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Vijay Granites Pvt. Ltd. v. CIT (2012) 349 ITR 350(SC)
The assessee, a company engaged in the business of raising granites from mines, polishing them and exporting them outside India as also in purchasing granite blocks and after subjecting granite blocks to further processing, exporting them outside India, claimed investment allowance in respect of cranes for assessment year 1986-87 and 1987-88 and allowance u/s. 32A for the assessment year 1988-89.
The Assessing Officer disallowed the claim, firstly on the ground that cranes were transport vehicles and further on the ground that no manufacturing process was involved in cutting the granites and polishing them. On appeal, the appellate authority accepted the contention of the assessee to the effect that the machinery was not a transport vehicle and the assessee was engaged in the manufacture or production of articles and therefore entitled to deduction. On appeal by the Department, the Tribunal confirmed the aforesaid conclusion. On the basis of application filed u/s. 256(1) the Tribunal referred the questions of law to the High Court. The High Court held that the act of cutting and polishing granite slabs before exporting them, did not involve any process of manufacture or production and the assessee was not entitled to the deduction u/s. 32A.
On appeal by the assessee to the Supreme Court, the Supreme Court found that the assessee had not led evidence before the Assessing Officer as to the exact nature of activities undertaken by it in the course of mining, polishing and export of granites. The Supreme Court observed that it has repeatedly held that, whenever the assessee claims investment allowance u/s. 32A, it has to lead evidence to show that the process undertaken by it constistutes “production”. The Supreme Court remitted the case to the Assessing Officer for fresh determination within three months from the date of receipt of the record, after giving opportunity to the assessee to produce relevant evidence.
