2019 (10) TMI 83 - HC - Income Tax

Entitlement to the claim u/s.80IB - as alleged petitioner/appellant is not engaged in any manufacturing activity and instead, it was only doing trading of mushroom powders in capsules - HELD THAT - Issue decided in favour of the assessee in the assessee's own case 2018 (7) TMI 1733 - MADRAS HIGH COURT wherein as held product which emerges after the process of manufacture is commercially a distinct commodity, can be of consumption as such containing a requisite amount of ingredients in the appropriate percentage, preserved in proper form as contained in the licence issued under the authorised enactments as well as the technical logo shared by the foreign company. - Decided in favour of assessee.

Summary

Issues:
- Appeal filed under Section 260A of the Income-tax Act, 1961 against orders of the Income Tax Appellate Tribunal for assessment years 2006-07, 2007-08, and 2009-10.
- Substantial question of law regarding entitlement to claim u/s.80IB.
- Interpretation of the term "manufacture" for claiming tax benefits under Section 80HH of the Act.

Analysis:
1. The appeals were filed by the appellant/assessee challenging the orders of the Income Tax Appellate Tribunal for the assessment years 2006-07, 2007-08, and 2009-10 under Section 260A of the Income-tax Act, 1961. The main issue raised in these appeals was whether the appellant was entitled to the claim under Section 80IB of the Act.

2. The substantial question of law before the court was whether the Appellate Tribunal was correct in holding that the appellant is not entitled to the claim u/s.80IB. The court heard arguments from both parties, with Mr. K. Ravi representing the appellant/assessee, and Mr. T.R. Senthil Kumar, assisted by Ms. K.G. Usharani, representing the respondent/Revenue.

3. The court referred to a previous judgment in the assessee's own case, where it was decided in favor of the assessee regarding the interpretation of the term "manufacture" for claiming tax benefits under Section 80HH of the Act. The court highlighted that the product which emerges after the process of manufacture is commercially a distinct commodity, meeting specific criteria, and therefore, the assessee was entitled to the claim.

4. Based on the precedent set in the previous judgment, the court allowed the tax case appeals and answered the substantial question of law in favor of the assessee. The court did not award any costs in this matter. The judgment emphasized the importance of meeting specific criteria for claiming tax benefits under the relevant sections of the Income-tax Act, ensuring that the product manufactured qualifies as a distinct commodity commercially accepted as such.