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2022 (4) TMI 811 - SC - Income TaxEntitlement to benefit of the provisions of Section 10B - Manufacture or production of articles yielding additional profit attributable to the new outlay of capital in a separate and distinct unit - tests which have been formulated in the decision of this Court in Textile Machinery Corporation Ltd 1977 (1) TMI 3 - SUPREME COURT - whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business - HELD THAT - In coming to the conclusion that the tests which have been formulated in the decision of this Court in Textile Machinery Corporation Ltd (supra) and reiterated in Indian Aluminium ( 1977 (1) TMI 5 - SUPREME COURT have been duly fulfilled, the Tribunal has entered specific findings of fact that the new unit was fully a independent unit with a production capacity of 15 lakh tons per annum as compared to the earlier production capacity of 2 lakh tons per annum of the old unit. The Tribunal has also dealt with the reasons which were furnished by the CIT in coming to the conclusion that what was set up was only an expansion of the old unit and not a new unit. Ex facie, the reasons which weighed with the CIT were not compliant with the tests which have been formulated in the judgments of this Court. In this backdrop, the judgment of the Division Bench of the High Court of Bombay at Goa 2020 (10) TMI 1053 - B OMBAY HIGH COURT affirming the judgment of the Tribunal does not suffer from any error. The Special Leave Petition is accordingly dismissed.
Issues: Interpretation of Section 10B of the Income Tax Act 1961 for assessing entitlement to benefits, application of tests from previous court decisions, determination of new industrial undertaking criteria, consideration of factual findings by the Tribunal, review of High Court judgment affirming Tribunal decision.
Analysis: 1. The judgment addressed the interpretation of Section 10B of the Income Tax Act 1961 to determine the respondent-assessee's entitlement to benefits. The Income Tax Appellate Tribunal applied tests from the Textile Machinery Corporation Ltd v CIT decision to assess the establishment of a new industrial unit. The tests emphasized the need for a physically separate and identifiable undertaking yielding additional profits from new capital outlay. The Tribunal's decision was based on these tests, which were reiterated in the Indian Aluminium case. 2. The Tribunal specifically found that the respondent's unit established in 1998 qualified as a new undertaking. The unit, set up at a cost of over ?30 crores, had a production capacity of 15 lakh tons per annum, distinct from the old unit's capacity of 2 lakh tons per annum. The Tribunal considered factors such as the installation of new machinery, compliance with foreign exchange earnings, and the physical separation of the new unit from the old one. 3. The Tribunal's findings highlighted that the new unit was an independent entity capable of producing ore with desired ferrous content, meeting the criteria for a new industrial undertaking. The Tribunal refuted the CIT's contention that the establishment was merely an expansion of the old unit, emphasizing the fulfillment of the tests set out by previous court decisions. 4. The High Court of Bombay at Goa affirmed the Tribunal's judgment, finding no error in its decision. Consequently, the Supreme Court dismissed the Special Leave Petition (SLP) filed, citing the alignment of the Tribunal's findings with the legal tests and the absence of errors in the High Court's affirmation. 5. Other SLPs related to the matter were also dismissed in light of the decision on the primary SLP (No 6730/2021), maintaining consistency in the application of legal principles across cases. The Court's orders provided a comprehensive review of the factual and legal considerations, ensuring adherence to established precedents and criteria for determining eligibility for tax benefits under Section 10B of the Income Tax Act 1961.
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