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2013 (2) TMI 483 - AT - Income TaxClaim of deduction u/s 10B rejected - CIT(A) held that the assessee is not a manufacturer - assessee submitts that it manufactures eatables from raw material and that it is separate and distinct product known in the market and is covered by definition of Section 2(29BA) - Assessee is a 100% EOU engaged in the business of manufacturing and export of various food products like Paratha, Samosa, Dholka, Idli, vada etc. - Held that:- As decided in Cit Versus Pankaj Jain Prop. Aagam Food Industries [2005 (12) TMI 525 - HIGH COURT OF JAMMU AND KASHMIR] the activity of production of the foodstuff is a manufacturing activity (except for the items outsourced from other parties). Manufacturing of chappati, parath, samosa, dhokla constitutes manufacturing activity as but as in the case of "mathia" and "chorafali" the assessee does repackaging. Further from the details of sales submitted by the assessee it is find that the sales includes sale of "coriander leaves", "chorafali", "custard apple pulp", "magaj ladu", "IQF shredded coconut" and "misc. items" from which it appears that the aforesaid items are sourced ready made and not manufactured in the factory of assessee. The total sales of such items as per the summary is Rs. 85,68,942/-. Thus the aforesaid items which have been outsourced and not manufactured in the premises of the assessee but have only been repackaged with some other connected activities at the assessee's premises cannot be considered to be a manufacturing activity by the assessee. The profit for the year includes the profit on sale on outsourced items & rom the profits, the break-up of profit earned from outsourced items is not available therefore the assessee shall not be entitled to deduction under Section 10B on profit earned on sale on outsourced items - Matter of quantification of the quantum of profits earned on out-sourced and self manufactured items needs verification, therefore the matter be sent back to the file of the AO for the limited purpose to determine the profits of self manufactured items and that of outsourced items. The AO shall compute the profits eligible for deduction u/s.10B and allow the deduction under Section 10B in proportion of the turnover of self-manufactured and outsourced items - partly in favour of assessee.
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