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2012 (7) TMI 531 - AT - Income TaxDenial of exemption claim u/s 10B - Revenue stated that exemption u/s. 10B applies to an assessee in which the undertaking begins to "manufacture" or "produce" articles or thing or computer software - assessee is 100% EOU for export of manufactured jute bags, packet tea, tea bags, bulk tea - Held that:- The process involved in export of blended and processed tea by the assessee which involves various steps right from the purchase of tea in bulk packaging from different Auction Centres in India and overseas to the physical stuffing of the packaged teas in containers for shipment - Assessee Company has established a new industrial Undertaking (100% EOU) for the manufacture of packet tea/tea bulk tea in the Falta Special Economic Zone, and it holds a green card issued by the Development Commissioner, Ministry of Commerce, Government of India, Kolkata. Assessee Company's said 100 Export Oriented Undertaking (EOU) is also registered with Central Excise Authorities. Section 2(r) of the Special Economic Zones Act, 2005, which is a Central Act passed by the Parliament in May, 2005, and which Act also governs the said industrial unit owned by Assessee Company herein, also defines the term 'manufacture' to include processes such as 'blending' - in CHOWGULE & CO. PVT. LTD. Versus UNION OF INDIA [1980 (11) TMI 61 - SUPREME COURT OF INDIA]the word used 'producing' in relation to the tea mixture, which was produced through the process of blending. Though Section 10A did not contain a definition for 'manufacture', the definition of the term contained in Section 2(r) of the 2005 Act was incorporated in Section 10AA with effect from February 10, 2006. Admittedly, this definition covers blending also. Therefore, blending and packing of tea done by the assessee qualifies for exemption under Section 10AA - the contention of the assessee that the scheme of income tax exemption available to units in the SEZ u/s. 10A and units in the free trade zone provided u/s. 10AA and the exemption available to 100% EOU u/s. 10B are very similar in nature and the wordings of the statutory provisions are similar in nature is correct - assessee was recognised 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 unit of the assessee's 100% EOU, it would defeat the very object of sections 10B. Thus, the assessee 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. Further, assessees who are in the business of blending and processing of tea in respect of undertakings in free trade zones are manufacturer/producer of tea for the purpose of claiming exemption u/s. 10A - in favour of assessee.
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