Of Income-Tax v. Sesa Goa Ltd. Reported In

O/TAXAP/360/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 360 of 2006With TAX APPEAL NO. 361 of 2006 FOR APPROVAL AND SIGNATURE: ================================================================COMMISSIONER OF INCOME TAX....Appellant(s)VersusGUJARAT MINERAL DEVELOPMENT CORPORATION LTD.....Opponent(s)================================================================ Appearance:MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKERDate : 14/11/2014 COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of these Appeals, the appellant has challenged the judgment and order of the Income Tax Appellate Tribunal as per the following details, whereby the Tribunal has dismissed the Appeal of the Department :- Tax AppealITA No.Assessment Year360/200696/AHD/991992 – 1993 361/2006937/AHD/991993 – 1994 2.While admitting the matters on 04.09.2006, the following substantial question of law was framed :- “(i) Whether on the facts and circumstances of the case, the Appellate Tribunal was right in allowing the deduction u/s 80-I of the Income Tax Act, 1961 on the extraction and selling of lignite?” 3.The facts in brief giving rise to the above Appeals are that :- It is the case of the appellant that the assessee is engaged in mining and sale of lignite. It had claimed deduction u/s. 80-I of the Act on its projects. During the assessment proceedings, the Assessing Officer noticed that the respondent had debited expenses of Multi Metal Project but as per the Audit Report, the said project at Ambaji was under installation and the same was a pre-operative expenses. On the claim of deduction, the Assessing Officer rejected the claim holding that the same is available to those industries, which produces articles or things not included in XI Schedule. After considered the settled legal principles of the words “manufacture” and “production”, the claim was disallowed. The Commissioner (Appeals) confirmed the addition. On further appeal, the Appellate Tribunal relying upon a case of previous year, allowed the claim. 4.Learned Advocate Mrs. Mauna M. Bhatt for the appellant – the Department has contended that the view taken by the Income Tax Appellate Tribunal is contrary to law and deserves to be quashed and set aside. 5.However, learned Senior Counsel for the respondent Mr. S.N. Soparkar has contended that the issue is covered by the decision of the Supreme Court in the case of Commissioner of Income-Tax v. Sesa Goa Ltd. reported in 271 Income Tax Reports 331 and which was subsequently followed in 287 Income Tax Reports 416. Relevant part of the above decision reads as under :- “Learned counsel appearing on behalf of the assessee, correctly submitted that the other provisions of the Act, particularly section 33(1)(b)(B) read with Item No.3 of the Fifth Schedule to the Act, would show that mining of ore is treated as “production” Section 35E also speaks of production in the context of mining activity. The language of these sections is similar to the language of section 32A(2). There is no reason for us to assume that the word “production” was used in a different sense in section 32A. the Supreme Court in the case of Commissioner of Income-Tax v. Sesa Goa Ltd. reported in 271 Income Tax Reports 331 and which was subsequently followed in 287 Income Tax Reports 416. Relevant part of the above decision reads as under :- “Learned counsel appearing on behalf of the assessee, correctly submitted that the other provisions of the Act, particularly section 33(1)(b)(B) read with Item No.3 of the Fifth Schedule to the Act, would show that mining of ore is treated as “production” Section 35E also speaks of production in the context of mining activity. The language of these sections is similar to the language of section 32A(2). There is no reason for us to assume that the word “production” was used in a different sense in section 32A. We are, therefore, of the opinion that extraction of processing of iron ore amounts to “production” within the meaning of the word in section 32A(2)(b)(iii) of the Act and, consequently, the assessee is entitled to the benefit of section 32A(1) of the Act. The question whether the High Court was correct in holding that the activity did not amount to “manufacture” is left open.” 6.In view of the above, the question is answered in favour of the assessee and in negative against the Department as the facts are akin in the cases. Hence, both the appeals stand dismissed. Sd/- (K.S. JHAVERI, J.) CAROLINE Sd/- (K.J. THAKER, J)