TaxTMI 
TaxTMI 
2018 (6) TMI 1474
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....scrutiny by the Revenue and notices under Sections 143(2) and 142(1) were issued. In compliance with the said notices, the assessee appeared before the Assessing Officer (AO, in short, hereafter) and the hearing was held on different dates and the assessee filed the requisite details. 4. The assessee is an exporter of garments who claimed deductions of Rs. 25,40,164.00/- (Rupees twenty five lakh forty thousand one hundred and sixty-four only) under Section 80HHC and of Rs. 2,17,79,599.00 (Rupees two crore seventeen lakh seventy nine thousand five hundred and ninety- nine only) under Section 10B of the said Act. Section 10B of the said Act provides for certain benefits to hundred per cent export oriented undertakings against export of articles or things etc. 5. The AO disallowed the claim for deduction under Section 10B of the said Act. The reason for disallowing the deduction by the AO was that the assessee, according to the AO, did not manufacture or produce any article or thing in course of its export. The AO perceived such position from the audit report produced by the assessee. The AO found that the assessee purchased readymade garments produced by others and exported the....
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....Pvt. Ltd). 11. The CIT (A) held that it could not be said that the assessee had not manufactured or produced any article and further held that the firm was eligible for the exemption. 12. Against the order of the CIT (A), the Revenue filed an appeal before the Tribunal as aforesaid. 13. The Tribunal in its order dated April 30, 2015 has held that the assessee procured semi-finished garments; on the semi-finished garments the assessee firm affixed or stitched various stickers, including heated/pressure stickers to improve the look and the semi-finished garments were then ironed and packed in poly poplin bags along with hanger putting them in export-worthy saleable condition. Silica gel was used to safeguard those garments from moth or odour. The said garments were then bar-coded and tagged in the final stage and then packed in cartons and thereafter the garments were exported by the assessee firm. The expenses incurred on account of above mentioned processes were duly reflected in the books of accounts and had been verified by the AO. 14. The Appellate Tribunal noted some definitions of the term 'manufacture', including the definition given in clause 9.32 of rules and re....
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....s to the manufacturing activity for claiming deduction and the other relates to the assessee being a trading concern as per the tax audit report. The appellant has restricted itself to the first part relating to manufacturing activity and no submission has been made in respect of the second part i.e. the trading concern and the tax audit report part. 22. In support of its case, the appellant has referred a judgment of the Supreme Court reported in 1987 (32) ELT 231 (S.C.) (Regional Director, Employees State Insurance Corporation v. Ram Chandar). In the said judgment, the Supreme Court discussed the term 'manufacture' and while doing so it was observed, "If by a process a different entity comes into existence then it can be said that this was manufactured." The Supreme Court followed a judgment reported in 1985 (20) E.L.T. 179 (SC) (Empire Industries Limited v. Union of India) wherein it was observed that "manufacture is complete as soon as by the application of one or more process, the raw material undergoes some change. If a new substance is brought into existence or if a new or different article having a distinctive name, character or use result from particular processes, such....
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....ITAT No. 184 of 2013 (Commissioner of Income Tax v. M/s. Jaytee Exports) dated March 6, 2014. In that judgment the earlier judgment of Ektara Export has been relied upon. The respondent has relied on a case reported in 75 ELT 520 which is also not applicable in the present matter as the question as to the term 'manufacture' was viewed in a wholly different context. In that judgment it was held that the expression 'manufacture' was given a special definition under Section 2(f) of the Central Excise Act, 1944. 25. Considering the above facts and circumstances we find that though the revenue has made a sincere endeavor to show that the activities and functions of the assessee cannot come within the meaning of what in common parlance is known as manufacture, the several orders of this court go in favour of the assessee as the definition given in clause 9.32 of rules and regulations relating to EOU framed by the Government of India leans in favour of the assessee. It is the admitted position and also the finding on facts by the CIT (A) and the Tribunal that the assessee performed some functions on the garments received by it though all functions were not performed on all the garments....