TaxTMI 
TaxTMI 
2013 (9) TMI 1139
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.... 3) The Learned CIT (A) erred in coming to the conclusion in para 7 of his order that the appellant claimed that their activity amounted to manufacture there by claiming that they were a manufacturing concern, whereas the appellant had been claiming that their activity would amount to manufacture/production, laying more stress on production. 4) The Learned CIT (A) erred in coming to the conclusion in para 7.1 of his order that the appellant as well as M/s. Sesa Goa Ltd., are engaged in the same line of business i.e. export of iron ore and as such the decision of the Honourable Supreme Court in the case of M/s. Sesa Goa Ltd., is directly applicable to the case of the appellant. Factually, although the appellant and M/s. Sesa Goa Ltd., are both involved in the export of Iron Ore, their process involved in manufacture/production as also the raw material used for producing the finished product are totally different. The Learned CIT (A) failed to consider this factual aspect and arrived at the incorrect decision that the appellant is not entitled to deduction U/s.10B. 5) The Learned CIT(A) erred in not correctly interpreting the decision of the Honourable Supreme Court....
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.... grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed and the appellant may be granted deduction U/s. 10B as claimed by them in the return of income. 2. The only issue involved in the grounds taken by the Assessee in the appeal is disallowance of the claim of deduction u/s 10B by the Revenue. 3. The brief facts relating to the case are that the Assessee, a Partnership firm, filed the return for the impugned assessment year on 17.9.2009 at an income of Rs. 1,05,11,410/-. The Assessee claimed exemption u/s 10B amounting to Rs. 8,39,57,651/-. The AO asked for the justification of the exemption. The Assessee pointed out that the Assessee is a 100% Export-Oriented Unit. The Assessee purchases unusable tailing rejects and mineral waste which has very low Fe content in the range of 38-43%. The Assessee converts it into usable iron ore fines with high Fe content of more than 58% and exports the same to China by carrying out the various processes through various machines installed by the Assessee. It was also submitted that the whole manufacturing process brings a change by way that the earlier commodity i.e. raw material an....
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.... qualify for production as per the above quoted decision. 7.2 The assessee has stated that A.Y 2009-2010 is the first year of operation, which is factually incorrect. The assessee started its business from the A.Y 2006- 2007 relevant to the A.Y 2007-2008, which can be seen from the returns of income filed by the Assessee. 7.3 The assessee has claimed a net profit of 9.63 crores on a gross turnover of 12.45 crores which is more than 75% of the turnover and expenditure debited towards beneficiation/processing is very small compared to the turnover and profit, disclosed. 7.4 Such a fantastic profit margin also proves that raw iron ore is not waste as claimed by the assessee, otherwise it would not fetch such high returns. 8. Therefore, in view of the facts of this case and legal issues involved in this case I do not see any infirmity in the order passed by the AO. Respectfully following the decision given by the Honourable Supreme Court in the case M/.s Sesa Goa, the order of the AO is confirmed and appeal of the assessee on this Ground is dismissed." 3.1 Before us, the ld. AR submitted the written submission as under : Submission of wri....
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.... of machineries utilized is enclosed herewith as Annexure "A". It has to be mentioned that the physical composition and form of the raw material and finished goods are totally different - the raw material is mostly in the semi liquid form, in the form of a slurry whereas the finished goods are in the form of dry powder. Similarly, the chemical composition of the raw material and finished goods are totally different - the raw material contains impurities, water and also its Fe content is in the range of 38% to 43% where as the finished goods is free from impurities, and its Fe content is more than 58%. For conversion of the wasteful raw material into exportable and valuable finished goods, a series of mechanical and chemical processes are involved. Since the tailing rejects and mineral waste is otherwise not usable or consumable, and is available in abundance, if not sold it involves substantial further expenditure for disposal of the tailing rejects and mineral waste as per the norms prescribed by Pollution Control Board and as such this raw material is sold at very low price if a buyer is found for this material. The Appellant claimed deduction under section 10B of the In....
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....form consistency. 2. In the case of the Appellant, issue involved relates to claim of deduction under section 10B, which has been claimed on the ground that the Appellant's process amounts to manufacture/production whereas in the case of Sesa, Goa, the issue involved was claim of investment allowance U/s 32A on Tippers etc., which transported the extracted iron ore from mining sites to the processing unit treating them and plant and machinery. Further, the honorable Supreme Court held that the act of extraction and processing of iron ore amounts to manufacture/production for purposes of claim of investment allowance for tippers etc., treating them as machineries used in the manufacture/production of iron ore. It has nowhere given a decision or finding that processing of iron ore in itself does not amount to manufacture/production. The issue that whether extraction of iron ore as well as processing of iron ore if taken independently of each other would also amount to manufacture/production independent of each other was not deliberated and answered since it was not the issue before the honorable Supreme Court. Thus the learned Assessing Officer as also the learn....
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....learly states that bringing into existence of new and distinct object or article or thing with a different chemical composition or integral structure tantamount to 'manufacture'. The Crude ore once processed is made marketable and had a different chemical and physical composition than the ROM (Crude Ore) even though in common parlance both may be called iron ore. It is no more remains as crude ores. Tailing no more remains tailing but converted into a powder. In view of this clause and the decision of the Supreme Court in the case of Chowgule & Co., it can be held that the assessee is engaged in these units in 'manufacturing". The honorable ITAT bench has in the order discussed various other decisions in coming to this conclusion. The honorable bench distinguished the decision of the honorable Supreme Court in the case of CIT vs Sesa Goa, reported at 271 ITR 331 and held that the said decision is not applicable to the facts of the case. Further the Bench has relied on the decision of the honorable Supreme Court in the case of CIT, N.C Budharaja & Co., reported at 204 ITR 412 to determine the meaning of production and manufacture. The honorable bench has squarely reli....
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.... order of the honorable CIT, Appeal, Panaji and holding that the Appellant is entitled to deduction under section 10B on the facts of the case. In the Appellate Order passed by the CIT, Appeal, Panaji, a reference has been made to the higher rate of profit than normal. The learned CIT, Appeals has given a finding that such a fantastic profit margin also proves raw iron ore is not a waste as claimed by the Assessee, otherwise it would not fetch such high returns. The finding of the learned CIT< (Appeals) is contrary to facts. It is a well known fact that tailing rejects and mineral waste is the discarded end product of the mining process which is in semi liquid form and is dumped into tailing pond. In fact to dispose it off as per the norms of pollution control board, it involves substantial expenditure and as such the miners are more than willing to sell it at throw away price if they find a buyer since this waste is generated in huge quantities and is available in abundance. This being the case the Appellant has purchased the tailing rejects and mineral waste at the prevailing market price and due to the value addition made after incorporating various mechanical and chemical pr....
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....gave the verdict in this case granting deduction under section 10B of the Income Tax Act, 1961. While arriving at the conclusion, the honorable special bench of the ITAT took into consideration the detailed facts of the case as also went into the definitions of the words "manufacture, production and processing". The definition of manufacture given in the special economic zone act 2005 in section 2(r) was also taken into consideration. The learned special bench squarely relied on the decision of the honorable Supreme Court in the case of M/s. Chowgule & Co. Pvt. Ltd., vs. Union of India (1981) 1 SCC 653 AIR 1981 SC 014, Aspinwall & Co. Ltd., vs. CIT (251) ITR 323 (SC), Brooke Bond Lipton India Ltd., vs. State of Karnataka (1998) 109 STC 235(Kar.), Girnar Industries vs. CIT (2011) 338 ITR 277, Kerala and also Tata Tea Ltd., (supra). The honorable High Court took into consideration the decision of the Supreme Court in the case of CIT vs. Sesa Goa Ltd., reported at 271 ITR 331 and distinguished the same from the facts of the case. In spite of taking into consideration, the decision of the honorable Supreme Court in the case of Sesa Goa, (supra), the honorable High Court relying on the ....
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....." 3.2 The ld. DR, on the other hand, vehemently relied on the order of the authorities below and contended that the process adopted by the Assessee does not tantamount to manufacture or production of any article. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of CIT vs. Sesa Goa, 271 ITR 331 for the proposition that for manufacture, there must be extraction as well as processing of the ore. The Assessee is not carrying on any extraction activity. The Assessee was buying the ore, may be rejections having low density of iron. What the Assessee was producing was also iron ore which has Fe content of more than 58%. There is no change in the mechanical composition of the raw materials as well as the finished product. 3.3 We have carefully considered the rival submissions and perused the material on record. We have also gone through the case laws as has been relied on before us. The only issue involved before us is whether the Assessee is processing the tailing rejects into iron ore whether it can be said that the Assessee is engaged in manufacture so that the Assessee can be entitled for exemption u/s 10B. The AO rejected the claim of the Assesse....
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.... which deals with the special provisions in respect of the newly established 100% export oriented undertakings were inserted by the Finance Act, 1988 w.e.f. 01/04/1989. Sec. 10B provides that any profits and gains derived by an assessee from a 100% EOU shall not be included in the total income of the assessee. This provision applies to any undertaking which manufactures or produces any article or thing. Explanation (i) to sec. 10B provides that the expression „100% Export Oriented Unit' means an undertaking which has been approved by the Board appointed in this behalf by the Central Government in exercise of the powers confirmed by sec. 14 of the Industries (Development &Regulation) Act, 1951 and the riles made there under. Explanation (iii) which was there at the time of the said sec. 10B defined the word „manufacture' for the purpose of the said section to include any - (a) process or (b) assembling or (c) recording of programme on disc, tape, perforated media or other information storage device. Thus, „process' was included within the word manufacture for the purpose of sec. 10B. Explanation (iv) of the said sec. 10B further provided that the ....
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....ftware exported out of India, should be received in or brought into India within a period of 6 months from the end of the previous year or within such further period as the competent authority may allow - Sub-section (3); ii. The profits derived from the export of articles or things or computer software shall be the amount which bears to the profits of the business, the same proportion, as the export turnover in respect of such article or things or computer software bears to the total turnover of business - Sub-section (4); iii. The assessee must furnish in the prescribed form No. 56G, along with his return of income, the report of a Chartered Accountant certifying that the deduction has been correctly claimed in accordance with the provisions of section 10B - Sub-section (5); iv. Where the assessee avails of the benefits of section 10A or section 10B, it will not be eligible for other tax exemptions available under other provisions of the Act during the period of 10 years - Sub-section (6); v. "manufacture" shall have the same meaning as assigned to it in clause (r) of section 2 of the Special Economic Zones Act, 2005. 43.3 Subsequently....
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....ains to consider whether the ore blended in the course of loading through the mechanical ore handling plant can be said to undergo processing when it is blended. The answer to this question depends upon what is the true meaning and connotation of the word "processing" in Section 8(3)(b) and Rule 13. This word has not been defined in the Act and it must therefore be interpreted according to its plain natural meaning. Webster's Dictionary gives the following meaning of the word „process': "to subject to some special process or treatment, to subject (especially raw material) to a process of manufacture, development of preparation for the market etc.; to convert into marketable form as livestock by slaughtering, grain by milling, cotton by spinning, milk by pasteurizing, fruits and vegetables by sorting and repacking." Where therefore 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) and Rule 13. The nature and extent of processing may vary from cas....
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....ue that they do not suffer any change in their respective chemical and physical compositions. Thus the Hon"ble Supreme Court accepted that there is change in chemical compositions after processing of the iron ore in this case.From the said decision of the Apex Court, it is apparent that Hon'ble Apex Court held even blending of iron ore for the purpose of export involves change in the chemical and physical composition of iron ore. But if we look to the facts in the impugned case of the assessee, the assessee is not only blending iron ore but carrying out various processes as to make iron ore called crude ore useable to Ispat Industries. The activity of the units of the assessee for Amona and Chitradurga involved converting input into output consist of crushing (crude ore called ROM which appeared to be pieces of rocks as we noted during the course of hearing on the basis of sample shown to us) screening, washing, stacking, loading in barges, river transportation to the boat and export in ships. The finished product which comes out are called lumps and fines which are used for Ispat Industries and brought by the foreign buyers. The finished product technically after processi....
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....ca Industries Ltd. Vs. State of Bihar (1961) 12 STC 150 (SC), Hon'ble Supreme Court defined the word „production', albeit, in connection with the Bihar Sales Tax Act, 1947. The definition was adopted from the meaning ascribed to the word "production" in the Oxford English Dictionary, as meaning "amongst other things that which is produced; a thing that results from any action, process or effort, a product; a product of human activity or effort". For the wide definition of the word „production', it has to follow that mining activity for the purpose of production of mineral ores would come within the ambit of the word „production' since ore is „a thing', which is the result of human activity or effort. 43.7 According to Webster International English Dictionary, the verb "produce" means to bring forward, beget, etc. The juxtaposition of the word "manufacture" with „agriculture' and „horticulture' is significant and cannot be lost sight of. The intention in employing the word "produced" obviously was to introduce an element of volition and effort involving the employment of some process for bringing into existence some goods. 43.8 I....
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....constitute „processing' of the ore. Now undoubtedly there is a close analogy between the facts of Nilgiri Tea Company case [10 STC 500 (Bom HC)] and the facts of the present case, but we do not think we can accept the decision of the Bombay High Court in the Nilgiri Tea Company case [10 STC 500 (Bom HC)] as laying down the correct law. When different brands of tea were mixed by the assessee in Nilgiri Tea Company case [10 STC 500 (Bom HC)] for the purpose of producing a tea mixture of a different kind and quality according to a formula evolved by them, there was plainly and indubitably processing of the different brands of tea, because these brands of tea experienced, as a result of mixing, qualitative change, in that the tea mixture which came into existence was of different quality and flavor than the different brands of tea which went into the mixture. There are, it is true, some observations in the judgment of the Bombay High Court which seem to suggest that if instead of manual application of energy in mixing the different brands of tea, there had been application of mechanical force in producing the tea mixture, the court might have come to a different conclusion and....
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....ii) The question is not whether there is any manual application of energy or there is application of mechanical force. Whatever be the means employed for the purpose of carrying out the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes "processing". 43.10 Therefore, Hon'ble Supreme Court, in construing the expression "processing" allowed the appeal of the assessee, in Chowgule & Co. Pvt. Ltd. (supra), holding, inter alia, that where any commodity is subjected to a process or treatment with a view to its "development or preparation for the market" it would amount to processing of the commodity within the meaning of Central Sales Tax Act, 1956. Hon'ble Supreme Court, in the said judgment, did not consider the expression "manufacture" since the question was decided only on the expression "processing". However, considering the judgment of the Bombay High Court in the case of Nilgiri Tea Co. [1959] 10 STC 500, Hon'ble Supreme Court observed that, for the purpose of producing a tea mixture of a different kind and quality according to a formula evolved by them, there was plainly and indu....
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....exclusively engaged in blending and packing of tea for export and was not manufacturing or producing any other article or thing. It was recognized as a 100% EOU division and the Department had no case that the assessee's unit engaged in export of tea bags and tea packets was not a 100% EOU. If exemption was denied on the ground that products exported were not produced or manufactured in the industrial units of the assessee's 100% EOU, it would defeat the very object of section 10B of the Act. (similar to assessee's case). Further, industrial units engaged in the very same activity, i.e., blending, packing and export of tea in the special economic zones and free trade zones, would continue to enjoy tax exemption under section 10A of the Act and section 10AA of the Act respectively. The assessee was allowed exemption on the profit derived by its 100% EOU engaged in blending, packing and export of tea bags and tea packets. Hon'ble High Court held as under: "The finding of this court is that the purpose of incorporation of section 2(r) of the Special Economic Zones Act, 2005, into section 10AA of the Income-tax Act is to provide a liberal meaning to the word "manufacture" whic....
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....r industries in the export processing zones, free trade zones and to 100 per cent export oriented units covered by sections 10A, 10AA and 10B of the Income-tax Act. Therefore, following the judgment of this court above referred to we hold that the assessee is entitled to exemption on the profit derived by its 100 per cent export oriented unit engaged in blending, packing and export of tea bags and tea packets. Consequently, we allow the appeals by reversing the orders of the Tribunal and by restoring the orders of the first appellate authority declaring the appellant's entitlement for exemption." 43.12 Hon'ble high court in this case, in our opinion, has clearly laid down that once the assessee is recognized as a 100% EOU for engaging in an activity and assessee is engaged in the same very activity, if the exemption is denied to the assessee on the ground that there is no production or manufacturing but only processing of the products exported in the 100% export oriented unit, the same would defeat the very object of section 10B. The Hon'ble high court took the view that the decision of the Hon'ble Supreme Court in Tara Agency's case 292 ITR 444 will not apply even though ....
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.... year. Thereafter, it is packed in consumer packets of 50, 100, 250, 500 or 1000 gms. Etc. or packed in the form of tea bags of 1.94 gms. Or 2 gms. etc., as the case may be. The assessee claimed exemption u/s 10B of the Act in respect of its 100% EOU for export of manufactured jute bags, packet tea, tea bags, bulk tea, etc. The AO rejected the claim of assessee of exemption u/s 10B in respect of export of blending of tea. The rejection of exemption u/s 10B was confirmed by the CIT(A). When the matter went before the special Bench, Special Bench after discussion the relevant provisions as well as the various decisions of High Court and the Supreme Court held as under:- "32. The provisions of section 10AA of the Act was inserted on the statute book by the Special Economic Zones Act, 2005 w.e.f. 10.02.2006. Even prior to the enactment of the said SEZ Act, Special Economic Zones (including units therein) were all along treated like EQU / FTZ / EPZ for all purposes whatsoever and were dealt within the Exim Policy accordingly. Section 2(k) of the Special Economic Zone Act, 2005 defines the expression "Existing Special Economic Zone" to mean every Special Economic Zone which is i....
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....vour tea", "green tea" "instant tea", "packet tea" "quick brewing black tea", "tea" and "test bag" have been separately defined as distinct product. In Tea (Marketing) Control Order, 2003 issued by the ' Central Government, in exercise of the powers conferred by section 30(5)(3) of The Tea Act, 1953, the expressions "manufacturer", "Buyer", "Packet Tea", "Tea Bag",- "Green Tea", "Quick Brewing Black Tea", "Instant Tea" and "Made Tea" have also been distinctly and separately defined. Clause (29BA) was inserted in section 2 of the Income Tax Act, 1961 by the Finance (No.2) Act, 2009 w.e.f. 01.04.2009 to define the expression "manufacture" as under: "manufacture", with its grammatical variations, means a change in a non-living physical object or article or thing, - (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure; The aforesaid definition of the expression "manufacture", although brought into the s....
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.... and in the light of allied and governing laws; in the light of allied laws e.g. The Tea Act, 1953, The Prevention of Food Adulteration Act, 1953 read with Prevention of Food Adulteration Rules, 1955. The Tea (Marketing) Control Order, 2003, The Tea (Distribution & Export) Control Order, 2005 as well as the Rules and Regulations framed by the Tea Board and also Calcutta Tea Traders Association from time to time as discussed above. 35. We find from the above facts and circumstances and case laws relied on by both the sides that the assessee was exclusively engaged in blending, packaging and export of tea bags, tea packets and bulk tea packs. The assessee's division enjoys recognition as a 100% EOU, which is granted by the Development Commissioner, Ministry of Commerce & Industry, Govt. of India. The assessee claimed exemption u/s. 10B of the Act for AYs 2000-01 onwards, which was granted upto the AY 2003-04. However, for the AY 2004-05, exemption was declined for the reasons that by the Finance Act, 2000, the definition of `manufacture' which included 'processing' contained in section 1OB of the Act was deleted w.e.f. 01.04.2001. The argument of the department i....
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....ndustries (supra) had held such amendment in Section 10AA to be of clarificatory in nature. The definition of 'manufacture' under the SEZ Act, Exim Policy, Food Adulteration Rules and Tea (Marketing) Control Order is much wider than what is the meaning of the term `manufacture' under the common parlance, and it includes processing, blending, packaging etc. In view of the above and respectfully following the decision of Hon'ble Kerala High Court in the case of Girnar Industries (supra) and Tata Tea Limited (supra), we "hold that the assessee is entitled for exemption under Section 10B of the Act on account of blending of tea. Similarly, in our view, the industrial units engaged in the very same activity i.e. blending, packing and export of tea in the free trade zone shall also be entitled to enjoy tax exemption under Section 10A of the Act. 37. Accordingly, we answer the question referred in favour of the assessee by holding that the assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s.10B of the Act. Further, assessees who are in the b....
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.... Eleventh Schedule for the purpose of exclusion does not arise. From this judgment, thus, it is apparent that the Hon'ble Apex Court accepted that manufacture/production includes processing also. 45.1 We have also gone through the decision of Hon'ble Supreme Court in the case of ITO Vs. Arihant Tiles and Marbles Pvt. Ltd. 320 ITR 79(sc). In this case when the assessee was engaged in the activity of cutting and polishing of marble blocks, the question before the Supreme Court was whether the activities undertaken by the assessee would fall within the meaning of the words „manufacture or production' in section 80-IA of the Income-tax Act, 1961? In this case, Hon'ble Supreme Court, after discussing the definition of „manufacture' given in section 2(29BA) of the Income-tax Act, 1961 and also discussing the provisions of section 80-IA(2)(iii) and after going through various decisions, held as under: "22. Applying the above tests laid down by this Court in CIT Vs. N.C. Budharaja and Co. 204 ITR 412 (SC) to the facts of the present cases, we are of the view that blocks converted into polished slabs and tiles after undergoing the process indicated above certai....
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....nterpreted the decision of the Hon'ble Supreme Court in the case of Sesa Goa 271 ITR 331 that extraction and processing of mining ore amounts to production; and one should read the expression „extraction and processing' together (this decision was not rendered in respect of exemption available u/s 10B). Even the coordinate bench of this Tribunal further held that "if section 10B provides exemption for processing also, the law would have made it very clear by apparently stating that processing is also entitled for exemption. When the expression „processing' is omitted in section 10B, we are not supposed to fill up the omission. If something is not there we should accept as it is not there. We should not provide for the omission that amounts to judicial legislation. There is no confusion in the provision of law provided under section 10B. The exemption is available only to manufacture or production. It is not available for processing." Although subsequently this Tribunal has rectified the order under section 254 vide order dated 19th July, 2007 on the application of the assessee and took the view that the assessee is entitled for exemption under section 10B as the assesse....
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....y other high court has decided the similar issue, this is the settled principle of law that the decision of that high court has to be followed as the high court is always superior to the tribunal in preference to the decision of coordinate bench. The decision so pronounced subsequently if affects the issue relating to the assessee, in our opinion, these subsequent decisions are binding on us as judicial discipline require that. This Tribunal is bound to consider those decisions and the Tribunal is not bound with the decision of the coordinate Bench. The jurisdictional Bombay High Court in the case of H.A. Shah & Co. Vs. CIT (1956) 30 ITR 618, 625 (Bom.) even took the view that in case fresh material facts came to the knowledge of subsequent bench, the decision of coordinate bench is not binding. In this regard, Hon'ble High Court observed as under :- "Nor are we satisfied that in order to enable the second Tribunal to depart from the finding of the first Tribunal it is essential that there must be some fresh facts which must be placed before the second Tribunal which were not placed before the first Tribunal. If the first Tribunal failed to take into consideration material....
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....these amendments are in the statute as on today and are to be considered for the impugned assessment year. The decision of Supreme Court in the case of Chowgule & Co as cited by us earlier was also not considered by the coordinate bench as the word "processing" was omitted in section 10B during that year for which case was decided. Both these amendments have duly been considered by the subsequent decision of Special Bench, High Court and the Supreme Court cited by us in discussion held here in above. We noted that subsequent to the decision of this Tribunal in ITA No. 162/PNJ/2006 dt. 12th July, 2007, the Special Bench of this Tribunal in the case of Madhu Jayanti International Ltd. [2012-TIOL-424-ITAT-KOL- SB] has dealt with the issue exhaustibly whether the assessees who are in the business of blending of tea i.e processing of tea and export thereof in 100% EOU can be said to be manufacturer / producer of tea for the purpose of section 10A/10B. When the Supreme Court has already held in the case of Tara Agencies 292 ITR 444 that blending of tea is processing. Thus, the Special Bench has decided the issue in respect of 100% EOU for the purpose of exemption under section 10B whethe....
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....rendered in the case of India Cine Agency (supra) as well as Arihant Tiles & Marbles (Supra) was brought to our knowledge which may have taken a different view that 100% EOU approved by the competent authority if engaged in processing activity for upgrading a commodity for the purpose of marketability for export would not be allowed exemption u/s 10B. The Ld. Special Counsel even could not bring to our knowledge any decision subsequent to the decision of the Special Bench and Arihant Tiles & Marbles (SC) as well as Kerala High Court in the case of Tata Tea (Supra) which would have disallowed the claim of the assessee u/s 10B on this basis after considering the Explanation (iii) of section 10AA as well as definition given u/s 2(29BA). Thus, due to the decision rendered by the Special Bench, High Courts and Supreme Court subsequent to the date of order in the case of Chowgule & Co. Ltd. Vs. ACIT in ITA No. 162/PNJ/2006 in our opinion, the issue raised by the Revenue is not fit to be referred to Special Bench as the decisions of Special Bench / High Court / Supreme Court are binding on us in preference to the decision of the coordinate Bench. Thus, we have in our opinion germane reaso....
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....ng the expression "processing" allowed the appeal of the assessee, in Chowgule & Co. Pvt. Ltd. (supra), holding, inter alia, that where any commodity is subjected to a process or treatment with a view to its "development or preparation for the market" it would amount to processing of the commodity within the meaning of Central Sales Tax Act, 1956. The Special Bench ultimately allowed exemption to the assessee on the similar issue where the assessee was engaged in the business of blending the tea for upgrading for marketing. Thus, in view of the decision of the Special Bench and other decisions discussed in the preceding paragraphs and that of Hon'ble Supreme Court in the case of Chowgule & co (supra) as well as definition of „manufacture' as inserted w.e.f 1.4.2009 by way of section 2 (29AB) of the Income Tax Act as referred to by both the parties, we hold that all the three 100% EOU engaged in processing so as to make crude ore and waste i.e tailings usable or marketable are entitled for exemption u/s 10B subject to the other conditions for exemption under section 10B are being fulfilled." From the aforesaid decision, it is apparent that this Tribunal in the case of Codli....