AN ARTICLE OR THING'. FROM THE DECISION OF THE APEX COURT IT IS CRYSTAL CLEAR THAT MINING OF MARBLE BLOCKS AND CUTTING AND POLISHING THEM WILL NOT AMOUNT TO MANUF ACTURE. FURTHER THE MADRAS HIGH COURT OBSERVED IN THE CASE OF CIT VS. SACS EAGLES CHICORY (2000) 241 ITR 319 THAT THE PROCESS OF MANUFACTURE INVOLVES THE CONSUMPTION OF ONE OR MORE ARTICLES IN ORDER TO PRODUCE A DIFFERENT ARTICLE AND CONSUMPTION IS NECESSARY IN THE PROCESS OF MANUFACTURE AND THERE CAN BE NO MANUFACTURE WITHOUT CONSUMPTION. IN THE INSTANT CAS E, THERE WAS NO CONSUMPTION INVOLVED IN THE PROCESS. HENCE, THE PROCESS UNDERTAKEN BY THE ASSESSEE IN CONVERTING LARGE MASS OF QUARTS INTO SMALLER SIZE OF REQUIRED DIMENSION COULD NOT BE CONSIDERED AS MANUFACTURE. ONCE THERE WAS NO MANUFACTURING ACTIVITY, THE ASSESSEE WAS DEFINITELY NOT ENTITLED FOR THE DEDUCTION UNDER SECTION 80-I.' 23. THE DR ALSO RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. JITENDRA STONE CRUSHING COMPANY (2007) 105 ITD 52, WHERE IT WAS HELD BY TRIBUNAL, CHANDIGARH BENCH, TH AT BY BREAKING BIG BOULDERS INTO 'GITTY' OR SMALL PIECES OF STONE, IT CANNOT BE SAID THAT THE ASSESSEE WAS ENGAGED IN MANUFACTUR ING OF ARTICLE AND HENCE, IT IS NOT ENTITLED FOR DEDUCTION U/S. 80 -IB OF THE ACT. IN THIS CONTEXT, IT IS PERTINENT TO REFER TO THE FOLLO WING OBSERVATIONS MADE BY THE HON'BLE TRIBUNAL IN PARA 6.8 OF THE SAI D DECISION: '6.8. THE HON'BLE SUPREME COURT IN THE CASE OF AMAN MARBLE INDUSTRIES (P.) LTD. V. CCE [2003J 58 RLT 595 HAS HELD THAT CUTTING OF MARBLE BLOCK INTO MARBLE SLABS OR TILES DOES NOT AMOUNT TO MANUFACTURE, AS IN BOTH THE FORMS, MARBLE REMAINS MARBLE. IN THE PRESENT CASE THE BOULDER IS THE BIG STONE WHILE THE PIECES OF THE BOULDERS I.E., GITTY OR BAJRI ARE SMALL STONES BUT THERE IS NO CHANGE IN THE COMPOSIT ION OF THE MATERIAL, SO IT CANNOT BE SAID THAT THE BREAKING OF BOULDERS ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 18 INTO 'GITTY' (SMALL STONES) IS A MANUFACTURING ACTIVITY . SINCE ACTIVITY OF THE ASSESSEE WAS NOT A MANUFACTURING, THE DEDUCTION UNDER SECTION 80-IB WAS NOT AVAILABLE TO THE ASSESSEE. IN THAT WAY OF THE MATTER, FOR THIS ISSUE, WE REVERSE THE ORDERS OF THE LEARNED CIT (APPEALS) AND RESTORE THAT OF THE ASSESSING OFFICER.' 24. THE DR SUBMITTED THAT IN SUPPORT OF ITS CLAIM FOR D EDUCTION U/S. 80IB OF THE ACT, THE ASSESSEE HAS REFERRED TO VARIOUS DECISIONS OF SUPREME COURT, OF HIGH COURTS AND OF DIFFERENT B ENCHES OF INCOME TAX APPELLATE TRIBUNAL. HOWEVER, THE FACTS A ND ALSO THE ISSUES IN THOSE CASES BEING DISTINGUISHABLE FROM TH AT OF THE ASSESSEE, THE SAME CAN NOT BE APPLICABLE TO TH E CASE OF THE ASSESSEE. 25. THE DR FURTHER SUBMITTED THAT THE ASSESSEE HAS CONT ENDED THAT THE VARIOUS END PRODUCTS IN ITS CASE, NAMELY, PF LUMPS, FE LUMPS, PF CHIPS, PF GRANULES, PF POWDER, FE CHIPS A ND QUARTZ GRANULES, BEING COMMERCIALLY DIFFERENT COMMODITY FR OM THE ORIGINAL ORE / MINERAL EXTRACTED FROM THE MINES, IT IS ELIGIBLE FOR DEDUCTION. HOWEVER, THE SAME IS NOT ACCEPTABLE SINC E MERELY BEING COMMERCIALLY DIFFERENT, IT CANNOT BE SAID THAT THE ASSESSEE WAS CARRYING ON MANUFACTURING ACTIVITY. IN THIS CONTEX T, THE DR MADE A REFERENCE TO THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS. GEM INDIA MFG. CO. (249 ITR 307), WHEREIN, ALTHOUGH THE POLISHED DIAMOND OBTAINED AFTER CUTTING AND POLISHING THE RA W DIAMOND, IS COMMERCIALLY A DIFFERENT COMMODITY, IT WAS HELD THA T THE ACTIVITY CARRIED OUT BY THE ASSESSEE FOR OBTAINING THE SAME DOES NOT AMOUNT TO MANUFACTURE. THE DECISION OF THE APEX COU RT, AS PER HEAD NOTE, IS AS FOLLOWS: 'IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT POLISH ED DIAMOND IS A NEW ARTICLE OR THING WHICH IS THE RESULT OF MANUFAC TURE OR PRODUCTION, SUBJECTING RAW UNCUT DIAMONDS TO A PROC ESS OF CUTTING AND POLISHING, WHICH YIELDS THE POLISHED DIAMOND, C ANNOT BE SAID TO AMOUNT TO MANUFACTURE OR PRODUCTION OF AN ARTICL E OR THING, FOR THE PURPOSE OF OBTAINING THE BENEFIT OF DEDUCTION U NDER SECTION 80- I OF THE INCOME-TAX ACT, 1961.' ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 19 26. THE LEARNED DR SUBMITTED THAT SINCE IN THE INSTANT CASE, AT ITS PLANT AT KADTHAL, THE ASSESSEE IS BASICALLY ENG AGED IN CRUSHING THE ORES/MINERALS INTO CHIPS AND SMALLER PIECES OF DIFFERENT SIZES APPLYING THE RATIO OF ABOVE DECISION OF SUPREME COU RT IN THE CASE OF BHERHAGHAT MINERAL INDUSTRIES (CITED SUPRA), AND THE DECISIONS OF TRIBUNAL, CHENNAI BENCH IN G.T.C. ENTERPRISES (C ITED SUPRA) AND TRIBUNAL CHANDIGARH BENCH IN JITENDRA STONE CRU SHING COMPANY (CITED SUPRA) THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. ACCORDINGLY HE SUBMITTED THAT THE DECISION ASSESSING OFFICER IN DENYING THE CLAIM OF DEDUCTION U/S. 80-IB OF THE ACT IS JUSTIFIED. 27. WE HAVE HEARD THE LENGTHY ARGUMENTS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. THE CRUCIAL ISSUE TO BE DECIDED BEFORE US IS WHETHER THE CRUSHING THE LUMP ORE EXTRACTED FROM THE MINES, FOR OBTAINING SMALLER PIECES OF VARIOUS SIZES IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80- IB OR NOT. THE DEDUCTION UNDER SECTION 80-IB IS AVAILABLE TO A N INDUSTRIAL UNDERTAKING IF IT MANUFACTURES OR PRODUC ES ANY ARTICLE OR THING NOT BEING ANY ARTICLE OR THING SPECIFIED I N THE LIST IN THE ELEVENTH SCHEDULE. THE WORDS 'INDUSTRIAL UNDERTAKIN G' HAS NOT BEEN DEFINED IN THE INCOME-TAX ACT, HOWEVER, CROPPE D UP MANY A TIME BEFORE THE HON'BLE SUPREME COURT AND VARIOUS H IGH COURTS. IN THE PRESENT CASE, INTERPRETATION OF THE WORDS 'I NDUSTRIAL UNDERTAKING' DOES NOT POSE MUCH DIFFICULTY BEFORE U S BECAUSE NOBODY HAS DISPUTED THAT THE ASSESSEE IS AN INDUSTR IAL UNDERTAKING. IT IS TRUE THAT EACH AND EVERY INDUSTR IAL UNDERTAKING WOULD NOT BE ELIGIBLE FOR THE DEDUCTION UNDER SECTI ON 80-IB OF THE INCOME-TAX ACT BECAUSE IT IS ONLY THE INDUSTRIAL UN DERTAKING WHICH SPECIFIES TEST INDICATED IN SECTION 80-IB, WOULD ON LY BE ELIGIBLE AND QUALIFIED FOR SUCH DEDUCTION. AN 'INDUSTRIAL UNDERT AKING' WHICH IS ENGAGED IN MANUFACTURE AND PRODUCTION OF AN ARTICLE OR THING WOULD BE ELIGIBLE FOR THE DEDUCTION UNDER SECTION 8 0-IB. 28. FOR ALLOWING THE DEDUCTION UNDER SECTION 80-IB IT I S NECESSARY TO UNDERSTAND THE MEANING OF THE WORD 'MA NUFACTURE'. ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 20 THE WORD 'MANUFACTURE' USED AS A VERB IS GENERALLY UNDERSTOOD TO MEAN AS THAT BRINGING INTO EXISTENCE A NEW SUBSTANC E AND DOES NOT MEAN MERELY TO PRODUCE SOME CHANGE IN A SUBSTAN CE, HOWEVER, MINOR IN A CONSEQUENCE THE CHANGE MAY BE. IN THE CASE OF B.S. BAJAJ & SONS V. CIT (222 ITR 418) (P&H), THE HON'BLE HIGH COURT INTERPRETED THE WORD 'MANUFACTURE' AND OBSERV ED THAT THE DISTINCTION BETWEEN PROCESSING AND MANUFACTURING IS WELL BROUGHT ABOUT IN A PASSAGE QUOTED IN PERMANENT ADDITION OF WORDS AND PHRASES VOL. 26 THE PASSAGE RUNS THUS: 29. MANUFACTURE' IMPLIES A CHANGE, BUT EVERY CHANGE IS NOT MANUFACTURE AND YET EVERY CHANGE OF AN ARTICLE IS T HE RESULT OF TREATMENT, LABOUR AND MANIPULATION. BUT SOMETHING M ORE IS NECESSARY AND THERE MUST BE TRANSFORMATION; A NEW A ND DIFFERENT ARTICLE MUST EMERGE HAVING A DISTINCTIVE NAME, CHAR ACTER OR USE. 30. THE HON'BLE P & H HIGH COURT HAD ALSO CONSIDERED, AND OPINED ON THE WORD 'MANUFACTURE' IN THE CASE OF SID HU RAM ATOM PARKASH V . STATE OF HARYANA [1974] 34 STC 344 (PUNJ. & HAR.) (AT PAGE 346) AS UNDER: APPLYING THE ABOVE DEFINITION TO THE INSTANT CASE, THE QUESTION IS WHEN THE LOGS ARE CONVERTED INTO PLANKS AND RAFTERS ; DOES IT MEAN THAT A MANUFACTURING PROCESS HAS BEEN GONE INTO? IN OTHER WORDS, HAS A NEW SUBSTANCE HAS OCCURRED? AS WE LOOK AT THE MATTER, WHEN A LOG, EITHER BY MANUAL LABOUR OR MECHANICAL PROCES S, IS CONVERTED INTO A PLANK OR A RAFTER, A NEW SUBSTANCE DOES NOT COME INTO BEING, AND THIS PROCESS IS NOT COVERED BY THE DEFINITION OF THE WORD 'MANUFACTURE' AS GIVEN BY THE SUPREME COURT. 31. THE TRIBUNAL, CALCUTTA SPECIAL BENCH IN THE CASE OF SHAH SCOTT DISTILLERIES (P.) LTD. V. ASSTT. CIT [2002] 255 ITR (AT) 14 [2001] 76 TAXMAN 89, ALSO INTERPRETED THE MEANING O F THE WORD 'MANUFACTURING' IN THE FOLLOWING WORDS: MANUFACTURING NORMALLY INVOLVES CONSUMPTION OF A P ARTICULAR COMMODITY IN THE PROCESS OF MANUFACTURING OF ANOTHE R COMMODITY. THE GOODS PURCHASED SHOULD BE CONSUMED, THE CONSUMP TION SHOULD BE IN THE PROCESS OF MANUFACTURE AND THE RES ULT MUST BE THE ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 21 MANUFACTURE OF OTHER GOODS. THERE ARE SEVERAL CRITE RIA FOR DETERMINING WHETHER A COMMODITY IS CONSUMED IN THE MANUFACTURE OF ANOTHER. THE GENERALLY PREVALENT TEST IS WHETHER THE ARTICLE PRODUCED IS REGARDED IN THE TRADE, BY THOSE WHO DEA L IN IT, AS DISTINCT IN IDENTITY FROM THE COMMODITY INVOLVED IN ITS MANUFACTURE. COMMONLY, MANUFACTURE, IS THE END RESU LT OF ONE OR MORE PROCESSES THROUGH WHICH THE ORIGINAL COMMODITY IS MADE TO PASS. THE NATURE AND EXTENT OF PROCESSING MAY VARY FROM ONE CASE TO ANOTHER, AND INDEED THERE MAY BE SEVERAL STAGES OF PROCESSING AND PERHAPS A DIFFERENT KIND OF PROCESSING AT EACH STAGE. WITH EACH PROCESS SUFFERED, THE ORIGINAL COMMODITY EXPER IENCES A CHANGE. BUT IT IS ONLY WHEN THE CHANGE, OR A SERIES OF CHANGES TAKE THE COMMODITY TO THE POINT WHERE COMMERCIALLY IT CA N NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT INSTEAD I S RECOGNIZED AS A NEW AND DISTINCT ARTICLE THAT A MANUFACTURE CA N BE SAID TO TAKE PLACE. 32. IT IS ALSO RELEVANT TO POINT OUT THAT UNDER CLAUSE (III) TO SUB- SECTION (2) OF SECTION 80-IB, THE LEGISLATURE HAS U SED TWO SEPARATE WORDS I.E., 'MANUFACTURES' AND 'PRODUCES' ANY ARTIC LE WITH AN 'OR' IN BETWEEN. THUS, BOTH HAVE TO BE READ SEPARATELY AND THE MEANING ASSIGNED TO THEM. THESE TWO WORDS CANNOT HAVE THE S AME MEANING. THE WORD 'PRODUCE' AN ARTICLE HAS A WIDER CONNOTATION THAN 'MANUFACTURE', EVERY MANUFACTURE CAN BE SAID T O BE PRODUCTION BUT NOT VICE VERSA. THEIR LORDSHIPS OF T HE HON'BLE APEX COURT IN THE CASE OF CIT V. N.C. BUDHARAJA & CO. (2 04 ITR 412) CONSIDERING THE PROVISIONS OF SECTION 80HH OF THE INCOME-TAX ACT HAD HELD AS UNDER: THAT THE WORD 'PRODUCTION' HAS A WIDER CONNOTATION THAN THE WORD 'MANUFACTURE'. EVERY 'PRODUCTION' MAY NOT AMOU NT TO 'MANUFACTURE' WHEREAS EVERY 'MANUFACTURE' CAN BE TE RMED AS 'PRODUCTION'. 'MANUFACTURE' DOES NOT IMPLY ONLY A C HANGE BUT SOMETHING MORE IS NECESSARY. A NEW AND DIFFERENT AR TICLE MUST EMERGE HAVING A DISTINCT NAME, CHARACTER OR USE TO BRING IT WITHIN THE MEANING OF THE WORD 'MANUFACTURE'. THE WORD PRO DUCE AN ARTICLE MAY NOT AMOUNT TO A 'MANUFACTURE' BUT IT WO ULD INCLUDE ALL THE BY-PRODUCTS, INTERMEDIATE PRODUCTS AND RESIDUAL PRODUCTS WHICH EMERGE IN THE COURSE OF MANUFACTURE OF GOODS. IT WAS HELD AS UNDER (AT PAGE 423): 33. THE WORDS 'MANUFACTURE' AND 'PRODUCTION' HAVE RECEI VED EXTENSIVE JUDICIAL ATTENTION BOTH UNDER THIS ACT AS WELL AS THE ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 22 CENTRAL EXCISE ACT AND THE VARIOUS SALE TAX LAWS. T HE WORD 'PRODUCTION' HAS A WIDER CONNOTATION THAN THE WORD 'MANUFACTURE'. WHILE EVERY MANUFACTURE CAN BE CHARACTERIZED AS PRO DUCTION, EVERY PRODUCTION NEED NOT AMOUNT TO MANUFACTURE. TH E MEANING OF THE EXPRESSION 'MANUFACTURE' WAS CONSIDERED BY T HIS COURT IN DEPUTY CST V. PIO FOOD PACKERS (1980) 46 STC 63 AMO NG OTHER DECISIONS. IN THE SAID DECISION, THE TEST EVOLVED F OR DETERMINING WHETHER MANUFACTURE CAN BE SAID TO HAVE TAKEN PLACE IS, WHETHER THE COMMODITY WHICH IS SUBJECTED TO THE PROCESS OF MANUFACTURE CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT IS RECOGNIZED IN THE TRADE AS A NEW AND DISTINCT COMMO DITY. PATHAK J., AS HE THEN WAS, STATED THE TEST IN THE FOLLOWIN G WORDS (AT PAGE 65): COMMONLY, MANUFACTURE IS THE END RESULT OF ONE OR MORE PROCESS THROUGH WHICH THE ORIGINAL COMMODITY IS MADE TO PAS S. THE NATURE AND EXTENT OF PROCESSING MAY VARY FROM O NE CASE TO ANOTHER, AND INDEED THERE MAY BE SEVERAL STAGES OF PROCESSING AND PERHAPS A DIFFERENT KIND OF PROCESSING AT EACH STAG E. WITH EACH PROCESS SUFFERED, THE ORIGINAL COMMODITY EXPERIENCE S A CHANGE. BUT IT IS ONLY WHEN THE CHANGE, OR A SERIES OF CHAN GES, TAKE THE COMMODITY TO THE POINT WHERE COMMERCIALLY IT CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT INSTEAD IS R ECOGNIZED AS A NEW AND DISTINCT ARTICLE THAT A MANUFACTURE CAN BE SAID TO TAKE PLACE'. THE WORD 'PRODUCTION' OR 'PRODUCE' WHEN USED IN JUX TAPOSITION WITH THE WORD 'MANUFACTURE' TAKEN IN BRINGING INTO EXISTENCE NEW GOODS BY A PROCESS WHICH MAY OR MAY NOT AMOUNT TO M ANUFACTURE. IT ALSO TAKES IN ALL THE BY-PRODUCTS, INTERMEDIATE PRODUCTS AND RESIDUAL PRODUCTS WHICH EMERGE IN THE COURSE OF MAN UFACTURE OF GOODS. 34. FROM THE COMBINED READING OF THE RATIOS LAID DOWN I N THE AFORESAID REFERRED TO CASES, IT CAN BE CONCLUDED TH AT WHEN THE CHANGE OR A SERIES OF CHANGES LAKES ONE COMMODITY T O THE POINT WHERE COMMERCIALLY IT CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY, BUT INSTEAD IS RECOGNIZED AS A NEW AND D ISTINCT ARTICLE, THEN IT CAN BE SAID THAT 'MANUFACTURE' TAKES PLACE. IN THE PRESENT ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 23 CASE, THE ASSESSEE HAD BROKEN THE BOULDERS IN SMALL PIECES, BUT THERE IS NO CHANGE IN THE COMPOSITION OF THE BOULDE R. ONLY THE BIG SIZE HAD BEEN REDUCED TO SMALL SIZE. SO, IT CANNOT BE SAID THAT BREAKING OF BOULDERS INTO SMALL PIECES OF STONE IS A MANUFACTURING ACTIVITY. 35. A SIMILAR ISSUE HAD BEEN CONSIDERED AND DECIDED BY THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER O F SALES TAX V. LAI KUNWA STONE CRUSHER (P.) LTD. AIR 2000 SC 1161 (SC). IN THE SAID CASE, THE RESPONDENT WAS A DEALER ENGAGED IN PURCHASING OF STONE BOULDERS AND CRUSHING THEM INTO SMALL CHIP S, GITTY AND DUST FOR THE PURPOSE OF FURTHER SALE. THE CONTENTIO N PUT-FORTH BY THE DEALER WAS THAT THE PROCESS ADOPTED BY HIM IN C ONVERSION OF BOULDERS TO THE SMALL STONES, DUST ETC. WAS PHYSICA LLY AND CHEMICALLY NOT DIFFERENT FROM THE ORIGINAL GOODS. T HE ASSESSING AUTHORITY REJECTED THE CONTENTION OF THE DEALER AND THE ASSISTANT COMMISSIONER OF SALES TAX NOTICED THAT THE TRADER H AD NOT MANUFACTURED GITTY NOR HAD SOLD IT HAVING CRUSHED B OULDERS INTO SMALL STONES AND DUST. THE VIEW OF THE ASSISTANT CO MMISSIONER WAS UPHELD BY THE TRIBUNAL. THE MATTER WAS CARRIED TO THE HON'BLE HIGH COURT WHEREIN THE PETITION WAS DISMISSED. IN T HE APPEAL BEFORE THE HON'BLE SUPREME COURT, THE QUESTION RAIS ED WAS WHETHER GITTY, STONE CHIPS AND DUST CONTINUED TO BE STONE OR ON CRUSHING STONE BOULDERS INTO GITTY, STONE CHIPS AND DUST DIFFERENT COMMERCIAL GOODS EMERGED. ON BEHALF OF THE DEPARTME NT, IT WAS CONTENDED THAT THE PROCESS ADOPTED BY THE DEALER WO ULD AMOUNT TO 'MANUFACTURE' AS PER DEFINITION OF 'MANUFACTURE' UN DER SECTION 2(E- 1) OF THE U.P. SALES TAX ACT, 1948. UNDER THE SAID PROVISION, 'MANUFACTURE' HAS BEEN DEFINED TO MEAN PRODUCING, M AKING, MINING, COLLECTING, EXTRACTING, ALTERING, ORNAMENTI NG, FINISHING OR OTHERWISE PROCESSING, TRADING OR ADOPTING ANY GOODS . THUS, IT WAS SUBMITTED THAT THE DEFINITION USED FOR THE PURPOSE OF MANUFACTURE IN THE ACT MADE IT VERY CLEAR THAT EVERY ACTIVITY I N RELATION TO GOODS NOT ONLY ALTERING THE SAME BUT ALSO PROCESSING OF T HE SAME HAD ALSO BEEN INCLUDED. ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 24 36. THEIR LORDSHIPS HAD POINTED OUT AT PAGE 1162 PARA 5 THAT THE VIEW TAKEN BY THE TRIBUNAL AND AFFIRMED BY THE HIGH COURT WAS THAT THE GOODS CONTINUED TO BE STONE AND THEY WERE NOT COMMERCIALLY DIFFERENT GOODS TO BE IDENTIFIED DIFFE RENTLY FOR THE PURPOSE OF SALE TAX. 37. IN THE AFORESAID DISCUSSED CASE, THEIR LORDSHIPS O F THE HON'BLE APEX COURT HAVE HELD THAT THE STONE, AS SUC H AND 'GITTY' AND ARTICLES OF STONE ARE ALL OF SIMILAR NATURE THO UGH BY SIZE, THEY MAY BE DIFFERENT. EVEN IF 'GITTY', 'KANKAR', STONE, BLAST ETC. MAY ALL BE LOOKED UPON A SEPARATE IN COMMERCIAL CHARACTER F ROM STONE BOULDERS OFFERED FOR SALE IN THE MARKET, YET IT CAN NOT BE PRESUMED THAT ENTRY 40 OF THE NOTIFICATION IS INTENDED TO DE SCRIBE THE SAME AS NOT STONE AT ALL. IN FACT THE TERM 'STONE' IS WI DE ENOUGH TO INCLUDE THE VARIOUS FORMS SUCH AS GITTI, KANKAR, ST ONE BLAST. 38. SIMILARLY, IN THE CASE OF LUCKY MINMAT (P.) LTD. V . CIT (245 ITR 830), THEIR LORDSHIPS OF THE HON'BLE APEX COURT AT PAGE NO. 831 WHILE DISTINGUISHING THE JUDGMENT OF THE HON'BL E RAJASTHAN HIGH COURT IN THE CASE OF CIT V. BEST CHEM & LIMEST ONE INDUSTRIES (P.) LTD. (210 ITR 883) HAD OBSERVED THAT THE CONVERSION INT O LIME AND LIME DUST OR CONCRETE BY STONE CRUSHER COULD LE GITIMATELY BE CONSIDERED TO BE A MANUFACTURING PROCESS WHILE THE MERE MINING OF LIME STONE AND MARBLE AND CUTTING THE SAME BEFOR E IT WAS SOLD IN THE MARKET COULD NOT BE SO CONSIDERED. IN THE PR ESENT CASE ALSO, THERE WAS CUTTING OF BOULDERS INTO SMALL PIECES. SO , IT CANNOT BE SAID THAT IT WAS A MANUFACTURING ACTIVITY, BECAUSE BY BREAKING THE BOULDERS I.E., BIG STONE INTO SMALL PIECES I.E., SM ALL STONE OR BAJRI NO NEW AND DISTINCT COMMODITY CAME INTO EXISTENCE, SO IT CAN NEITHER BE A PRODUCTION BY THE PROCESS OF MANUFACTU RE OR A THING OTHERWISE PRODUCED, BECAUSE IN EITHER CASE, BRINGIN G INTO EXISTENCE A NEW PRODUCT IS A NECESSARY CONDITION. ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 25 39. THE HON'BLE SUPREME COURT IN THE CASE OF AMAN MARBL E INDUSTRIES (P.) LTD V. CCE [2003] 58 RLT 595 HAS HELD THAT CUTTING OF MARBLE BLOCK INTO MARBLE SLABS OR TILES DOES NOT AMOUNT TO MANUFACTURE, AS IN BOTH THE FORMS, MARBLE REMAINS M ARBLE. IN THE PRESENT CASE THE BOULDER IS THE BIG STONE WHILE THE PIECES OF THE BOULDERS I.E., GITTY OR BAJRI ARE SMALL STONES BUT THERE IS NO CHANGE IN THE COMPOSITION OF THE MATERIAL, SO IT CANNOT BE SAID THAT THE BREAKING OF BOULDERS INTO 'GITTY' (SMALL STONES) IS A MANUFACTURING ACTIVITY. THE SAME VIEW WAS TAKEN IN THE CASE OF INCOME TAX OFFICER V. JITENDRA STONE CRUSHING CO. (105 ITD 52) (CHD). 40. IN THE PRESENT CASE THE LOWER AUTHORITIES DISALLOW ED THE CLAIM OF THE ASSESSEE ON THE REASON THAT THE ASSESS EE IS ONLY CRUSHING THE LUMP ORE EXTRACTED FROM THE MINES, FOR OBTAINING SMALLER PIECES OF VARIOUS SIZES. THERE IS NO CHANG E IN PHYSICAL AND CHEMICAL COMPOSITION, AFTER SUBJECTING THE ORIGINAL ORES TO DIFFERENT STAGES OF PROCESSING AT ITS PLANT. ACCORDING TO THE ASSESSEE THE VARIOUS PRODUCTS GENERATED BY THE ASSESSEE BEING CO MMERCIALLY DIFFERENT COMMODITIES FROM THE ORIGINAL ORE/MINERAL EXTRACTED FROM THE MINES AND ELIGIBLE FOR DEDUCTION U/S. 80IB OF T HE ACT. THE LOWER AUTHORITIES ARE OF THE OPINION THAT MERELY BE ING COMMERCIALLY DIFFERENT PRODUCT, IT CANNOT BE SAID THAT THE ASSES SEE WAS CARRYING ON MANUFACTURING ACTIVITY AND PLACING RELIANCE ON T HE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT V. GEM INDIA MA NUFACTURING CO. (249 ITR 307) WHEREIN, ALTHOUGH THE POLISHED DI AMONDS OBTAINED AFTER CUTTING AND POLISHING THE RAW DIAMON D, IS COMMERCIALLY DIFFERENT COMMODITY IT WAS HELD THAT T HE ACTIVITY CARRIED OUT BY THE FOR OBTAINING THE SAME DOES NOT AMOUNT TO MANUFACTURE. IN THE PRESENT CASE THE ASSESSEE BASI CALLY ENGAGED IN CRUSHING THE ORES/MINERALS INTO CHIPS AND SMALLE R PIECES OF DIFFERENT SIZES THE ASSESSEE CANNOT BE CONSIDERED A S MANUFACTURING ANY PRODUCT/ ARTICLE. IN THE CASE OF LUCKY MINMAT PVT. LTD. VS. CIT (245 ITR 830) (SC) IT WAS HELD TH AT MERE MINING OF LIMESTONE AND MARBLE AND CUTTING THE SAME BEFORE IT WAS SOLD, WILL NOT CONSTITUTE MANUFACTURE OR PRODUCTION BUT CO NVERSION INTO ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 26 LIME AND LIME DUST ARE CONCRETE BY STONE CRUSHERS C OULD LEGITIMATELY TO BE CONSIDERED AS A MANUFACTURING PR OCESS. WHILE MERE MINING OF LIMESTONE AND MARBLE AND CUTTING THE SAME BEFORE IT WAS SOLD IN THE MARKET COULD NOT BE CONSIDERED S O. THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80HH. IT WAS HELD BY SUPREME COURT IN THE CASE OF DY. CST & ANR. VS. BHE RHAGHAT MINERALS INDUSTRIES (246 ITR 230) THAT THE CRUSHING OF DOLOMITE LUMPS INTO CHIPS IS NOT A PROCESS OF MANUFACTURE TH AT BRINGS ABOUT NEW COMMERCIAL COMMODITY. IN THE CASE OF ACI T VS. WOLKEM INDIA LTD. (107 TTJ 439) (JODH) HELD THAT IF THE AS SESSEE IS ENGAGED INTEGRATED ACTIVITY OF MINING, PROCESSING AND GRIND ING OF WOLLASTONITE AND CALCITE PRODUCTS IS ENGAGED IN THE MANUFACTURE/PRODUCTION ELIGIBLE FOR DEDUCTION U/S. 80IA AND 80IB OF THE ACT. IN OTHER WORDS IF AN ASSESSEE IS ENGAG ED IN THE ACTIVITY OF EXTRACTING GRANITE, CUTTING THE SAME INTO SLABS/ TILES, POLISHING AND SELLING THE END PRODUCT IN THE MARKET, THAT WOU LD AMOUNT TO PRODUCTION OF AN ARTICLE OR THING. IF THE ASSESSEE ONLY PURCHASES GRANITE/MARBLE FROM THE MARKET AND THEREAFTER CARRI ES OUT FURTHER PROCESS LIKE CUTTING, POLISHING, ETC., IT WOULD NOT AMOUNT MANUFACTURE OR PRODUCTION. 41. ADVERTING TO THE FACTS OF PRESENT CASE, WE FIND THA T THE ASSESSEE HAS NOT CARRIED ON THE INTEGRATED ACTIVITY OF MINING, PROCESSING AND POLISHING AND IT IS ENGAGED ONLY MIN ING AND CRUSHING INTO SMALL PIECES. IN OUR OPINION, FACTS OF THE ASSESSEE CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE CASE OF LUCKY MINMAT PVT. LTD. CITED (SUPRA) AND THIS JUDGEMENT OF SUPRE ME COURT IS DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CAS E AND THE LOWER AUTHORITIES ARE JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE U/S. 80IB OF THE ACT AND VARIOUS JUDGEMENTS RELIED BY AR IS NO ASSISTANCE TO THE ASSESSEE ON THE FACE OF JUDGEMEN T IN THE CASE OF LUCKY MINMAT PVT. LTD. CITED (SUPRA). ACCORDINGLY, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS REJECTED. ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 27 42. THE NEXT GROUND IS THAT THE CIT(A) ERRED IN DISMISS ING THE CLAIM OF THE ASSESSEE FOR GRANT OF TDS FOR A.Y. 200 5-06 AND 2007- 08. ON THIS ISSUE THE ASSESSEE WANTS A DIRECTION F ROM THE TRIBUNAL TO GIVE CREDIT FOR TDS FOR A.YS. 2005-06 A ND 2007-08. 43. THE LEARNED AR SUBMITTED THAT CONSEQUENT TO THE PRO CESSING OF RETURN U/S. 143(1) THE ASSESSEE FILED A RECTIFIC ATION PETITION ENCLOSING THE COPY OF TDS CERTIFICATE FOR WHICH NO ACTION HAS BEEN TAKEN BY THE LOWER AUTHORITIES. THE CIT(A) REJECTE D THE CLAIM OF THE ASSESSEE HOLDING THAT NON-GRANTING OF TDS DOES NOT ARISE OUT OF THE IMPUGNED ASSESSMENT ORDER BEFORE HER. 44. IN OUR OPINION, THE OBSERVATION OF THE CIT(A) IS NO T CORRECT. IF THE TDS IS RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER WHENEVER DETERMINES AN AMOUNT OF TAX DUE FROM THE ASSESSEE, HE SHOULD CONSIDER THE TDS CERTI FICATE RELEVANT TO ASSESSMENT YEARS UNDER CONSIDERATION. ACCORDING LY, WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE TDS CERTIFICA TE FILED BY THE ASSESSEE RELATING TO THESE ASSESSMENT YEARS AND GIV E CREDIT FOR THE SAME. 45. THE NEXT GROUND IS WITH REGARD TO CONFIRMATION DISA LLOWANCE BEING EMPLOYEE SHARE OF CONTRIBUTION TO PF AFTER PR ESCRIBED AND WITHIN THE FINANCIAL YEAR. THIS ISSUE IS RELATING TO ASSESSMENT YEAR 2006-07 AND 2007-08. BRIEF FACTS OF THE ISSUE ARE THAT IN THIS CASE DISALLOWANCE WAS MADE U/S. 36(1)(VA) OF THE ACT ON THE REASON THAT PF PAYMENT WAS MADE BEYOND THE DUE DATE WITHIN THE FINANCIAL YEAR. THE LOWER AUTHORITIES DISALLOWED THE SAME ON THE REASON THAT THE SAID AMOUNT WAS PAID AFTER THE GRACE PERIO D. 46. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THIS ISSUE CAME UP FOR CONSIDERATION BEFOR E THE KARNATAKA HIGH COURT IN THE CASE OF CIT V. SABARI ENTERPRISES (298 ITR 141) AND ALSO IN THE CASE OF CIT VS. ANZ INFORMATION TEC HNOLOGY PVT. LTD. (318 ITR 123) WHERE IN HELD THAT CONTRIBUTION MADE TOWARDS ITA NOS. 870, 43 & 1056/HYD/2010 M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNOWN AS M/S. JUMBO MINING LTD.) ================================= 28 PROVIDENT FUND BY THE EMPLOYER BELATEDLY AND CONTRI BUTION TOWARDS EMPLOYEES STATE INSURANCE I.E., BEYOND THE STIPULA TED PERIOD PROVIDED UNDER THE PROVIDENT FUND ACT WERE ALLOWABL E DEDUCTION IN VIEW OF SECTION 43B OF THE INCOME-TAX ACT, 1961. IN VIEW OF THESE JUDGEMENTS WE DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION IF THE IMPUGNED AMOUNTS WERE PAID BY THE ASSESSEE ON O R BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S. 139(1) OF THE ACT. 47. THE NEXT GROUND IN ALL APPEALS IS LEVY OF INTEREST U/S. 234B AND 234C OF THE ACT. LEVY OF THIS INTEREST IS CONS EQUENTIAL AND MANDATORY IN NATURE AND INTEREST HAS TO BE COMPUTED BY THE ASSESSING OFFICER IN ACCORDANCE WITH LAW. 48. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JULY 2012. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 2 ND JULY 2012 COPY FORWARDED TO: 1. M/S. IMERYS CERAMICS (I) PVT. LTD. (FORMERLY KNO WN AS M/S. JUMBO MINING LTD.), 6-3-1239/2/A, KOTIS COURT, IV FLOOR, RAJBHAVAN ROAD, SOMAJIGUDA, HYDERABAD-82. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -2(1), ROOM NO. 824, 8 TH FLOOR, I.T. TOWERS, AC GUARDS, HYDERABAD. 3. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2( 1), I.T. TOWERS, AC GUARDS, HYDERABAD.. 4. THE CIT(A)-III, HYDERABAD. 5. THE CIT-II, HYDERABAD 6. THE DR B BENCH, ITAT, HYDERABAD. TPRAO