TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 19
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....B of the Act in respect of manufacturing and processing of the Oil Seeds, Spices, Cereals and Pulses as invalid. The Revenue has also raised the issue on merits. For this Revenue has raised the following grounds: - "1 1(a). On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the reopening of the assessment for the purpose of disallowing the exemption under section 10B was invalid. 1(b). On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that the assessee by claiming exemption u/s 10B on an activity which did amount to manufacturing had made a patently wrong claim which was allowed by the Assessing Officer in the original assessment and therefore reopening of the assessment was rightly done as per the provisions of law. 1(c). On the facts and in the circumstances of the case and having clearly held that part of the activities of the assessee did not fit into the definition of manufacturing. the Ld. CIT(A) erred in holding that the reopening of the assessment for the purpose of disallowing exemption u/s 10B was not in order." The facts and circumstances are exactly identical in all the three years an....
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....can be characterized as production, every production need not amount to manufacture. The test evolved for determining whether manufacture can be said to have taken place is, whether the commodity which subjected to the process of manufacture. The test evolved for determining whether manufacture can be said to have taken place is, whether the commodity which subjected to the process of manufacture can no longer be regarded as the original commodity but is recognized in the trade as new and distinct commodity. Commonly, manufacture and result of none or more process through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage with each process suffered the original commodity experiences a change. But it is only in the change, or series of changes, takes the commodity to the point where commercial it can no longer be regarded as the original commodity but instead it is recognized as new and distinct article that a manufacture can be said to take place. In this case there is no change in the constituents of the ....
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....facturing activity and hence not eligible for claiming exemption u/s. 10B of the I.T. Act Assessee's claim of exemption uls. 100 of the I.T. Act, is therefore, disallowed." Aggrieved, assessee filed before CIT(A). 5. Before CIT(A), it was contended that original return was processed under section 143(1)(a) of the Act on 25-11-2003 and subsequently, case was re-opened and assessment was completed under section 143(3) read with section 147 of the Act vide order dated 20-01-2006. Subsequently, second time the assessment was reopened and assessment was completed under section 143(3) read with section 147 of the Act vide order dated 30-11-2010 (the impugned order) was against the original reopening and against assessment order dated 20-01-2006, assessee filed appeal and CIT(A) dismissed the appeal disallowing the claim of the assessee and assessee preferred the appeal before ITAT on the same. The ITAT vide its common order dated 03-06-2013 for all the three years set aside the matter to the file of the CIT(A). Even the assessee in second round also filed the appeal before CIT(A) and challenged the reopening of jurisdictional issue as well as on merits. The CIT(A) after examining the ....
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....e, but in view of the discussion in the above paragraphs, the income on account of other income being received by the assessee for defective goods can at best be said to have been "attributable to" business but not 'derived from" the manufacturing activity. As the ratio of the above judgment and the fact of the case clearly shows that the other income described above cannot be related to the manufacturing activity of the assessee which is eligible for deduction u/s. 10 B. Accordingly the above income is excluded from the profit of the EOU unit for claiming deduction u/s. 10 B Accordingly, no deduction u/s. 10 B is allowed on the other income. Thus it is evident from the order of the AO dt. 20.01.2006 that the issue of eligibility under section 10B was a matter of discussion in this order itself. Therefore, the subsequent reopening and concluding of assessment one more time u/s 143(3) r.w.s. 147 on 30.11.2010 is, in my considered opinion, uncalled for. It is uncalled for, firstly, the assessment pertains to A.Y.2003-04 and the four years from the end of the assessment year have already lapsed by 31.03.2008 and six years will lapse after 31 .03.2010. (As seen from the facts of....
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....) the appellant has furnished all the details required by the AO during the course of reassessment proceedings and also before the CIT(A). V) the company is registered under SEZ Act as manufacturing unit. vi) the definition of 'manufacture" was inserted as clause (298A) Of Section 2 of the A by the Finance Act. 2009 with retrospective effect from 1.4. 2009 and the appellant was not aware by the time the return of income was filed. In view of the above, the Ld.AR has requested for relief by dismissing the order of the AO. 4.1.5 I have carefully examined the issue of manufacturing activity of the appellant No doubt the appellant has sold some of the spices without putting them into the manufacturing activity, it is evident that processing in the form of grading, removing moisture, powdering, mixing etc. was done. Even though these activities may not fit into the definition of manufacturing as per new clause 296A of Section 2, we cannot: ignore the fact that this clarification was not available to the appellant at the time of filing its return of income. Further, it is registered as a manufacturing unit with SEZ. It is also not out of context to say that the appellant ....
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.... This was replied by the assessee vide letter undated, which is enclosed in assessee's paper book at pages 18-20. 4. In view of the facts, we are of the view that the AO has formed an opinion during the course of original assessment proceedings and this reopening is merely on change of opinion, which is not permissible under section 147 of the Act in view of the decision of Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India Limited (2010) 320 ITR 561 (SC), wherein it is held as under: - "On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re- open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic inte....