2009 (3) TMI 117 - HC - Income Tax

Industrial Undertaking - The expression manufacture or production are different expressions and the word production has a wider meaning - the word production under section 10B considering similar expression in section 80IB will have to be given this wider meaning, considering that the expressions are not defined in the Act but the expressions are used in the same Act. The only difference between section 80-IB and section 10B is that section 10B applicable to a 100 per cent. export oriented unit, whereas section 80-IB can be in respect of any unit held that the cutting, polishing and sizing granites amounted to either manufacturing or processing and accordingly, the assessee was entitled for deduction under section 10B of the Income-tax Act.

Summary

Issues:
1. Deduction under section 10B of the Income-tax Act for an approved 100% export-oriented undertaking.
2. Application of the doctrine of consistency in fiscal statutes.
3. Interpretation of the term "manufacture or production" under section 10B.
4. Compliance with predicates for availing benefits under section 10B.

Analysis:

1. The judgment pertains to an appeal regarding the deduction under section 10B of the Income-tax Act for the assessment year 2001-02. The Assessing Officer initially denied the deduction due to the absence of a bank realisation certificate for export sales. However, upon remand by the Commissioner of Income-tax (Appeals), the claim was allowed by the Assessing Officer.

2. The Revenue challenged the order of the Commissioner of Income-tax (Appeals) before the Tribunal, citing a judgment of the Rajasthan High Court. The Tribunal dismissed the appeal, emphasizing the doctrine of consistency in fiscal statutes. It held that once the Revenue accepted the claim for a previous assessment year, it could not change its stance unless there was a change in facts or law.

3. The main question raised before the court was whether the activities of cutting, polishing, and sizing granites constituted manufacturing or processing, making the assessee eligible for deduction under section 10B. The court referred to precedents from the Rajasthan High Court and the Supreme Court to interpret the terms "manufacture" and "production." It concluded that the term "production" under section 10B should be given a broader meaning, similar to section 80-IB, as the expressions are not defined in the Act.

4. The court dismissed the Revenue's argument that the assessee had not fulfilled other requirements for claiming benefits under section 10B, noting that such issues were not raised before the Income-tax Appellate Tribunal. It also referenced judgments from the Gujarat High Court and its own court to support the principle that once relief is granted for a previous assessment year, it cannot be disturbed for subsequent years without valid reasons.

In conclusion, the court upheld the decision to allow the deduction under section 10B for the appellant and dismissed the Revenue's appeal, emphasizing the importance of consistency in tax assessments and interpreting statutory provisions in a manner that aligns with judicial precedents.