TMI Blog2009 (8) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... export profit allowed. - IT Appeal No. 100 of 2009 - - - Dated:- 17-8-2009 - C.N. Ramachandran Nair and C.K. Abdul Rehim, JJ. S/Shri S. Arun Raj and Firoze Bandhya Rujina, for the Petitioner Shri P.K.R. Menon, Sr. Standing Counsel, for the Respondent [Judgment per : C.N. Ramachandran Nair, J.]. - Assessee-appellant has an industrial unit located in the Special Economic Zone at Kakkanad, Kochi where it is engaged in blending and repacking of tea for export. For the assessment year 2004-2005 the assessee claimed deduction of export profit in respect of the blended tea exported from the industrial unit under Section 10A of the Income Tax Act (hereinafter called "the Act"). However, the assessing authority held that "blending" does not answer the description of manufacture or processing and so much so, assessee is not entitled to deduction of export profits claimed under Section 10A of the Act. It is the specific case of the department that blending can be treated as a manufacturing activity only after the definition clause of "manufacture" contained in Section 2(r) of the Special Economic Zones Act, 2005 is incorporated in the provisions of Section 10AA of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference : "S.10 A. Special provision in respect of newly established undertakings in free trade zone, etc. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee : Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive assessment years : Provided further that where an undertaking initially located in any free trade zone or export processing zone is subsequently located in a special economic zone by reason of conversion of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or produced by it. The contention of the assessee is that since there is no definition of the word "manufacture" or "processing" in the Income Tax Act, the definition of "manufacture" contained in the Export Import Policy of 2002-2007 under which Free Trade Zone is established, applies. According to the counsel, even though blending as such is not specified in the definition clause contained in the policy, it falls within the definition clause of "manufacture" contained in the Policy by necessary implication. The definition contained in Chapter IX of the EXIM Policy under clause 9.30 is as follows : ""Manufacture" means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, repacking, polishing, labelling, re-conditioning repair, remaking, refurbishing, testing calibration, re-engineering. Manufacture, for the purpose of this Policy, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining." It is worthwhile to refer to the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute to effectuate the legislative intention. It is equally settled law that, if the language is plain and unambiguous, one can only look fairly at the language used and interpret it to give effect to the legislative intention. Nevertheless, tax laws have to be interpreted reasonably and in consonance with justice adopting a purposive approach. The contextual meaning has to be ascertained and given effect to. A provision for deduction, exemption or relief should be construed reasonably and in favour of the assessee." We have already noticed that in substance the provisions of Section 10A and Section 10AA later introduced serve the very same purpose of granting exemption on the profits earned by industrial units in the Free Trade Zone/Special Economic Zone. These provisions introduced in the Income Tax Act are essentially implementation of EXIM Policy periodically announced by the Government providing incentives to export oriented units located in Free Trade Zones/Special Economic Zones mainly to augment Foreign Exchange Earnings. In fact, it is pertinent to note that though Section 10A did not contain a definition for "manufacture", definition of the said term contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
