TaxTMI 
TaxTMI 
2016 (5) TMI 687
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.... 3. On the facts and in the circumstances of the case the learned CIT(A) has erred in holding that the assessee is entitled to claim deduction u/s 10B in respect of Unit-1 for A.Y. under reference i.e. A.Y. 2008-09 without appreciating the fact that as per the provisions of sub-section (1) of section 10B, the assessee is entitled to claim deduction only for a period of 10 consecutive assessment years beginning with the A.Y. relevant to the previous year in which the undertaking begins manufacture or production of articles or things or computer software. 4. On the facts and in the circumstances of the case the learned-CIT(A) erred in holding that for the purpose of accounting 10 consecutive assessment years, the assessment years for which the assessee had opted out of section 10B have to be excluded without considering the statutory position that assessee's option to not to claim deduction u/s 10B for certain assessment years will not alter the period of 10 consecutive assessment years beginning with the year of manufacture or production of articles or things or computer software. 5. For these and other grounds that may be urged at the time of hearing, ....
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....company was entitled for deduction u/s 10B of the Act. 5. Being aggrieved by this direction, revenue is in present appeal before us. 5.1 The learned Departmental Representative (DR) has invited our attention to the plain provisions of sec.10B of the Act. He submitted that the activities of the respondent-assessee-company are not in the nature of manufacture and the period of 10 consecutive years should be reckoned from the year in which manufacture or production of article or thing is commenced. As a result, respondent-assessee-company is not entitled for deduction under the provisions of sec.10B of the Act. In this connection, he has relied on the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. DSL Software Ltd. (18 taxmann.com 151)(Kar). 5.2 On the other hand, learned AR of the assessee submitted that the issue whether the activity of the respondent-assesseecompany comes within the meaning of 'manufacture' is covered by the decision of the Hon'ble High Court of Karnataka in the assessee's own case reported in 57 Taxmann.com 152. 5.3 As regards reckoning of period of 10 consecutive years, learned AR of the assessee submitted that since resp....
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....y experiences a change. The test for determining whether the manufacture can be said to have been taken place is whether the commodity, which is subjected to process can no longer be regarded as the original commodity but is recognized in trade as a new and distinct commodity. The word "manufacture" implies a change but every change is not manufacture. The manufacture is a transformation of an article which is commercially different from the one which is conferred. The essence of manufacture is the change of one object to another for the purpose of making it marketable. The essential point is in manufacture, something is brought into existence which is different from that which originally existed, in the sense that the thing produced is by itself a commercially different commodity. The moment there is transformation,. a new commodity commercially known as distinct and separate commodity having its own character, use and name, whether it be the result of one process or several processes "manufacture" takes place and duty is attracted.' 8. From the aforesaid material, it is clear, the finished product which is sold by the assessee, is different from the material which are pr....
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....tion referred to in this sub-section only for the unexpired period of aforesaid ten consecutive assessment years : Provided further that for the assessment year beginning on the 1st day of April, 2003, the deduction under this sub-section shall be ninety per cent. of the profits and gains derived by an undertaking from the export of such articles or things or computer software: Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, [2011] and subsequent years. Provided also that no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under sub-section (1) of section 139. (2) This section applies to any undertaking which fulfils all the following conditions, namely :- (i) it manufactures or produces any articles or things or computer software ; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the ....
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....r provision of this Act, in computing the total income of the asses-see of the previous year relevant to the assessment year immediately succeeding the last of the relevant assess-ment years 5ending before the 1st day of April 2001, or of any previous year, relevant to any subsequent assessment year,- (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years, in relation to any building, machinery, plant or furniture used for the purposes of the business of the undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of subsection (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of subsection (1) of section 36, as the case may be, shall not apply in relation to any such allowances or deduction. ....
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....edia or other information storage device ; or (b) any customized electronic data or any product or service of similar nature, as may be notified by the Board, which is transmitted or exported from India to any place outside India by any means ; (ii) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made there-under or any other corresponding law for the time being in force ; (iii) "export turnover" means the consideration in respect of export by the undertaking of articles or things or computer software received in, or brought into India by the assessee in convertible foreign exchange in accordance with sub-section (3), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India. (iv) "hundred per cent. export-oriented undertaking" means an undertaking which ha....