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TMI Blog2018 (6) TMI 1474X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income Tax Appellate Tribunal, "C" Bench, Kolkata (the Tribunal, in short, hereafter) in I.T.A No. 1038/KOL/2008 for the assessment year 2004-05. 2. The matter relates to Section 10B of the said Act as has been substituted by the Finance Act, 2000 with effect from April 1, 2001. 3. The assessee filed its return on October 18, 2004 disclosing a total income "Nil". The return was selected for scrutiny by the Revenue and notices under Sections 143(2) and 142(1) were issued. In compliance with the said notices, the assessee appeared before the Assessing Officer (AO, in short, hereafter) and the hearing was held on different dates and the assessee filed the requisite details. 4. The assessee is an exporter of garments who claimed dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment Commissioner of the said SEZ approved the unit of the assessee firm under the hundred per cent E.O.U scheme for the production of diverse garments. 8. As the AO had disallowed the exemption claimed under Section 10B of the said Act and assessed total tax payable by the assessee as Rs. 84,16,206/- (Rupees eighty four lakh sixteen thousand two hundred and six only) the assessee filed an appeal before the Commissioner of Income Tax (Appeals)- XIV (CIT (A), in short, hereafter). In the said appeal the assessee disclosed its activities towards manufacturing to show that such activities would amount to manufacturing. Such activities were ironing, packing, affixing bar code labels, emblem graphics, affixing stickers, putting silica gel pouc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove the look and the semi-finished garments were then ironed and packed in poly poplin bags along with hanger putting them in export-worthy saleable condition. Silica gel was used to safeguard those garments from moth or odour. The said garments were then bar-coded and tagged in the final stage and then packed in cartons and thereafter the garments were exported by the assessee firm. The expenses incurred on account of above mentioned processes were duly reflected in the books of accounts and had been verified by the AO. 14. The Appellate Tribunal noted some definitions of the term 'manufacture', including the definition given in clause 9.32 of rules and regulations relating to EOUs framed by the Government of India which is as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was not a manufacturer and the term 'manufacture' cannot be applied in respect of its so called hundred per cent export oriented undertaking. 19. Though the appellant has framed three questions, it has pressed only one question stating the same to be a substantial question of law. 20. The question is as follows: "Whether on the facts and in the circumstances of the case, the Learned Tribunal erred in facts as well as in law in holding that the assessee was carrying on manufacturing activity for claiming deduction under Section 10B of the Income Tax Act though the tax auditor in the Tax Audit Report categorically mentioned that it is a trading concern and no consumption of raw material had taken place." 21. This question as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new item or a new commodity known differently in the market as such by people who use or deal with that good." 23. The appellant has relied on another judgment reported in (2001) 251 ITR 323 (Aspinwall and Co. Ltd. v. Commissioner of Income Tax) wherein the Supreme Court while deciding a matter under the said Act observed that "The word 'manufacture' has not been defined in the Act. In the absence of a definition of the word 'manufacture' it has to be given a meaning as is understood in common parlance. It is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. If the change made in the article results ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier judgment of Ektara Export has been relied upon. The respondent has relied on a case reported in 75 ELT 520 which is also not applicable in the present matter as the question as to the term 'manufacture' was viewed in a wholly different context. In that judgment it was held that the expression 'manufacture' was given a special definition under Section 2(f) of the Central Excise Act, 1944. 25. Considering the above facts and circumstances we find that though the revenue has made a sincere endeavor to show that the activities and functions of the assessee cannot come within the meaning of what in common parlance is known as manufacture, the several orders of this court go in favour of the assessee as the definition given in clause 9.32 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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