TMI Blog2016 (9) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... Judicial Member) And Anil Chaturvedi (Accountant Member) For the Revenue : Sanjay Kumar, Sr.DR For the Assessee : A. P. Sandesara, AR ORDER Rajpal Yadav (Accountant Member) Present two appeals are directed at the instance of the Revenue against separate orders of the ld.CIT(A) even dated i.e. 21.12.2010 for the Asstt.-Years 2006-07and 2007-08. 2. Solitary grievance of the Revenue in both years is that the ld.CIT(A) has erred in granting deduction under section 10B of the Income Tax Act of ₹ 2,91,06,674/- and ₹ 6,88,677/- (interest income) in the Asstt.-Year 2006- 07 and ₹ 5,41,14,329/- and ₹ 9,12,760/- (interest income) for the Asstt.-Year 2007-08. Facts on all vital points are common in both the years, therefore, for the facility of reference, we take the facts mainly from the Asstt.-Year 2006-2007. 3. Brief facts of the case are that the assessee has filed its return of income on 30.12.2006 declaring total income at ₹ 49,93,572/- and on 31.10.2007 declaring total income of ₹ 1,38,60,251/- in the Asstt.-Years 2006-07 and 2007-08 respectively. The case of the assessee for both the years was selected for scrutiny as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en Gupta, VP (Finance) attended the office of the undersigned on 24/12/2008. However, he refused to accept the show cause notice. He requested to grant one day's time to verify the fact from records. He promised that he will accept the show cause notice on 25/12/2008. However, nobody turned up on 25/12/2008 to receive the show cause insptie of repeated telephonic reminders by the undersigned. Consequently, Inspector of this ' office had to go to the factory of the assessee (located in Vatva) and got the Show cause notice served. The assessee cannot under any circumstance take the plea that he was given 3 days time to prepare the reply. 5.11 Apart from the above, the main contention raised by the assessee that it did not possess Plant Machinery during the F.Y. 1995-96 and hence it was not in a position of manufacturing dyes and dyes intermediates. Moreover, it has been claimed that it had paid job work charges to parties who had carried out the work of manufacturing/production. The assessee has stated that it had supplied all raw materials and packing materials to the above mentioned parties for doing the job work. The assessee has also contended that it t had obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit from export of articles or things or computer software manufactured or produced by it, which Is subsequently converted into a EOU, shall be eligible for deduction under section 10B of the IT Act, on getting approval as 100% export oriented undertaking. In such a case, the deduction shall be available only from the year in which it has got the approval as 100% DOU and shall be availably only for the remaining 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 articles or things or computer software, as a DTA unit. Thus, it is amply clear that the period of 10 years will start from the year in which the undertaking set up in DTA has started deriving profit from the export of articles or things manufactured by it. 5.15 The assessee's contention that only after obtaining excise registration certificate it became an industrial undertaking set up in DTA is highly Shocking. It is a well established fact that the assessee has been claiming deduction u/s. 80-IA and 80HHC being an industrial undertaking engaged in manufacture/production of any article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal clear that the assessee company was an industrial undertaking set up in DTA and it deriving profits from export of articles or things manufactured by it in A.Y. 1996-97. As per provisions of sec. 10B(1) deduction u/s. 10B will be available for 10 consecutive assessment years beginning with the assessment year in which the undertaking begins to manufacture articles or things. 6. Thus, deduction u/s. 10B of the Act is available to the assessee only upto A.Y.2005-06 and the assessee is not eligible-for deduction u/s. 10B for A.Y. 2006-07. 4. On appeal, the ld.CIT(A) has reversed this finding and allowed the deduction. 5. With the assistance of the ld.representatives, we have gone through the record carefully. As far as existence of the assessee as an EOU is concerned, there is no dispute between the parties. Similarly, it is not in dispute that the assessee fulfills conditions enumerated in section 10B of the Act for availing deduction. The dispute between the parties is very limited. According to the AO, the assessee was engaged in manufacturing of dyes and dyes intermediates. It has been exporting these products from the F.Y.1995-96. It has claimed deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to the plant machinery, it is to be seen that even for trial basis, the assessee has derived any profit from manufacturing activity and claimed deduction under section 8HHC and 80IA, then, it would be construed that the assessee has exhausted one of these years out of future claim. The ld.counsel for the assessee also relied upon the decision of ITAT, Ahmedabad Bench in the case of Deepkiran Foods P.Ltd. Vs. ACIT, 141 ITD 0085. He placed on record copy of this decision. The facts of this case are quite distinguishable. In this case, the issue was set aside to the AO to find out whether the assessee has earned profit on sale of outsourced items and claimed deduction under section 10B of the Act. The profit derived by an assessee on self-manufactured item was considered to be eligible for deduction under section 10B of the Act. No such circumstances are there in the present appeals. Therefore, in our opinion, theld.CIT(A) has erred in allowing deduction to the assessee in both these years. We set aside order of the ld.CIT(A) and restore that of the AO on this issue. 6. As far as deduction under section 10B on the interest income is concerned, once we have held that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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