ORDER
I.C. Sudhir, J.M.
1. In all these three appeals the first appellate orders have been questioned by the assessees on the common grounds:
1. The very initiation of reassessment proceedings under Section 148 of the Act is bad in law and on the facts of the case and hence the consequent reassessment is also void ab initio and deserves to be quashed.
2. Without prejudice to above, the learned AO further erred in law as well as on the facts of the case, in disallowing the deduction claimed by the assessee under Section 80-IA of the IT Act, 1961. Hence the deduction so claimed may please be allowed now.
3. The learned AO also erred in misinterpreting the decision of Hon’ble Supreme Court in the case of Lucky Minmat (P) Ltd. The said decision is not applicable on the facts of the present case and hence the addition made by the AO, by relying on the said decision, deserves to be deleted in toto.
4. The learned AO further erred in law as well as on the facts of the case, in charging of interest under Section 234A, B and C of the IT Act, 1961. The assessee totally denies its liability of charging of any such interest and hence, the levy of interest may please be quashed in toto.
2. In support of these grounds the learned Authorised Representative submits that originally returns of income for these assessment years were processed under Section 143(1)(a) of the Act, 1961. In the computation attached with the return of income the assessee had claimed deduction under Section 80-IA of the Act, 1961. Later on the AO reopened the assessment for above years withdrawing the deduction under Section 80-IA on the basis of decision of Hon’ble Supreme Court in the case of Lucky Minmat (P) Ltd. v. CIT . In the reassessment, AO did not agree with the contentions of assessee and learned CIT(A) has also upheld the withdrawal made by the AO based on aforesaid decision. The learned Authorised Representative submits that assessee’s case was directly covered by the later decision of Hon’ble Supreme Court in case of CIT v. Sesa Goa Ltd. (2004) 192 CTR (SC) 577 : (2004) 271 ITR 331 (SC) wherein the decision of Hon’ble Karnataka High Court in the case of CIT v. Mysore Minerals Ltd. has been affirmed with this finding that extraction of granite and converting the same into slab should be considered as manufacture or production of an article or thing. Since assessee’s activity is also of converting of marble blocks, identical as granite blocks, into marble slabs and hence is directly covered by the decision of Hon’ble Supreme Court as mentioned above. The learned Authorised Representative submits that the decision in the case of Lucky Minmat (P) Ltd. (supra) on the other hand is on Section 80HH and not on Section 80-I/80-IA. He submits that later decision of Hon’ble Supreme Court is to prevail as it has binding precedent . In this regard he places reliance on the decision of Hon’ble Delhi High Court in the case of Bhika Ram and Ors. v. Union of India and Ors. . He also refers the decision of Hon’ble Supreme Court in the case of MA. Murthy v. State of Karnataka and Ors. with this submission that the later decision of Hon’ble Supreme Court has to be followed irrespective of the fact that whether the earlier decision finds place in the later decision or not. The learned Authorised Representative also points out, without prejudice to above contention, that it is also settled position of law that wherever two views are possible, the view which favours the assessee has to be followed. He refers the decision of Hon’ble Supreme Court in CIT v. Kullu Valley Transport Co. (P) Ltd. and the case in CIT v. Podar Cement (P) Ltd. .
3. On the issue of charging of interest under Section 234B of the Act learned Authorised Representative submits that the lower authorities have made and upheld it without appreciating that in the assessment order no specific direction in this regard has been made by the AO but he has directed as “Assessed. Issue necessary forms. Charge interest as per law.” Reliance has been placed by him on the decision of Hon’ble Supreme Court in the case CIT v. Ranchi Club Ltd. (2000) 164 CTR (SC) 200 and of Hon’ble Rajasthan High Court in the case Zakir Hussain v. CIT (2006) 202 CTR (Raj) 40.
4. The learned Departmental Representative, on the other hand, justifies the orders of the lower authorities.
5. After considering the aforesaid arguments advanced by the parties in view of order of the lower authorities as well as decisions relied on by learned Authorised Representative, we find substance in the aforesaid contentions of learned Authorised Representative that in view of later decision of Hon’ble Supreme Court in the case of CIT v. Sesa Goa Ltd. (supra) and CIT v. Mysore Minerals Ltd. (supra), the lower authorities were not justified in denying the claim of deduction under Section 80-IA of the Act to the assessee based on an earlier decision of Hon’ble Supreme Court in the case of Lucky Minmat (P) Ltd. (supra). For a ready reference the relevant extract of the decision of Hon’ble Supreme Court (sjc-Karnataka High Court) in the case of CIT v. Sesa Goa Ltd. (sic-CLT v. Mysore Minerals Ltd.) (supra) is being reproduced hereunder:
…In order to find out whether a particular activity is manufacturing activity or not it has to be observed that there should be an action or process of making an article by application of physical or mechanical labour and the product must be commercially new or different article. Manufacturing results in alteration or change in the nature of the goods which are subjected to process. Granite blocks are converted into slabs and cut into sizes and thereafter polished. It is not the same commodity, i.e., the block. This matter was examined in the case of the assessee in CIT v. Mysore Minerals Ltd. and it was held that the assessee is an industrial undertaking entitled to investment allowance under Section 32A. In view of the decision given in the case of the assessee we are of the view that the Tribunal is right in law in coming to the conclusion that the original assessment which granted the relief under Sections 32A and 80-1 to the assessee was not erroneous and the inference of the CIT under Section 263 was not proper.
6. We are thus respectfully following the decision of Hon’ble Supreme Court in the case CIT v. Sesa Goa Ltd. (supra) direct the AO to consider the claim of deduction under Section 80-IA of the Act of the assessee in the aforesaid assessment years in view of the above decision of Hon’ble Supreme Court in the case CIT v. Sesa Goa Ltd. (supra). The first appellate order is, therefore, set aside. The ground Nos. 1 to 3 are thus allowed in favour of assessee.
7. So far as charging of interest under Section 234B questioned by the assessee in ground No. 4 is concerned, it being consequential in nature, does not need independent adjudication.
8. The appeals are thus partly allowed.