JUDGMENT : DAMA SESHADRI NAIDU, J. Introduction: 1. The Assessee purchases ‘raw mined’ iron ore from the mine owners and uses that in its beneficiation or Concentrator Plant to ‘manufacture’ Iron Ore Concentrate Fines—a 100% export-oriented product. The Assessee claims the benefit under section 10B of the Income Tax Act (IT Act), treating its activity to be 'manufacturing'. The Assessment Officer rejects that claim. At the appellate echelons, the Assessee succeeds. So the Revenue comes before us. 2. So the question is, does the activity the Assessee undertakes amount to manufacturing or processing to entail it to the benefit under section 10B of the IT Act? Facts: The Assessment: 3. The Respondent-Assessee is a partnership firm engaged in the business of export of Iron Ore Concentrate Fines. The relevant assessment year is 2008-09. 4. The Assessee filed a return of income for AY 2008-09 on 29.09.2008 declaring a total income of Rs.53,92,300/-. The return of income was processed on 7.12.2009. The case was selected for scrutiny by CASS, and statutory notices u/s 143(2) and 142(1), dated 24.08.2009, were served on the Assessee. 5. Through the Assessment Order, dt.30.12.2010, the AO completed the assessment as under: (i) Disallowance of deduction claimed u/s 10B. That is, the claim of deduction u/s 10B of the IT Act amounting to Rs. 4,85,30,680/- was disallowed; (ii) Preoperative Expenses, too, were disallowed. The Appeal before CIT (A): 6. Aggrieved, the Assessee appealed to the Commissioner of Income Tax (Appeals). The Appellate Authority, through Order, dated 24.10.2013, substantially allowed the appeal: (i) Reversed the disallowance of deduction claimed u/s 10B amounting to Rs.4,85,30,680/-. (ii) Rejected the Revenue’s plea that the Assessee under-priced purchases to increase the profit. (iii) On the disallowance of pre-operative expenses of Rs. 2,68,650/-, the AO was directed to give effect to this enhancement. In the result, the appeal was partly allowed and partly disallowed. The Cross-Appeals before the ITAT: 7. Aggrieved by the order of the Commissioner of Income Tax (A), the Revenue filed an appeal before the Income Tax Appellate Tribunal, Panaji Bench, Goa. Through the Impugned Order, the Tribunal dismissed the Revenue's appeal but allowed the Assessee's. The Tax Appeal before this Court: The Substantial Questions of Law: 8. The Cross-Appeals before the ITAT: 7. Aggrieved by the order of the Commissioner of Income Tax (A), the Revenue filed an appeal before the Income Tax Appellate Tribunal, Panaji Bench, Goa. Through the Impugned Order, the Tribunal dismissed the Revenue's appeal but allowed the Assessee's. The Tax Appeal before this Court: The Substantial Questions of Law: 8. In this appeal before us, the Revenue presented two substantial questions of law: A. Was the ITAT right in allowing deduction under section 10B amounting to Rs.4,85,30,680/- to the Assessee, though the Assessee did not carry out any manufacturing activity? B. Was the ITAT right in allowing deduction under section 10B amounting to Rs.4,85,30,680/- to the Assessee, which includes excess deduction of Rs.4,45,64,130/- the Assessee claimed by under-invoicing the purchases from its sister concern, resulting in an increased profit? 9. On 27.03.2015, this Court admitted the appeal, but it accepted only question ‘A’ as the substantial question of law and rejected question ‘B’. That is, it has rejected the Revenue’s contention that the Assessee under-invoiced the purchases from its sister concern. In this regard, this Court has reasoned that both the CIT (A) and the Tribunal found on the facts that the Assessee did not under-invoice the raw material it had purchased from its sister concern. According to it, the Revenue could not show how the concurrent findings were perverse or arbitrary. So it rejected question ‘B’ as not raising any substantial question of law. 10. As the Tribunal's order covered two assessment years—2008-09 and 2009-10—the Revenue has filed two appeals. Submissions: The Revenue's Contentions: 11. The Revenue has contended that both the appellate authorities have erred in deleting the additions. It asserts that the Assessee does not carry on any ‘manufacturing’ of iron ore. Aided by statutory and lexical exposition of ‘manufacturing’, the learned Standing Counsel has elaborated on what this expression connotes in the statutory context and how the appellate authorities, concurrently though, have erred in entering wrong findings. The Assessee's Submissions: 12. The learned counsel for the Assessee, to begin with, has pointed out that the findings are concurrent and need no interference. According to him, the material extracted from the mines, called Run-of-Mines (ROM), contains many impurities such as mud, silica, sulphur, limestone, and so on. This ROM gets subjected to a manufacturing process called magnetic separation. And, indeed, this purification process is nothing but manufacturing. 13. Heard Ms. According to him, the material extracted from the mines, called Run-of-Mines (ROM), contains many impurities such as mud, silica, sulphur, limestone, and so on. This ROM gets subjected to a manufacturing process called magnetic separation. And, indeed, this purification process is nothing but manufacturing. 13. Heard Ms. Amira Razaq, the learned Standing Counsel for the Revenue; and Shri S.M. Singbal, the learned counsel for the Assessee. Discussion: 14. The facts in brief are that the Assessee is a partnership firm engaged in the export of Iron Ore Concentrate Fines. It is an approved 100% Export Oriented Unit (EOU) and has received approval from SEEPZ Special Economic Zone for manufacturing Iron Ore Concentrate Fines up to an annual capacity of 1,90,000 MT. The whole material gets exported. The Assessee has also been registered with the Central Excise Authority and issued a certificate of Registration as an export-oriented undertaking. 15. The Assessee purchased Run-of-Mines (ROM) from the mine owners—that is, its sister concern and others. And that ROM constitutes the raw material fed to its beneficiation or Concentrator Plant. Eventually, through this process the Assessee produces or manufactures Iron Ore Concentrate Fines. The Assessee, as we have noted, claimed the detection under section 10B amounting to Rs.4,85,30,680/-. But the Revenue has contended that the Assessee does not indulge in any 'manufacturing'. So the question is, does the cleaning process the Assessee puts the ROM to amount to manufacturing? If it does, was the ITAT right in allowing deduction under section 10B of the IT Act, amounting to Rs.4,85,30,680/- to the Assessee? No other question should we consider. 16. Run-of-mine, as defined by Dictionary of Mining, Mineral, & Related Terms (12nd ed., compiled and edited by the Staff of the U.S. Bureau of Mines, 1996), is the “the raw mined material as it is delivered by the mine cars, skips, or conveyors and prior to treatment of any sort”. According to the same dictionary, crude is “a substance in its natural, unprocessed state: crude ore or crude oil, for example.” That is, the ore found “in a natural state; not cooked or prepared by fire or heat; not altered or prepared for use by any process; not refined”. According to the same dictionary, crude is “a substance in its natural, unprocessed state: crude ore or crude oil, for example.” That is, the ore found “in a natural state; not cooked or prepared by fire or heat; not altered or prepared for use by any process; not refined”. Further, beneficiation is defined as “the dressing or processing of coal or ores for the purpose of (1) regulating the size of the desired product, (2) removing unwanted constituents, and (3) improving the quality, purity, or assay grade of the desired product”. It may also amount to “concentration or other preparation of coal or ores for smelting by drying, flotation, or magnetic separation. Finally, the lexicon regards 'beneficiation' as the “improvement of the grade of coal or ores by milling, flotation, sintering, gravity concentration, or other processes”. 17. Finally, we may refer to Magnetic Separation as a method of beneficiation. According to the Dictionary of Mining, Mineral, & Related Terms, it is “the separation of magnetic materials from nonmagnetic materials, using a magnet. This is an especially important process in the beneficiation of iron ores in which the magnetic mineral is separated from nonmagnetic material; e.g., magnetite from other minerals, roasted pyrite from sphalerite, etc.” 18. We may also note the statutory position. As the assessment years were 2008-2009 and 2009-2010, we should check the legal position relevant for those years. First, let us refer to section 10B of the IT Act. It is a special provision regarding the newly established 100% exportoriented undertakings. Subsection (1) mandates that “subject to the provisions of this section”, a deduction of such profits and gains as derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for ten consecutive assessment years. This period must begin with the assessment year relevant to the previous year in which the undertaking manufactures or produces articles or things or computer software, as the case may be. The deduction shall be allowed from the Assessee’s total income. 19. To get qualified for this benefit, the Assessee must fulfill these conditions: (i) it “manufactures or produces” any articles or things or computer software; (ii) it does not form the unit by splitting or by reconstructing its already existing business. We need not elaborate on other aspects. Before the amendment on 01.04.2001, Explanation (III) treated “process” as an aspect of manufacture. 20. We need not elaborate on other aspects. Before the amendment on 01.04.2001, Explanation (III) treated “process” as an aspect of manufacture. 20. The word “manufacture” has been defined for the first time in the IT Act in section 2 (29BA) by the Finance (No.2) Act, 2009, with retrospective effect from April 1, 2009. This provision treats manufacture as a change in a non-living physical object or article or thing (a) resulting in the transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character, or use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure. 21. Before the substitution of section 10A by the Finance Act, 2000, with effect from April 1, 2001; Explanation (iii) to the earlier section 10A defined the term “manufacture” as thus: (iii) “manufacture” includes any (a) process, or (b) assembling, or (c) recording of programmes on any disc, tape, perforated media or other information storage device. Explanation (1) to section 10AA contained the following definition of “manufacture”: (iii) ‘manufacture’ shall have the same meaning as assigned to it in clause (r) of section 2 of the Special Economic Zones Act, 2005 (SEZ Act). This provision of SEZ Act defines ‘manufacture’ thus: to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes, such as refrigeration, cutting, polishing, blending, repair, remaking, re-engineering, and includes agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining. 22. The definition under section 2 (r) of SEZ Act is similar to the definition in the Export-Import Policy. This policy defines ‘manufacture’ very widely to include even the blending of teas. Further, the definition of ‘manufacture’ contained in section 2(r) of the Special Economic Zones Act, 2005, was incorporated in section 10AA with effect from February 10, 2006. This amendment is clarificatory. According to this definition, even blending and packing of tea would be entitled to the benefit of section 10A. 23. So we ought to examine whether the Assessee has been indulging in any of these activities: making, producing, fabricating, assembling, processing or bringing into existence, by hand or by machine, a new product. This amendment is clarificatory. According to this definition, even blending and packing of tea would be entitled to the benefit of section 10A. 23. So we ought to examine whether the Assessee has been indulging in any of these activities: making, producing, fabricating, assembling, processing or bringing into existence, by hand or by machine, a new product. This new product must have a distinctive name, character, or use; it shall also include processes such as refrigeration, cutting, polishing, blending, repair, remaking, re-engineering. Any of these processes in mining amounts to manufacture. 24. Precedentially, the locus classicus on what amounts to 'manufacture' is Union of India v. Delhi Cloth and General Mills Co. Ltd ( AIR 1963 SC 79 ). There, a product called ‘Vanaspati’ was made exigible to excise duty on the premise that extracting ‘refined oil’ from raw oil amounted to manufacture. The respondent companies contended that at no stage did they produce any new product. The Supreme Court has repelled the respondents’ contentions. In that context, it has interpreted section 2(f) of the Central Excises and Salt Act, 1944, under which ‘manufacture’ was inclusively defined as “any process incidental or ancillary to the completion of a manufactured product”. So the Apex Court has held that the definition of “manufacture” in section 2(f) puts it beyond any possibility of controversy that it amounts to ‘manufacture’ if a product undergoes any of the numerous processes that are required to turn the raw material into a finished article known to the market. 25. In Union of India v. G. Glass Industries Ltd. (1988 (97) ELT 5), the question was whether printing on glass bottles would amount to manufacture under Section 2 (f) of the Central Excise Act 1944. In fact, the Supreme Court has laid down a two-fold test to decide where a process amounts to manufacture: First, we should see whether by that process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist. Second, we may have to see whether the commodity which already existed serves “no purpose but for the said process”. Applying the two-fold test, on the merits, G. Glass Industries has held that printing on bottles did not amount to manufacture. 26. Second, we may have to see whether the commodity which already existed serves “no purpose but for the said process”. Applying the two-fold test, on the merits, G. Glass Industries has held that printing on bottles did not amount to manufacture. 26. Similarly, in ITO v Arihant Tiles and Marbles P. Ltd. (320 ITR 79 (SC), the conversion of marble blocks into tiles and slabs by sawing and polishing has been declared as ‘manufacture or production’ under section 80IA of the IT Act because it involves several steps. The next year, in 2010, this Court has followed the case-holding of Arihant Tiles and Marbles in Commissioner of Income Tax v. Fateh Granite (P) Ltd [2010] 222 CTR 638 (Bombay). 27. But in Commissioner of Income Tax v. Sesa Goa Ltd. (271 ITR 331 (SC), as quoted in M/S Arihant Tiles & Marbles(P)Ltd.), the meaning of the word ‘production’ came up for consideration. The question was whether the ITAT was justified in holding that the Assessee was entitled to deduction under Section 32A of the IT Act, 1961, regarding machinery used in the mining activity, ignoring the fact that the Assessee was engaged in extraction and processing of iron ore, not amounting to manufacture or production of any article or thing. 28. This Court, in that case, while dismissing the Revenue's appeal, held that extraction and processing of iron ore did not amount to ‘manufacture’. But it concluded that extraction of iron ore and the various processes would involve ‘production’ under section 32A(2)(b)(iii) of the IT Act, 1961. So the Assessee was entitled to the investment allowance under Section 32A of the IT Act. On appeal, the Supreme Court has held that the word ‘production’ is expansive in ambit, and it has a wider connotation than the word ‘manufacture’. According to it, while every manufacture can constitute production, every production does not amount to manufacture. 29. In CIT v. Emptee Poly-Yarn (P) Ltd. (2010) 2 SCC 720 ), the Supreme Court has reminded the Revenue that it has repeatedly recommended to the Department, be it under the Excise Act, the Customs Act, or the Income Tax Act, to examine the process applicable to the product in question and not to go only by dictionary meanings. Then, it has pointed out that this recommendation has not been followed over the years. Then, it has pointed out that this recommendation has not been followed over the years. Emptee Poly-Yarn quotes with approval its earlier holding CIT v. Oracle Software India Ltd. (2010) 2 SCC 677 ), that the term ‘manufacture’ implies a change, but every change is not a manufacture, despite the fact that every change in an article is the result of treatment of labour and manipulation. But this test of manufacture needs to be seen in the context of the above process. “If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word ‘manufacture’.” 30. In Chowgule & Co. (P) Ltd. v. Union of India (1981) 1 SCC 653 ), the appellant carried on the business of mining iron ore and selling it in the export market after dressing, washing, screening and blending it. Since the chemical and physical composition of the ore varies from mine to mine and even within the same mine itself, intra mine blending of the ore was carried out at the mining site. It was to arrive at a certain specified chemical and physical composition. The appellant drew different quantities of ore from different stockpiles and put them together in the mechanical ore handling plant so that they would get blended in the process of loading. And the blended ore which would get actually loaded into the ship was the ore of the contractual chemical and physical composition. 31. But the Sales Tax Officer took the view that blending of ore done while loading through the mechanical ore handling plant did not amount to manufacture or processing of ore. The question in Chowgule was whether blending of ore while loading it into the ship through the mechanical ore handling plant constituted manufacturing or processing of ore. 32. According to the Supreme Court, it is now well settled that “the test for determining whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity, but is recognised in the trade as a new and distinct commodity”. In other words, the test required to be applied is this: does the processing of the original commodity bring into existence a commercially different and distinct commodity? In other words, the test required to be applied is this: does the processing of the original commodity bring into existence a commercially different and distinct commodity? Then, on the facts, Chowgule has held that the blending of different qualities of ore possessing different chemical and physical composition does not amount to manufacture. But it amounts to "processing", when the blending takes place. After taking semantic support from Webster's Dictionary, Chowgule has held that if any commodity is subjected to a process or treatment with a view to its "development or preparation for the market", as, for example, by sorting and repacking fruits and vegetables, it would amount to processing of the commodity within the meaning of Section 8 (3)(b) of the Central Sales Tax Act and Rule 13 under that Act. 33. In Aspinwall & Co. Ltd. v. CIT (2001) 7 SCC 525 ), The question was whether conversion of raw coffee berries into coffee beans amounted to manufacturing activity. The Supreme Court has held that the word ‘manufacture’ has not been defined in the Act. In the absence of a definition of the word ‘manufacture’, it has to be given a meaning as understood in common parlance. It is to be “understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities, or combinations whether by hand labour or machines”. If the change made in the article results in a new and different article, then it amounts to manufacturing activity. 34. According to Aspinwall, the net product is absolutely different and separate from the input. The change made in the article results in a new and different article which is recognised in the trade as a new and distinct commodity. The coffee beans have an independent identity distinct from the raw material from which it was manufactured. A distinct change comes about in the finished product. 35. If we probe further, in Commissioner of Income Tax v. Hindustan Petroleum Corpn. Ltd. [2017] 297 CTR 3 (SC), The question was whether the process of bottling of gas into cylinders for domestic use by complex technical process undertaken in the plant with missionary amounted to production or manufacture of gas cylinders for purposes objection under sections 80- I, 80-IA, and 80 HH. The Supreme Court has answered in the affirmative. 36. Ltd. [2017] 297 CTR 3 (SC), The question was whether the process of bottling of gas into cylinders for domestic use by complex technical process undertaken in the plant with missionary amounted to production or manufacture of gas cylinders for purposes objection under sections 80- I, 80-IA, and 80 HH. The Supreme Court has answered in the affirmative. 36. Coming back to the facts, we may note that the AO held that the Assessee had not carried out any manufacturing activity. So he disallowed the Assessee's claim under section 10B of the Act. On appeal, the CIT (A) reversed the AO's finding. In the Cross-appeals before the Tribunal, on this issue, the Tribunal has held that the Assessee has purchased ROM— that is, material extracted from mine on “as is where is” basis—and that ROM included a lot of impurities such as mad, silica, sulphur, limestone, and so on. It has, rightly, held that ROM is crude ore, practically of no use unless it is processed and made suitable for steel making industry. Describing the manufacturing process undertaken by the Assessee, the Tribunal has held that in the iron ore production, the ROM is a raw material in a very crude form. 37. When extracted, ROM contains a lot of waste material called 'impurities'. According to the Tribunal, very low-grade iron ore cannot be used in metallurgical plants, for it needs to be upgraded to increase the iron content. In the Assessee's case, iron ore concentrates are manufactured by the process of magnetic separation. For this purpose, the Assessee uses High-Intensity Magnetic Separator, which increases the iron content through concentration. Eventually, the assessee ‘manufactures’ Iron Ore Concentrate Fines, by upgrading the iron content to around 58%. Putting the Issue in Perspective: 38. We have already seen that ‘beneficiation’ involves the improvement of the grade of coal or ores by milling, flotation, sintering, gravity concentration, or other processes. In the same vein, we have seen that the separation of magnetic materials from nonmagnetic materials, using a magnet is an especially important process in the beneficiation of iron ores. 39. Section 10A, before April 2001, had the Explanation (iii), defining the term ‘manufacture’ to include any (a) process or (b) assembling. At any rate, the Explanation (1) to section 10AA equated the word ‘manufacture’ with what has been defined under section 2 (r) of the Special Economic Zones Act, 2005. 39. Section 10A, before April 2001, had the Explanation (iii), defining the term ‘manufacture’ to include any (a) process or (b) assembling. At any rate, the Explanation (1) to section 10AA equated the word ‘manufacture’ with what has been defined under section 2 (r) of the Special Economic Zones Act, 2005. That is, to manufacture is to make, produce, fabricate, assemble, process, or bring into existence, by hand or by machine, a new product having a distinctive name, character or use. This manufacturing may include process such as blending, repair, remaking, re-engineering. 40. Besides, in the earliest years, a Constitution Bench of the Supreme Court in G. Glass Industries Ltd., has laid down a two-fold test to decide whether a process amounts to manufacture. That process may bring out a different commercial commodity. Or it may make the original commodity cease to exist. On the second count, the original commodity should serve no purpose unless it undergoes the process in question. We reckon here the beneficiation the Assessee has undertaken passes the twin tests. 41. From the above plethora of precedents, we have seen that various shades of manufacturing or processing have been favourably considered by the Apex Court to be qualified as transforming the original product into a commercially viable end product, distinct and different from the original product. Conclusion: 42. The Assessee purchases ROM, which includes a lot of impurities; it is crude ore, practically of no use unless it is processed and made suitable for its intended end-use. True, very low-grade iron ore cannot be used in metallurgical plants, for it needs to be upgraded to increase the iron content. In the Assessee's case, iron ore concentrates are manufactured by the process of magnetic separation. It essentially amounts to ‘manufactures’ or ‘process’. Therefore, we find no reason to interfere with the Tribunal's findings on this sole substantial question of law. Result: 43. We answer the sole substantial question of law against the appellant-Revenue and in favour of the Respondent-Assessee. Tax Appeal Nos.25 of 2015; 26 of 2015; and 37 of 2015: 44. In Tax Appeal No.25 of 2015, the parties are the same; the assessment year is 2008-09. Baring the variations in amounts of tax or disallowance, all other issues are the same. So are the Tax Appeal Nos.26 of 2015 and 37 of 2015; they relate to Assessment Year 2009-10. 45. In Tax Appeal No.25 of 2015, the parties are the same; the assessment year is 2008-09. Baring the variations in amounts of tax or disallowance, all other issues are the same. So are the Tax Appeal Nos.26 of 2015 and 37 of 2015; they relate to Assessment Year 2009-10. 45. As is the case with Tax Appeal No.17/2015, in this batch of cases, too, the Court admitted the appeals on the singular substantial question of law. Thus, not only the parties but also the facts and the issues are the same in all the Tax Appeals. 46. We, therefore, dispose of these Tax Appeals, as well, applying the same holding as has been declared in Tax Appeal No.17/2015. Result: As a result, the appeals are dismissed. No order on costs.