Law:

Section:

Section 32A, read with section 80-I, of the Income-tax Act, 1961 - Investment allowance - Assessment years 1986-87 to 1988-89 - Assessee-company apart from raising granites from mines also purchased granite blocks and after subjecting granite blocks to further processing, exported them outside India - Whether act of cutting and polishing granite slabs before exporting them involved any process of manufacture or production to entitle assessee to benefit under section 32A or 80-I - Held, no FACTS The assessee-company was engaged in the business of raising granites from mines, polishing them and exporting them outside India. Apart from that, it purchased granite blocks and after subjecting granite blocks to further processing, exported the polished granites. For the assessment years 1986-87 and 1987-88 to the assessee claimed investment allowance in respect of cranes which were disallowed by the Assessing Officers on the ground that cranes were transport vehicles and further no manufacturing process was involved in the process of mining. On appeal, the appellate authority accepted the claim of the assessee to the effect that the machinery was not transport vehicle and that it was engaged in manufacturing or production of articles, and, therefore, it was entitled to deduction. On further appeal, the Tribunal upheld the order of the appellate authority. On reference : HELD For applicability of section 32A it is required that the machinery or the plant should have been installed for the purpose of manufacture or production of any article or thing. Similarly, for claiming deduction under section 80-I, it is necessary that the industrial undertaking should manufacture or produce any article or thing. [Para 3] The act of cutting and polishing granite slabs before exporting them did not involve any process of manufacture or production to entitle the assessee to the benefit under section 32A or 80-I. [Para 10] CASES REFERRED TO CIT v. Gomatesh Granites [2000] 246 ITR 737/[2001] 118 Taxman 141 (Mad.) [Para 4], CIT v. Gem India Mfg. Co. [2001] 249 ITR 307/ 117 Taxman 368 (SC) [Para 5], CCE v. Associated Stone Industries (Kota) Ltd. [2003] 10 SCC 771 (SC) [Para 6], CIT…

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