LexINCOME TAX OFFICER, UDAIPUR versus M/S. ARIHANT TILES AND MARBLES (P) LTD.
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[2009] 16 (ADDL.) S.C.R. 21 i ' INCOME TAX OFFICER, UDAIPUR A v. MIS. ARIHANT TILES AND MARBLES (P) LTD. (Civil Appeal No. 8036 of 2009) DECEMBER 2, 2009 B [S.H. KAPADIA, J.M. PANCHAL AND H.L. DATTU, JJ.J Income Tax Act, 1961 - s.801A - Assessment Year 2001-2002 - Assessee engaged in conversion of marble blocks into polished slabs and tiles which it exported (partly) c - Whether conversion of marble blocks into polished slabs and tiles amounts to "manufacture or production of article or thing" so as to make assessee entitled to benefit of deduction under s.801A - Held, Yes - On facts, not only there was manufacture but also an activity which was something beyond D manufacture and which brought a new product into existence. Words and Phrases - "manufacture" and "production" - ' Connotation of, in context to s. 801A of the Income Tax Act, 1961. E The assessees-respondents, during the relev_ant Assessment Year 2001-2002, were engaged in the conversion of marble blocks into polished slabs and tiles ,, which they exported (partly). The question which arose for consideration in the F present appeals was whether conversion of marble blocks into polished slabs and tiles amounts to "manufacture or production of article or thing" so as to make the respondents-assessees entitled to benefit of G deduction under s.SOIA of the Income Tax Act, 1961, as it 1 stood at the material time. Dismissing the appeals filed by the Department, the Court 21 H 22 SUPREME COURT REPORTS [2009] 16 (ADDL.) $.C.R. A HELD: 1.1. The present case not only concerns with cutting of marble blocks into slabs but also concerns with the activity of polishing and ultimate conversion of the blocks into polished slabs and tiles. From the process indicated, it is found that there are various stages through B which the blocks have to go through before they become polished slabs and tiles. In the circumstances, on the facts of the cases in hand, there is certainly an activity which will come in the category of "manufacture" or "production" under s.801A of the Income Tax Act, 1961. C [Para 15] (30-G-H; 31-A] 1.2. The blocks converted into polished slabs and tiles after undergoing the process indicated certainly results in emergence of a new and distinct commodity. The original block does not remain the marble block, it D 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 existence and, therefore, on the facts of these cases, the activity undertaken by the respondents- E assessees did constitute manufacture or production in terms of s.801A of the Income Tax Act, 1961. [Paras 20] (33- A-C] 1.3. If the contention of the Department is to be F accepted, riamely that the activity undertaken by the respondents is not a manufacture, then, it would have serious revenue consequences. Each of the respond.::nts is paying excise duty, some of the respondents :'e job workers and the activity undertaken by them has been recognised by various Government Authorities as G manufacture. To say that the activity will not amount to manufacture or production under s.801A will have disastrous consequences, particularly in view of the fact that the assessees in all the cases would plead that they H INCOME TAX OFFICER, UDAIPUR v. ARIHANT TILES 23 AND MARBLES (P) LTD. were not liable to pay excise duty, sales tax etc. because A the activity did not constitute manufacture. Keeping in mind the above factors, it is clear that in the present cases, the activity undertaken by each of the respondents constitutes manufacture or production and, therefore, they would be entitled to the benefit of s.801A of the B Income Tax Act, 1961. [Para 22] [33-D-G] 1· Rajasthan State Electricity Board v. Associated .... Industries & Anr. AIR 2000 SC 2382 and Aman Marble Industries Pvt. Ltd. vs. Collector of Central Excise 157 ELT 393 (SC), held inapplicable. C Commissioner of Income Tax vs. Sesa Goa Ltd. 271 ITR 331 (SC) and Commissioner of Income Tax vs. N. C. Budharaja & Co., 204 ITR 412 (SC), relied on. Lucky Minmat Pvt. Ltd. vs. Commissioner of Income Tax, Jaipur (2001) 9 SCC 669; CIT vs. Best Chemical and Lime Stone Industries Pvt. Ltd. 210 ITR 883 (Raj.) and Commissioner of Income Tax vs. Mysore Minerals Ltd, (2001) 250 ITR 725 (Kar), referred to. Case Law Reference: referred to ref
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