TaxTMI 
TaxTMI 
2020 (12) TMI 677
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....port of Iron Ore Concentrate Fines. The relevant assessment year is 2008-09. 4. The Assessee filed a return of income for AY 2008-09 on 29.09.2008 declaring a total income of Rs. 53,92,300/-. The return of income was processed on 7.12.2009. The case was selected for scrutiny by CASS, and statutory notices u/s 143(2) and 142(1), dated 24.08.2009, were served on the Assessee. 5. Through the Assessment Order, dt.30.12.2010, the AO completed the assessment as under: (i) Disallowance of deduction claimed u/s 10B. That is, the claim of deduction u/s 10B of the IT Act amounting to Rs. 4,85,30,680/- was disallowed; (ii) Preoperative Expenses, too, were disallowed. The Appeal before CIT (A): 6. Aggrieved, the Assessee appealed to the Commissioner of Income Tax (Appeals). The Appellate Authority, through Order, dated 24.10.2013, substantially allowed the appeal: (i) Reversed the disallowance of deduction claimed u/s 10B amounting to Rs. 4,85,30,680/-. (ii) Rejected the Revenue's plea that the Assessee under-priced purchases to increase the profit. (iii) On the disallowance of pre-operative expenses of Rs. 2,68,650/-, the AO was directed to give effect to this enhancement. In th....
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.... him, the material extracted from the mines, called Run-of-Mines (ROM), contains many impurities such as mud, silica, sulphur, limestone, and so on. This ROM gets subjected to a manufacturing process called magnetic separation. And, indeed, this purification process is nothing but manufacturing. 13. Heard Ms. Amira Razaq, the learned Standing Counsel for the Revenue; and Shri S.M. Singbal, the learned counsel for the Assessee. Discussion: 14. The facts in brief are that the Assessee is a partnership firm engaged in the export of Iron Ore Concentrate Fines. It is an approved 100% Export Oriented Unit (EOU) and has received approval from SEEPZ Special Economic Zone for manufacturing Iron Ore Concentrate Fines up to an annual capacity of 1,90,000 MT. The whole material gets exported. The Assessee has also been registered with the Central Excise Authority and issued a certificate of Registration as an export-oriented undertaking. 15. The Assessee purchased Run-of-Mines (ROM) from the mine owners-that is, its sister concern and others. And that ROM constitutes the raw material fed to its beneficiation or Concentrator Plant. Eventually, through this process the Assessee produces or m....
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.... Subsection (1) mandates that "subject to the provisions of this section", a deduction of such profits and gains as derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for ten consecutive assessment years. This period must begin with the assessment year relevant to the previous year in which the undertaking manufactures or produces articles or things or computer software, as the case may be. The deduction shall be allowed from the Assessee's total income. 19. To get qualified for this benefit, the Assessee must fulfill these conditions: (i) it "manufactures or produces" any articles or things or computer software; (ii) it does not form the unit by splitting or by reconstructing its already existing business. We need not elaborate on other aspects. Before the amendment on 01.04.2001, Explanation (III) treated "process" as an aspect of manufacture. 20. The word "manufacture" has been defined for the first time in the IT Act in section 2 (29BA) by the Finance (No.2) Act, 2009, with retrospective effect from April 1, 2009. This provision treats manufacture as a change in a non-living physical object or article or t....
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....39;manufacture' is Union of India v. Delhi Cloth and General Mills Co. Ltd[AIR 1963 SC 791]. There, a product called 'Vanaspati' was made exigible to excise duty on the premise that extracting 'refined oil' from raw oil amounted to manufacture. The respondent companies contended that at no stage did they produce any new product. The Supreme Court has repelled the respondents' contentions. In that context, it has interpreted section 2(f) of the Central Excises and Salt Act, 1944, under which 'manufacture' was inclusively defined as "any process incidental or ancillary to the completion of a manufactured product". So the Apex Court has held that the definition of "manufacture" in section 2(f) puts it beyond any possibility of controversy that it amounts to 'manufacture' if a product undergoes any of the numerous processes that are required to turn the raw material into a finished article known to the market. 25. In Union of India v. G. Glass Industries Ltd.[1988 (97) ELT 5], the question was whether printing on glass bottles would amount to manufacture under Section 2 (f) of the Central Excise Act 1944. In fact, the Supreme Court has laid down a two-fold test to decide where a p....
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....nary meanings. Then, it has pointed out that this recommendation has not been followed over the years. Emptee Poly-Yarn quotes with approval its earlier holding CIT v. Oracle Software India Ltd. [(2010) 2 SCC 677], that the term 'manufacture' implies a change, but every change is not a manufacture, despite the fact that every change in an article is the result of treatment of labour and manipulation. But this test of manufacture needs to be seen in the context of the above process. "If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word 'manufacture'." 30. In Chowgule & Co. (P) Ltd. v. Union of India[(1981) 1 SCC 653], the appellant carried on the business of mining iron ore and selling it in the export market after dressing, washing, screening and blending it. Since the chemical and physical composition of the ore varies from mine to mine and even within the same mine itself, intra mine blending of the ore was carried out at the mining site. It was to arrive at a certain specified chemical and physical composition. The appellant drew different quantities of ore from different....
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....d different article, then it amounts to manufacturing activity. 34. According to Aspinwall, the net product is absolutely different and separate from the input. The change made in the article results in a new and different article which is recognised in the trade as a new and distinct commodity. The coffee beans have an independent identity distinct from the raw material from which it was manufactured. A distinct change comes about in the finished product. 35. If we probe further, in Commissioner of Income Tax v. Hindustan Petroleum Corpn. Ltd.[[2017] 297 CTR 3 (SC)], The question was whether the process of bottling of gas into cylinders for domestic use by complex technical process undertaken in the plant with missionary amounted to production or manufacture of gas cylinders for purposes objection under sections 80- I, 80-IA, and 80 HH. The Supreme Court has answered in the affirmative. 36. Coming back to the facts, we may note that the AO held that the Assessee had not carried out any manufacturing activity. So he disallowed the Assessee's claim under section 10B of the Act. On appeal, the CIT (A) reversed the AO's finding. In the Cross-appeals before the Tribunal, on ....