TaxTMI 
TaxTMI 
2016 (9) TMI 1331
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....93,572/- and on 31.10.2007 declaring total income of Rs. 1,38,60,251/- in the Asstt.-Years 2006-07 and 2007-08 respectively. The case of the assessee for both the years was selected for scrutiny assessment and notices under section 143(2)/142(1) were issued and served. On perusal of the record, it revealed to the AO that the assessee has claimed deduction of Rs. 2,83,33,749/- and Rs. 5,41,14,329/- under section 10(B) of the Act in the Asstt.-Years 2006-07 and 2007-08. According to the AO, the assessee-company has been on the business of manufacturing dyeing and dyes intermediates since financial year 1995-96. The assessee had set up an undertaking in Domestic Tariff Area (DTA) and it was deriving profit from export of articles or things or computer softwares manufactured or produced by it. It has subsequently converted into hundred percent EOU. Such a conversion was made after getting approval as 100% EOU. According to the assessee, it is entitled for deduction under section 10B at 100% of profits and gains derived by the assessee on export of article or things or computer softwares. This deduction was admissible to the assessee under section 10B(1) for a period of 10 consecutive a....
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.... stated that it had supplied all raw materials and packing materials to the above mentioned parties for doing the job work. The assessee has also contended that it t had obtained certificate of Registration from Excise Authorities, oh 9.12.1997 and thus, only subsequent to this date it has become an undertaking set up in DTA. 5.12 The contention of the assessee is not acceptable at all. The issue to be considered is whether the assessee was engaged in manufacture/production of dye & dyes intermediates during F.Y. 1995-96. As per the records during the F.Y. 1995-96, the assessee has shown export trading sales of Rs. 1,81,44,308 and export manufacturing sales of Rs. 2,05,62,267/-. thus, the assessee has itself categorized sales as those of "Manufactured Goods". Moreover, for A.Y. 1996-97 the assessee has claimed following deductions. U/S.80HHC Rs.47,82,994 U/S.80IARs Rs.24,83,068 (30% of Manufacturing [Profit) (restricted upto Rs. 4,93,301) From the above mentioned facts, it is very clear that the assessee has claimed deduction u/s. 80HHC and u/s. 80IA on items manufactured by it. Deduction u/s, 80-lA during the A.Y. 1996-97 was available only to the industrial undertaki....
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....cle/thing and it is well established fact that the unit was not located in SEZ/EOU at that point of time. Thus, it was an industrial undertaking set up in DTA in F.Y. 1995-96 (A.Y. 1996-97). 5.16 Now, coming to the point that whether it was deriving profits from export of articles or things manufactured by it. The very fact that the assessee has claimed deduction u/s. 80HHC and u/s. 80-IA points to the conclusion that it was deriving 'profits from export of articles or things manufactured by it. Further, even if the contention of the assessee that it did not have any Plant & Machinery in A.Y. 1996-97 to carry out the required manufacturing and it had paid job work charges to other parties who did manufacturing on its behalf, is considered, it is found that there are number of judgements wherein different courts have held that the process of manufacturing Is not dependent on the existence of Plant & Machinery. Even, if the assessee is not manufacturing the products directly and exercise supervision on the production through other agencies, it still amounts to manufacturing. Following are some of the judgements which support this view. Griffon Laboratories Pvt. Limited.vs CIT 1....
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....The assessee has converted its DTA unit into EOU. It can claim deduction under section 10B as per sub-section 1 for a consecutive period of ten years from the year in which it begins manufacture. Since it was manufacturing in the Asstt.-Year 1996-97, ten consecutive assessment years have expired and it is not admissible in the Asstt.-Year 2006-07 onwards. The assessee sought to submit that deduction claimed in the F.Y.1995-96 and other years, were not admissible. These were wrongly claimed and wrongly been granted. For proving this fact, the assessee is harping upon certain entries in the books of accounts, and pointed out that it has very meager plant & machinery. It did not possess plant & machinery during the F.Y.1995-96. The ld.CIT(A) has accepted this fact. In our opinion, the assessee cannot be permitted to breath hot and cold simultaneously. When we confronted the ld.counsel for the assessee, as to how assessee can claim deduction in these assessment years, when deduction were claimed under section 80HHC and 80IA in the Asstt.-Year 1996-97, the reply of the ld.counsel for the assessee was that the Revenue might have committed an error in granting such deduction in those year....