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2.1. The PCIT failed to assume valid jurisdiction under section 263 of Income tax ACT as held by the various judicial decisions.

2.2. The PCIT ought to have detailed the reasons as to how the decisions relied by the appellant company are distinguishable.

3. The PCIT erred in not appreciating that the word production appearing in sec. 32AC has a wider connotation in comparison to "manufacturer". 3.2. The PCIT failed to appreciate that any activity which brings a commercially a new product into existence constitute production. 3.3. The PCIT erred is not considering the appellant submission that the issue with regard to additional depreciation has already been decided by the Jurisdictional High Court in favour of the appellant and that the jurisdictional High Court ruling is binding.

2. The Registry has noted delay of 39 days in the appeal which stand condoned in the light of the fact that that the time available to prefer the appeal fall within the Lockdown situation arising out of Covid-19 Pandemic. The Ld. AR advanced arguments supporting the case of the assessee which has been controverted by Ld. Sr. DR. Having heard rival submissions and upon perusal of case records, the appeal is disposed- off as under.

3. Upon perusal of impugned order, it could be seen that the assessment is subjected to revision on three issues viz. (i) claim of deduction u/s 32AC; (ii) claim of additional depreciation u/s 32(1)(ii); &

(iii) Disallowance u/s 14A.

4. On the issue of claim of deduction u/s 32AC, the Ld. Pr. CIT observed that the assessee was only extracting / separating minerals such as granite, limenite, rutile, zircon, monazite etc. in its original form from mineral sand available in certain beaches. It was noted that the aforesaid minerals were extracted by the assessee from the sand and thereafter, plain sand was dumped back in to beaches. The assessee thus does not manufacture any items and the stated extraction process do not fit into the definition of 'manufacturing' in terms of sec 2(29BA). Thus, investment allowance claimed u/s 33AC for Rs. 612.61 Lacs was required to be withdrawn.

6. However, Ld. Pr. CIT distinguished the case of Sesa Goa Ltd. (supra) on the ground that in that case, the assessee was extracting iron ore whereas in the present case, the assessee was merely extracting minerals from beach sand. Pertinently, in the original return of income, the assessee made claim u/s 35(2AB) but withdrew the same which would lead to conclusion that assessee conceded that it was not fulfilling the conditions under those provisions. The Ld. AO should have verified the claim made u/s 32AC. Further there was regrouping of asset under plant and machinery. The AO did not examine whether the assets were eligible assets u/s 32AC or not. The assessment order failed to verify the same and the claim was allowed without making requisite enquiries which call for revision in terms of Explanation 2 to Sec. 263(1). The Ld. Pr.CIT further held that third proviso to sec 32(1)(ii) would apply only from AY 2016-17. The Ld. AO was accordingly directed to verify the same.