2011 (4) TMI 968

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ase, the Income-tax Appellate Tribunal was right in holding that the activity of the assessee of manufacturing of identity cards amounts to 'manufacture' and the undertaking of the assessee is an 'industrial undertaking' for the purpose of section 80-IA of the Act and the assessee is eligible for the benefit under section 80-IA of the Act ?" 4. Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the assessee filed its return for the assessment year 2000-01 on November 29, 2000, declaring an income of Rs. 1,30,31,964 which was processed on January 25, 2001. It claimed deduction of Rs. 21,68,157 under section 80-IA of the Act. Proceedings under section 148 of the Act were initiated. The Assessing Officer disallowed the claim of the assessee, vide order dated December 5, 2002. Feeling aggrieved, the assessee took the matter in appeal before the Commissioner of Income-tax (Appeals) (in short "the CIT (A)") who, vide order dated March 7, 2003, upheld the order of the Assessing Officer and dismissed the appeal. Being dissatisfied, the assessee approached the Tribunal by way of an appeal. The Tribunal, vide order dated August 10, 2007, allowed the appe....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cle or thing specified in the list in the Eleventh Schedule' had been omitted."   8. In order to adjudicate the issue relating to the assessee being an "industrial undertaking" or not and whether it carries on any manufacturing activity, it would be expedient to notice the details of activities undertaken by the assessee, which are as under :   "(a) Data from the voter list is entered into the computer, such data includes name, age, sex and address of the voters constituency-wise in bilingual.   (b) Photography of the individual voter-wise is carried out with the help of cameras, attendant equipment, viz., TV, VCR, generator, monitor, video tapes, etc.   (c) Feeding the data from video tapes to the computer machine for onward processing of identity cards.   (d) Application of hologram of the State on each such card and appending the signatures of the issuing authority, etc.   (e) Printing and lamination of the identity cards.   (f) Miniature printing for onward transmission to the Election Department."   9. In addition to the above, the final photo identity card which is prepared by the assessee is a completely new product from the da....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....bove. The assessee for preparation of photo identity cards has to process the data, print the same on the cards, put hologram containing the State emblem, take photograph of the voter, match the photo with the voter's data, affix the same on the cards and laminate the cards and take out the master copy duly laminated, consisting 40 miniatures per page of the above cards for the Election Department. The aforesaid activity involves making of a new final product from the data with which it started and would, thus, amount to manufacture or production of an article or thing. Once it is held that the assessee was manufacturing or producing an article or thing, necessarily it has to follow that the assessee is an "industrial undertaking" and covered under the provisions of section 80-IA of the Act. 13. The aforesaid view has the acceptance of the legislative intent as the Finance (No. 2) Act, 2009, effective from April 1, 2009, has inserted section 2(29BA) in the Act which defines "manufacture" as under :   "(29BA) 'manufacture', with its grammatical variations, means a change in a non-living physical object or article or thing,-   (a) resulting in transformation of the objec....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....'ble Bombay High Court in the case of Emirates Commercial Bank Ltd. [2003] 262 ITR 55 (Bom) clearly applies in the instant case for the purposes of construing the eligibility of the assessee's industrial under-taking for the purposes of benefits under section 80-IA of the Act. In section 32A(2)(b)(iii) the reference is to an 'industrial undertaking' for the purposes of business of construction, manufacture or production of any article or thing. Similarly, in section 80-IA(2)(iv)(a) also the reference is to an industrial undertaking which manufactures or produces articles or things. In fact, according to the hon'ble High Court, the data processing itself tantamounts to meeting the criteria of 'manufacture'. The instant case of the assessee stands on a better footing inasmuch as the assessee produces a tangible production in the shape of photo identity cards. Therefore, in our view, the aforesaid objection taken by the Revenue does not help its stand of denying relief under section 80-IA to the assessee." 15. Learned counsel for the Revenue could not demonstrate that the approach of the Tribunal in this respect was perverse or erroneous in any manner.   16. Lastly, Schedule XI....