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Showing contexts for: iron ore processing in Vedanta Ltd , Gurgaon vs Acit, Circle- 26(2), New Delhi on 21 September, 2020Matching Fragments
48. While scrutinising the return of income, the assessing officer was of the opinion that the assessee is not entitled for additional depreciation as the word 'manufacture' as defined in section 2(29BA) of the Act with effect from 1.4.1999 do not take in its purview the claim of the assessee. According to the assessing officer, to claim additional depreciation available under section 32(1)(iia) of the Act, the assessee should be engaged in the manufacture or production of any article or thing. Since the assessee is in the business of mining iron ore and selling thereof, the assessing officer was of the opinion that the process of extraction of mining iron ore and processing the same do not constitute 'manufacture' or 'production'.
"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that the assessee is entitled to deduction of investment allowance under section 32A of the Income Tax Act, 1961, in respect of machinery used in mining activity ignoring the fact that the assessee is engaged in extraction and processing of iron ore, not amounting to manufacture or production of any article or thing ?"
3. The High Court, 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 (hereinafter referred to as, "the Act"), entitling the assessee to investment allowance under the said provision.
3. The High Court, 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 (hereinafter referred to as, "the Act"), entitling the assessee to investment allowance under the said provision.
9. We are, therefore, of the opinion that extraction and 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.
9. We are, therefore, of the opinion that extraction and 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. The civil appeal is, accordingly, dismissed but without any order as to costs."