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2016 (8) TMI 278 - MADRAS HIGH COURT

2016 (8) TMI 278 - MADRAS HIGH COURT - TMI - Eligibility for the benefit of Section 10B in respect of profit from sale of scrap and spent solution - Held that:- As decided in assessee's own case for AY 2000-01 scrap and spent solution have been generated directly from the manufacturing activity and hence, the Assessing Officer is not correct in excluding these items from the profits of EOU and bringing them to tax under the head 'other sources . From the records it is clear that the scrap and sp .....

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- Decided in favour of the assessee. - Loss incurred from the Aurangabad unit includible in the EOU - Whether loss cannot be considered as a single undertaking of the assessee along with the EOU at Alathur? - Held that:- On the aspect of treating profit/loss from Aurangabad Unit, to be included in the export oriented unit at Alathur, we are not inclined to accept the contentions of the appellant that the Tribunal has committed an error, in holding that the loss incurred from Aurangabad Unit, .....

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or the Respondent : Mr.L.Seetharaman for Mr.R.Sivaraman ORDER ( Order of the Court was made by S. Manikumar, J.) Tax Case Appeal is directed against the order made in I.T.A.No.1488/Mds/2005, dated 15.06.2007, passed by the Income-Tax Appellate Tribunal, B Bench, Chennai, for the assessment year 2000-01. 2. Brief facts leading to the appeal are as follows: The assessee is an export oriented undertaking, engaged in the business of manufacture and export of pharmaceuticals. The assessee filed its r .....

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ad been transferred and that the said unit lost the eligibility of been classified under the EOU status and thus, completed the assessment. 3. Being aggrieved by the order of the assessing officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The appellate authority, vide order, dated 28.02.2005, deleted the addition made by the assessing officer, under the head other sources , holding that the scrap and spent solution, are part of the manufacturing process and t .....

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a part of the EOU operations and thus, held both the above issues, in favour of the assessee. 5. Being the aggrieved by the order of the appellate authority, dated 28.02.2005, in I.T.A.No.55/2003-04, the Deputy Commissioner of Income-Tax, Chennai, has filed an appeal before the Income-Tax Appellate Tribunal in I.T.A.No.1488/Mds/2005. After hearing both the parties and considering the material on record, the Tribunal, vide order, dated 15.06.2007, confirmed the order of the appellate authority. T .....

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a different state, and cannot be considered as a single undertaking of the assessee along with the EOU at Alathur? 6. Though referring to Section 10B of the Act, Mrs.Hema Murali Krishna, learned counsel made submissions that deduction of profits and gains as are derived by a hundred per cent export-oriented undertaking, can be made only 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 p .....

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the assessment year 2000-01. 7. Admittedly, the relevant assessment year involved in this appeal is 2000-01, ie., from 01.04.2000 to 31.03.2001. Added further, it is also worthwhile to consider the reasons assigned by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, in I.T.A.No.1488/Mds/2005, dated 15.06.2007, for the assessment year 2000-01, which is as follows: The first appellate authority after considering the above facts, held that scrap and spent solution have been generated .....

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olution, we are of the considered opinion that the scrap and spent solution are part of the manufacturing process and the C.I.T.(Appeals) was justified in directing the Assessing Officer to recompute the income/loss exempt under sec. 10B of the Act. In view of the above, we are of the considered opinion that the order of the first appellate authority is a well reasoned one. Hence, we uphold the finding of the C.I.T.(Appeals) on this issue. 8. On the second substantial question of law, raised in .....

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raphs 12.1 and 12.2 of the C.I.T.(Appeals) order. Considering the report of the Assessing Officer and the submissions of the Assessee, the C.IT.(Appeals) has decided the issue in favour of the Assessee at para 12.4 which reads as under: 12.4 From the above facts it is seen that the Assessee has acquired existing unit at Aurangabad in January. 2000 and obtained EOU status in March, 2000. The total value of plant and machinery of such unit acquired forms 3.64% of total value of used in the EOU ope .....

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