Deduction under section 10B applicable to manufacturing activity
Deduction under section 10B applicable to manufacturing activity
Assessee was assembling instruments and apparatus for measuring and deleting ionizing radiators and claimed deduction u/s 10B. AO rejected the claim that assessee was manufacturing articles and held that it only assembled items. CIT(A) upheld AO's order, but ITAT held that assessee was manufacturing and entilted u/s 10B. High Court held that assessee was into manfacturing activity producing an article or thing and eligible for deduction u/s 10B.
1. The assessee was engaged in the business of assembling of instruments and apparatus for measuring and detecting ionizing radiators. It claimed deduction under section 10B
2. The assessing authority rejected the assessee's claim taking a view that the assessee had not manufactured or produced articles or things as required under section 10B(1), but only was engaged in assembling of items as per 3CD audit report.
3. The Commissioner (Appeals) confirmed assessment order.
4. On second appeal, the Tribunal, however, held that the process carried on by the assessee for getting the final product showed that the assessee was engaged in manufacture or production of an article or thing and was entitled to deduction under section 10B.
5. The High Court on appeal held as under:
From the aforesaid material, it is clear, 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 processes are carried out and a new product is arrived. After going through the said process, the product which comes under that process is different from that which originally existed, in the sense that the thing produced is by itself a commercially different commodity. The moment there is transformation, a new commodity commercially known as distinct and separate commodity having its own character, use and name, whether it be the result of one process or several processes, manufacture takes places and duty is attracted. Therefore, the Tribunal was justified in holding that the process undertaken by the assessee constitutes manufacture and that they are entitled to the benefit of Section 80(ia) of the Act. Accordingly, the substantial question of law is answered in favour of the assessee and against the Revenue. There is no merit in these appeals.
Appeals are dismissed.
