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Issues involved: Claim for deduction under section 10B of the Income Tax Act, validity of notices issued under section 148 for assessment years 200001, 200102, and 200203, justification for reopening assessments.
Claim for deduction under section 10B: The petitioner, a manufacturing concern, claimed eligibility for deduction under section 10B of the Income Tax Act. The deduction was allowed for the assessment under section 143(3). The petitioner asserted not claiming any deduction under section 10B for the assessment year 200001. For the subsequent years, the petitioner contended that relevant material facts were disclosed during assessment, and deduction was rightfully claimed as a manufacturer establishing a new unit. The notices issued under section 148 alleged concealment of facts and questioned the manufacturing status based on the age of machinery. The petitioner argued against the need for reopening assessments, citing the purchase date of the machinery in question. Validity of notices under section 148: The Revenue contended that assessment orders were passed but not served due to a directive. The court observed that for the year 200001, where no deduction was claimed, there was no basis for allowing or reopening deductions under section 10B. Regarding the assessment year 200102, where deduction was allowed and all relevant materials were provided, the Assessment Officer was barred from reopening the assessment after four years without demonstrating concealment of material facts for the deduction. Justification for reopening assessments: The petitioner presented detailed manufacturing processes undertaken on raw castings to transform them into marketable products, emphasizing the distinction between raw materials and the final goods. Citing precedents from the Madras High Court, the petitioner argued that the processed goods constituted new products suitable for commercial use, aligning with the broad interpretation of "manufacture." The court found no grounds for reopening assessments, particularly rejecting the claim of using old machinery for manufacturing based on the purchase date provided by the petitioner. The decision to quash the notices for reopening assessments was based on the absence of disputed facts and the lack of justification for challenging the previously allowed deductions under section 10B.
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