TMI Blog2020 (12) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... I RAJA AND CO. [ 1993 (9) TMI 6 - SUPREME COURT ] it has held that even in respect of third contingency, it can be held that the assessee is engaged in the activity of production. Thus, the order passed by the CIT (Appeals) has been upheld. It is pertinent to mention that in the memo of appeal filed before the tribunal, the revenue has not assailed the finding recorded in favour of the assessee that there has been no splitting up of the business, therefore, the question of remitting the matter to the tribunal does not arise. In HERO VINOTH (MINOR) VS. SESHAMMAL [ 2006 (5) TMI 478 - SUPREME COURT ] while dealing with the scope of Section 260A of the Act, it was held that this court will not interfere with findings of the court, unless the courts have ignored material evidence or acted on no evidence or have drawn wrong inferences from proved facts by applying the law erroneously or the decision is based on no evidence. - Decided against the revenue and in favour of the assessee. - I.T.A. NO.184 OF 2016 - - - Dated:- 2-12-2020 - HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T. NARENDRA PRASAD APPELLANTS (BY SRI.E.R. INDRAKUMAR SR. ADV. A/W SRI.E.I. SANMAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as formed by splitting up of Unit-I, which was already in existence. The Assessing Officer therefore, disallowed the deduction claimed by the assessee under Section 10B of the Act to the tune of ₹ 21,31,59,892/- and added it to the income of the assessee. 4. The assessee thereupon approached the Commissioner of Income Tax (Appeals) who by an order dated 22.06.2012 inter alia held that Assessing Officer as unable to counter the claim of the assessee that Unit II is a distinct unit and is situate in separate premises and customers of the new unit are different from Unit-I. It was further held that output generated by the assessee in the form of research output and chemical compounds is in the nature of manufacture /production of articles or things as prescribed under Section 10B of the Act and the assessee has satisfied all the conditions to claim the deduction under Section 10B of the Act. In the result, the appeal preferred by the assessee was allowed. The revenue thereupon filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal by an order dated 16.09.2015 dismissed the appeal preferred by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essential condition with regard to manufacture as prescribed under Section 10B of the Act is not satisfied by the assessee and under the agreement, the payments were made to the assessee for the research done on contract basis. It is also urged that Commissioner of Income Tax (Appeals) as well as the tribunal grossly erred in holding that there is a production or manufacture in the nature of compounds. It is also urged that the foreign exchange earned by the assessee was from rendering research activity and not from export of any article and the approval granted by the prescribed authority does not automatically make the assessee entitled to claim deduction under Section 10B of the Act. It is also pointed out that the activities of the assessee are not covered by the expression 'manufacture' which has been defined in Section 2 (29BA) of the Act. Alternatively, it is contended that since, the tribunal has not given any finding whether or not Unit-II came into existence by splitting up of the business, the matter deserves to be remitted to the tribunal. It is also urged that exemption provision should be interpreted strictly and since, the assessee has not fulfilled the cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the submissions made by learned counsel for the parties and have perused the record. Before proceeding further, it is apposite to take note relevant extract of Section 10B of the Act, which reads as under: 10B. 5 Special provision in respect of newly established hundred per cent export- oriented undertakings' (1) Subject to the provisions of this section, any profits and gains derived by an assessee from a hundred per cent export- oriented undertaking (hereafter in this section referred to as the undertaking) to which this section applies shall not be included in the total income of the assessee. (2) This section applies to any undertaking which fulfils all the following conditions, namely:- (i) it manufactures or produces any article or thing; (ia) 7 in relation to an undertaking which begins to manufacture or produce any article or thing on or after the 1st day of April, 1994, its exports of such articles and things are not less than seventy- five per cent of the total sales thereof during the previous year;] (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence: Provided that this condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to counter the claims of the appellant that Unit-II is a distinct unit in a separate premises, substantial amount was invested in establishing the new unit and customers of the new unit are different from that of the Unit-I. On examination of a number of documents produced by the A.R of the appellant before me, I am convinced that Unit-II is a new unit established by the appellant, therefore, I am unable to agree with the stand taken by the Assessing Officer that Unit-II was established by splitting up of the existing Unit-I. (ii) It is noticed that in respect of Unit I, initially the appellant claimed deduction under Section 80HHC of the IT Act, 1961 and subsequently claimed deduction under Section 10B of the Act and those claims were allowed by the Department. Only in respect of Unit-II the claim of the appellant under Section 10B of the Act was denied though the activities carried on at Unit-I and Unit-II are identical. (iii) I am in agreement with the stand taken by the A.R. of the appellant that the output generated by the appellant in the form of research output and chemical compounds is in the nature of manufacture or production of articles or things as prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
