The judgment of the court was delivered by
Dr. Manjula Chellur C. J.-The Revenue is before us in all the appeals. The following questions were raised for consideration at the time of admission :
"1. Whether, on the facts and in the circumstances of the case, and also in the light of the decision of the Supreme Court reported in CIT v. Gem India Manufacturing Co. [2001] 249 ITR 307 (SC) and Collector of Central Excise v. Associated Stone Industries (Kota) Ltd. [2003] 10 SCC 771, the Tribunal is right in law and fact in holding that the assessee is entitled to deduction under section 80HH and section 80-I of the Income-tax Act ?
2. Whether, on the facts and in the circumstances of the case, does conversion of granite boulders into small pieces of different sizes amount to production or manufacture ?
3. Whether, on the facts and in the circumstances of the case and if the answer to the above question is in the affirmative, does the assessee in view of sub-section (9) of section 80HH is entitled to deduction both under sections 80HH and 80-I ?"
The above appeals pertain to different assessment years of the respondent-assessee. The facts that lead to the filing of these appeals in brief are as under :
The assessee is running metal crushing units. When the case of the assessee was taken up for scrutiny it was found that the assessee had claimed deductions under section 80HH and section 80-I, in all the cases except I. T. A. No. 576 of 2009. So far as I. T. A. No. 576 of 2009, the deductions were claimed under section 80-IB. The crushing unit of the respondent-assessee conducts operations in the following manner. The raw-material "granite boulders" are used for bringing out graded metal of various sizes which are used in construction activities. According to the Assessing Officer, though there is some manufacturing process carried on by the respondent-assessee, there was no product which could be termed as "production" on account of manufacturing activity, therefore, the claim of the respondent-assessee made under several sections, as stated above, are to be rejected. In other words, according to the Assessing Officer, the process adopted by the respondent-crushing unit cannot be neither termed as manufacturing process nor it produces any article or thing changing the nature of the raw material. The assessee, aggrieved by the said opinion of the Assessing Officer, took up the matter before the first appellate authority-Commissioner of Income-tax (Appeals).
The Commissioner of Income-tax (Appeals) allowed the appeal of the assessee following the decision of the Tribunal in Panchayil Industries (I. T. A. Nos. 336, 337 & 338/Coch/2002) and directed the Assessing Officer to allow the deductions claimed by the assessee. Aggrieved by the said order of the first appellate authority, the Revenue went before the Tribunal challenging the order of the Commissioner of Income-tax (Appeals). The Tribunal following the law laid down in the case of Deputy CIT v. Poabson Granite Products P. Ltd. in I. T. A. No. 495/Coch/2004 dated August 4, 2005, and Panchayil Industries (I. T. A. Nos. 336, 337 & 338/Coch/2002), confirmed the opinion of the Commissioner of Income-tax (Appeals) rejecting the claim of the Revenue. Aggrieved by the same, the Revenue is before this court contending that the activity carried on in the crushing units of the respondent-assessee can neither be called as manufacturing activity or the outcome of the process can be termed as production.
Learned standing counsel representing the Revenue took us through the earlier decision of the Tribunal in Panchayil Industries (I. T. A. Nos. 336, 337 & 338/Coch/2002) wherein the Tribunal, after referring to several judgments, opined that the commercial activity is to be considered in the light of the respective trade practice or if no such trade practice is available it has to be considered in the common parlance in order to arrive at the conclusion whether it is a case of manufacturing activity, the input and output would be commercially different or not. As a matter of fact, the learned standing counsel tried to convince us by submitting that whether the product is used as a boulder or crushed granite piece, it is used in the construction activity, therefore, there is no process of manufacturing involved. In other words, according to him, boulders being crushed into smaller pieces of granite will change the nature of product being called as granite stone, therefore, there is no manufacturing process involved and there is no product which can be commercially termed as a different product in the trade practice concerned.
As against this the learned counsel, appearing for the respondent-assessee,took us through ITO v. Arihant Tiles and Marbles P. Ltd. [2010] 320 ITR 79 (SC). We have gone through the said judgment. The question that arose before the apex court in the said case was whether sawing marble blocks into slabs and tiles including polishing, amounts to manufacture or production. Their Lordships, after referring to several judgments of different High Courts and also earlier judgments of the apex court, dismissed the appeal. The cases which are relevant for the purpose of considering the case on hand would be CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC) and CIT v. Sesa Goa Ltd. [2004] 271 ITR 331 (SC) which reads as under (page 86 of 320 ITR) :
"In the case of CIT v. Sesa Goa Ltd. reported in [2004] 271 ITR 331 (SC), the meaning of the word 'production' came up for consideration. The question which came before this court was whether the Income-tax Appellate Tribunal was justified in holding that the assessee was entitled to deduction under section 32A of the Income-tax Act, 1961, in respect of machinery used in mining activity ignoring the fact that the assessee was engaged in extraction and processing of iron ore, not amounting to manufacture or production of any article or thing. The High Court, in that case, while dismissing the appeal preferred by the Revenue, held that extraction and processing of iron ore did not amount to 'manufacture'. However, it came to the conclusion that extraction of iron ore and the various processes would involve 'production' within the meaning of section 32A(2)(b)(iii) of the Income-tax Act, 1961, and, consequently, the assessee was entitled to the benefit of investment allowance under section 32A of the Income-tax Act. In that matter, it was argued on behalf of the Revenue that extraction and processing of iron ore did not produce any new product whereas it was argued on behalf of the assessee that it did produce a distinct new product. The view expressed by the High Court that the activity in question constituted 'production' has been affirmed by this court in Sesa Goa's case [2004] 271 ITR 331 (SC) saying that the High Court's opinion was unimpeachable. It was held by this court that the word 'production' is wider in ambit and it has a wider connotation than the word 'manufacture'. It was held that while every manufacture can constitute production, every production did not amount to manufacture."
Learned counsel for the respondent-assessee also relies upon another judgment of the apex court in Lucky Minmat P. Ltd. v. CIT [2000] 245 ITR 830 (SC). As a matter of fact, Lucky Minmat Pvt. Ltd. (supra) and Arihant Tiles (supra), both are by the Benches consisting of three judges of the apex court. In Arihant Tiles' case (supra) they referred to the principle laid down in Lucky Minmat Pvt. Ltd. (supra). In Lucky Minmat Pvt. Ltd. (supra), the issue that came up for consideration was whether mining of limestone and marble blocks, and cutting and sizing them, amounts to manufacture or production of article in order to consider deduction under section 80HH of the Act. The apex court held that the assessee had business of mining of limestone and marble blocks and, thereafter, cutting and sizing before being sold in the market amounts to conversion into lime and lime dust or concrete by stone crushers could legitimately be considered to be a manufacturing process while the mere mining of limestone and marble and cutting the same before it was sold in the market could not be so considered. So far as Sesa Goa Ltd. (supra) case, the facts of that case was similar to the case on hand before us.
While considering the meaning of the word "production", the High Court of Karnataka in the case of CIT v. Mysore Minerals Ltd. (No. 1) [2001] 250 ITR 725 (Karn) held that extraction and processing of iron ore did not amount to manufacture. But, however, the High Court concluded that after extraction of iron ore, various processes involve production within the meaning of section 32A(2)(b)(iii) of the Income-tax Act, therefore, squarely allowed the assessee to have the benefit of investment allowance under section 32A. The view expressed by the High Court that activity involved in Sesa Goa Ltd.' case (supra) constituted production and it was upheld by the apex court opining that the word "production" is wider in ambit and it has a wider connotation than the word "manufacture". Ultimately, it opined that while every manufacture can constitute production, every production need not amount to manufacture.
So far as N. C. Budharaja and Co. (supra) the question was whether construction of a dam to store water (reservoir) can be categorised as amounting to manufacturing or producing an article. In that context, their Lordships opined that whether manufacture can be stated to have taken place or not, has to be seen from the test whether the commodity which is subjected to a process can no longer be demanded as original commodity but is a new and distinct commodity. They further opined that the word "manufacture" would ultimately mean there is existence of new goods by the process which may or may not involve manufacture. When the above is the settled position as of now one has to see the actual process that is undertaken so far as the respondent-unit is concerned. The activity normally carried on by the respondent-unit has the following process :
"1. Digging holes using jackhammers and air-compressors and blasting for producing boulders.
2. Breaking of boulders using mechanical rock breakers to produce rubbles.
3. Loading the rubbles to the tipper lorries using excavator loader.
4. Feeding the rubbles from the tipper lorries to the primary crushers for producing soilings.
5. The soilings produced at the primary crushers are fed to the different secondary crushers through conveyor belts to produce granite aggregates of different sizes vi.,1-1/2", 1", 1/2",1/4" sand and dust.
6. The above products are fed to the vibrating screens through conveyor belts for segregation and the segregated different granite aggregates are collected in different bunkers.
7. The products stored at the bunkers are loaded to the trucks for sending to the customers."
From the above process carried on in different units of the respondentassessee clearly indicates, the commercial identity of the boulder which is used as raw-material to bring into existence altogether a different product, i.e., rubbles (crushed metal granite) and also "M Sand" of different sizes. In other words, in the commercial world, products are quite different in terms of trade though both the materials could be used in the construction activity. The products manufactured by the respondent-assessee have distinct and different utility. Therefore, the identity is also different. If boulder could be used for the purpose of foundation, M Sand and crushed metal granite, cannot be used for the same purpose for which boulders are used. In that sense, all the products are different though come from the same raw-material. In the light of the above process being undertaken which ultimately results in a different marketing product, in the units of the respondent-assessee, both processes are present, i.e., manufacture and also production. In the light of the above judgments and the reasoning, we are of the opinion, the Tribunal was justified in confirming the orders of the Commissioner of Income-tax (Appeals).
So far as the benefits claimed under sections 80HH, 80-I and 80-IB as held by the apex court in the case of Joint CIT v. Mandideep Eng. and Pkg. Ind. P. Ltd. [2007] 292 ITR 1 (SC), if various deductions are independent in nature available to an assessee under different circumstances, they all have to be allowed if they come within the application of a particular provision of law. In other words, in terms of sections 80HH, 80-I and 80-IB, if claims are made for deductions by the respondent-assessee in the same year at the same time, if it is found relevant for the purpose of giving deductions, all are to be extended. It does not depend upon the existence of other provision. In other words, if the benefit is extended under one provision, the assessee cannot be denied the benefit of other provision which is altogether for a different purpose. Simultaneously, the assessee can have all the benefits at a time depending upon the facts and circumstances of each case.
In the light of the above observations, we are of the opinion the substantial questions raised are all answered against the appellant-Revenue confirming the orders of the Tribunal.