TMI Blog2009 (1) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... ea countries. The Assessing Officer observed that Saint Gobain has taken over Bicron, USA globally and consequent to this, Saint Gobain, Bangalore has to effect the take over. However, the Bicron products Pvt. Ltd. applied only for a change of name. According to the Assessing Officer, it was the obligation of M/s Saint Gobain, Bangalore to apply for any change of name or seek afresh permission from the Ministry of Industry to carry out the business of 100% EOU. This has not been done. Hence, this is one of the grounds on which deduction u/s 10B was not allowed. 2.2 The Assessing Officer noticed that the assessee in the column against the nature of business or profession has mentioned that it is carrying on the business of assembly of instruments and apparatus for measuring and detecting ionizing radiators. Deduction u/s 10B is allowable in case 100% export oriented undertaking manufactures or produces articles or things. Since the assessee company is engaged in assembling of instruments and therefore, the learned Assessing Officer held that the assessee is not entitled to deduction u/s 10B. 2.3 The Assessing Officer also noticed that the assessee has done domestic sales to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils furnished before me, the process carried out by the appellant in assembling the Radiation-detectors is essentially in the nature of preparations for installation of the Radiation-detectors. Accordingly, such activities cannot be construed as assembling amounting to production or manufacture of articles or things envisaged u/s 10B of the Act. In that view of the matter, I agree with AO that the claim for the deduction u/s 10B of ₹ 14080601/- is not allowable and uphold his action of denying the same. Accordingly, this ground of appeal is dismissed. 3.4 As I have held that the appellant is not eligible for the deduction u/s 10B of the Act, for the AY under appeal, the issue of whether, the appellant was required to seek afresh permission for registering it as 100% EOU, consequent to change in the name from BI to SGCandDIPL (stately involving no change in its ownership), in the context of allowing the deduction, is considered as not relevant and therefore not adjudicated upon . 2.7 During the course of proceedings before us, the learned AR has filed a paper book containing 37 pages. It is submitted that in the year 2000, the name of the company was changed to Saint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identity of new unit. In the present case, there is neither change in shareholding of the company nor any such alteration in the business of the undertaking and therefore, this cannot be construed as reconstruction of business. The learned AR further submitted that reconstruction should be understood with the word 'business' and not with 'ownership'. For this proposition, the learned AR relied on the following decisions:- 1. Krishna Electrical Industries vs DCIT 82 TTJ 575 (Delhi) 2. Chetak Enterprises (P) Ltd. vs ACIT 92 TTJ 611 (Jodhpur) Hence, the learned AR submitted that deduction u/s 10B cannot be denied to the assessee on the ground that there has been reconstruction of business. 2.8 The second requirement, which is to be fulfilled, is that the assessee must be engaged in the manufacture or production of article or thing. The learned AR drew our attention to the technical write-up on the manufacture of radiation-detectors as submitted before the learned CIT(A). The assessee has also filed copy of flow chart showing as to how the radiation-detectors is manufactured. The learned AR drew our attention to the meaning of the word 'manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee is engaged in the manufacture and production of an article:- 1) CIT vs U P Agro Industrial Corporation (1991)-93 CTR (All) 214-Allahabad HC 2) Jackson Engineers (P) Ltd. vs Income Tax Officer (1989)-031 ITD-0079-Delhi Tribunal 3) Tarai Development Corporation vs Commissioner of Income Tax (1979)-002-Taxman-0359-HC 4) DCIT vs V M Jog Construction Ltd. (2003)-81-TTJ-856-ITAT 2.11 The learned AR submitted that the following principles emerged out of the judicial precedents referred to above:- The process or series of changes brings into existence a new substance. The new substance must have a distinctive name, character or use. The identity of the original article is different from the processed article. After application of the above principles or tests in the instant case, it is clear that the assessee is engaged in the manufacture or production of an article or thing. The processes involved are as under:- The series of process like interfacing, filleting, light shield assembly, top cap assembly brings into existence a new product called Radiation Detectors. The Radiation Detectors is known in the market because of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the legal position on the issue, it will be relevant to reproduce the technical write-up as given to the learned CIT(A):- Technical Write-up on The Manufacture of Radiation Detectors at SGCD-India Saint-Gobain Crystals and. Detectors India Ltd. is engaged in the manufacture of Radiation (Scintillation) Detectors since 1996. A brief description of the production and the process is given here for the benefit of those who would like to know the process in brief. The Scintillation Principle: The basic principle used in the manufacture of radiation detectors is known scintillation . Scintillation is a property exhibited by some crystals in which the crystals give out low energy radiation (in the visible or near visible ranges) when subjected to higher energy radiation such as x-ray, y-ray or other such nuclear radiations. The crystals that exhibit this type of property are called scintillation crystals. The radiation detectors manufactured from such crystals are called scintillation detectors. There are several crystals that exhibit the scintillation property. Most popularly used crystals are Sodium Iodide (Nal), Cesium Iodide, BGO and Cadmium Tungstate. SGCD-India s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quality for the collection and transmission of light. Such crystals are of hygroscopic nature and therefore such crystals are to be sealed inside a hermetical seal. A magnetic shielding is also to be provided. Such crystal glass is to be interfaced with PMT and since the PMT is sensitive to the external light and therefore, PMT is to be sealed from the external light. The finished product, which is sold by the assessee is different from the material, which are procured for making such a finished product. A series of process are carried out and a new product is evolved. The decision of the Apex Court in the case of Tara Agencies is not applicable, as in that case, the material purchased was tea and what was being sold was also tea. Only process of blending was undertaken. It is not a case where some change is made in a substance. The Hon'ble jurisdictional High Court in the case of V M Salgaocar Bros. (supra) has also held that 'manufacturing' means when a change or series of changes take the commodity subjected to such processes to a point where it can no longer been regarded as the original commodity. The Hon'ble Bombay High Court in the case of CIT vs Tata Locomot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at a finding of fact in the present case. The question raised by the Revenue cannot, thus, be held to be substantial question of law . 2.18 Hence, considering various judicial pronouncements and considering the processes carried on by the assessee in getting the final product, it is held that the assessee is engaged in manufacture or production of an article or thing and is entitled to deduction u/s 10B. 2.19 During the year under reference, there has been no change in the shareholding. The owner is the same. There has been no change in the business. Hence, it cannot be said that there is reconstruction of business. The deduction u/s 10B cannot be denied on this ground. 2.20 Deduction u/s 10B is allowable to a 100% export oriented undertaking if it has been approved as a 100% export oriented undertaking by the Board appointed in this behalf by the Central Government. In the instant case, the undertaking has been approved as a 100% export oriented undertaking. Hence, deduction cannot be denied on the ground that it has some domestic sales. However, if there is a domestic turnover, then deduction will have to be computed as per the provisions of section 10B(4). Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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