1. Business activity of mining limestone and marble blocks, then cutting and sizing before sale for tax deduction under Section 80HH of Income Tax Act, 1961. (Para 1 , 3 )
Back
Next 
2000 Supreme(SC) 1265
SUPREME COURT OF INDIA
N.Santosh Hegde : S.P.Bharucha : U.C.Banerjee
Lucky Minmat Private Limited
Versus
Commissioner Of Income Tax, Jaipur
Case No. : 2454 of 1997
Date of Decision : 8/3/00
Important Points
Mere mining, cutting, and sizing of limestone and marble blocks does not constitute a manufacturing or production process for tax relief purposes, unlike the conversion of limestone into lime, lime dust, or concrete.
Subject
Taxation Law - Income Tax
Act Referred
Headnote
(A) Income Tax Act, 1961 - Section 80HH - Business activity - Manufacturing or production - Mining of limestones and marble blocks, cutting and sizing the same before being sold - Whether such activity constitutes manufacturing or production for purpose of tax relief - Conversion into lime, lime dust, or concrete by stone crushers may be considered manufacturing, but mere mining and cutting does not qualify as such. (Paras 3 and 4)
Facts of the case:
The assessee engaged in the business of mining limestones and marble blocks, which were subsequently cut and sized before being sold in the market. The assessee sought relief under Section 80HH of the I.T. Act, 1961, on the basis that its business activities were in the nature of manufacturing or production.
Findings of Court:
The court found that there is a clear distinction between the process of converting extracted limestone into other products such as lime, lime dust, or concrete, and the process of merely mining and cutting stone blocks. While the former qualifies as a manufacturing process, the latter does not.
Issues: Whether the business activity of mining, cutting, and sizing limestones and marble blocks constitutes "manufacturing or production" for the purpose of claiming relief under Section 80HH of the I.T. Act, 1961.
Ratio Decidendi: The mere mining of limestone and marble and subsequent cutting of the same before sale does not amount to a manufacturing process, as it lacks the conversion of the raw material into a different product.
Result: Appeal dismissed with costs.
Facts of the case:
The assessee engaged in the business of mining limestones and marble blocks, which were subsequently cut and sized before being sold in the market. The assessee sought relief under Section 80HH of the I.T. Act, 1961, on the basis that its business activities were in the nature of manufacturing or production.
Findings of Court:
The court found that there is a clear distinction between the process of converting extracted limestone into other products such as lime, lime dust, or concrete, and the process of merely mining and cutting stone blocks. While the former qualifies as a manufacturing process, the latter does not.
Issues: Whether the business activity of mining, cutting, and sizing limestones and marble blocks constitutes "manufacturing or production" for the purpose of claiming relief under Section 80HH of the I.T. Act, 1961.
Ratio Decidendi: The mere mining of limestone and marble and subsequent cutting of the same before sale does not amount to a manufacturing process, as it lacks the conversion of the raw material into a different product.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
Table of Contents
2. Whether business activity constitutes manufacturing or production for relief under Section 80HH of I.T. Act, 1961. (Para 1 , 5 )
3. Mere mining and cutting of limestone and marble differs from conversion into lime or concrete, which is manufacturing. (Para 3 , 4 )
4. Mining and cutting stone before sale is not manufacturing; conversion into lime or concrete qualifies as manufacturing. (Para 4 )
5. Appeal dismissed with costs, as facts were distinguishable from precedent case where manufacturing was found. (Para 6 )
6. Does mining and cutting limestone and marble blocks constitute manufacturing or production under Section 80HH of the Income Tax Act, 1961?
No. The court held that mere mining, cutting, and sizing of stone before sale does not amount to manufacturing, unlike conversion into lime or concrete. (Para 3 , 4 )
7. Can a court follow a precedent when the facts of the present case are materially different?
No. A precedent cannot be followed when the facts are materially distinct. The court must distinguish the cases based on factual differences. (Para 4 , 5 )
8. What is the legal effect of the Supreme Court declining leave to appeal from a High Court judgment?
Declining leave to appeal does not make the High Court judgment binding in a different factual context. The decision is confined to its own facts. (Para 5 )
(1) THE Tribunal, in the instant case, placed reliance on its earlier judgment in the case of M/s Best Chemical and Lime Stone Industries Pvt. Ltd. and concluded that the facts and circumstances in the present case were similar. It, therefore, followed its earlier judgment. The following question was referred to the High Court for consideration, arising out of the judgment of the Tribunal. "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that business activity of the assessee is clearly in the nature of manufacturing or production and, therefore, it is entitled for relief under Section 80HH of the I.T. Act, 1961."
(2) THE High Court answered the question against the assessee and the assessee is in appeal.
(3) THE High Court noted that the facts found by the Tribunal in the instant case were, "The assessee had business of mining of limestones and marble blocks and thereafter, cutting and sizing the same before being sold in the market." The High Court distinguished its earlier judgment in the case of M/s Best Chemical & Lime Stone Industries Pvt. Ltd. because there the assessee was engaged in the business of extracting limestone and its sale either as such or after converting it into lime and lime dust or concrete by stone crushers. Such, the High Court found, were not the facts in the case before it.
(4) WE have been shown the statements of case in the present matter as also in the matter of M/s Best Chemical (supra) and are satisfied that the Tribunal has found as aforestated. There was, therefore, clearly, a distinction on facts. The 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 lime stone and marble and cutting the same before it was sold in the market could not be so considered.
(5) THE entire argument before us is based upon the High Courts judgment in the case of M/s Best Chemicals (supra) and the fact that this Court declined to grant leave to appeal therefrom. However, the facts being different, that judgment cannot be followed here. No other argument is advanced.
(6) THE appeal is dismissed with costs.
