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2014 (4) TMI 484 - HC - Income TaxSegregation of metal scrap from cable scrap – Deemed export - Whether the Tribunal erred in treating the processes employed by the assessee in segregating the metal scrap from cable scrap as 'Manufacture or produce' within the meaning of section 10B of the Income-tax Act – Held that:- Where the change or series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the process, it would amount to manufacture of an article or thing – Relying upon Reference in this respect may be made to the decision of the Supreme Court in the case of M/s. Ujagar Prints and others (II) vs. Union of India and others [1988 (11) TMI 106 - SUPREME COURT OF INDIA] - the word “manufacture” implies a change but every change in the raw material is not manufacture - There must be such a transformation that a new and different article must emerge having a distinct name, character or use. The assessees would put the imported material to series of manual and mechanical processes and through such exercise so undertaken, bring into existence entirely new, distinct and different commodities which are marketable – the Tribunal correctly came to the conclusion that this process amounted to manufacturing - the assessee, as an EOU is required to carry out manufacturing activity and on its DTA sales is also required to pay excise duty which admittedly, the assessee paid and excise department collected - It would be a dichotomy if on the same activity the assessees were to pay excise duty on the ground that the same amounted to manufacturing activity but would be declined deduction under the Income Tax Act on the ground that the same did not - the Tribunal has merely remanded the entire issue before the AO for fresh consideration - The assessing officer shall examine whether on DTA sales by the assessee, claim of deduction u/s 10B of the Act would be allowable. Deduction u/s 80IB and u/s 80HHC of the Act – Held that:- Any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record - In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings - This is precisely what has happened in the present case - The Appellate Commissioner and the Tribunal did not need to nor did they travel beyond the materials already on record, in order to examine the claims of the assessees for deductions under section 80IB and 80HHC of the Act – Decided against Revenue.
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