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TMI Blog2000 (9) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... -firm. The ld.CIT(A) has failed to appreciate that goods have been shown as sold to the partners namely A.M.D. Overseas Pvt. Ltd. and Arvind Dumra Sons (HUF) who have claimed benefits under section 80-HHC. The ld.CIT(A) has failed to appreciate that the assessee-firm has not fulfilled the norms stipulated in the notification issued by the Government of India dated6-4-1984and hence benefit under section 10A cannot be allowed. The ld.CIT (A) has erred in holding that the profits shown are to be assessed in the hands of the assessee-firm on substantive basis thus reversing the finding of the AO that the profits belongs to the two partners namely A.M.D. Overseas Pvt. Ltd. and Arvind Dumra Sons (HUF)." 3. Mr. Satish Goel, ld. DR appeared for the Revenue. He placed strong reliance on the assessment order and vehemently contended that the goods had been purchased by the partners of the firm and thereafter exported. The assessee had claimed exemption under section 10A and the partners of the firm had claimed the benefit under section 80HHC of the Income-tax Act. Thus, it was his argument that the exemption under section 10A of the Income-tax Act was not allowable in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order and submitted that the whole confusion started with the non-appreciation of the true facts of the case by the Assessing Officer. For the said purpose, our attention was invited to page 2 of the assessment order which reads as under:-- "As regards the claim of the assessee regarding processing and manufacturing done during the year. It is seen that during the year the assessee purchased terry towel and bed-sheeting from M/s. Yunus Bros.,Pakistanand Swadeshi Mills Co. Ltd." 6. He vehemently argued that what the assessee had purchased was not terry towel and bed sheeting, he had instead purchased terry towel and bed sheeting fabric. For this, he relied upon page 2 of the impugned order which reads as under:-- "While examining the appellant's case the Assessing Officer found that the appellant had made its purchases of terry towels and bed-sheeting fabrics from M/s. Yunus Bros.,Pakistanand Swadeshi Mills Co. Ltd. to the extent of Rs. 1,02,77,090." 7. Coming to the aspect of manufacturing/processing our attention was invited to page 10 of the Paper Book placed before us which describes the manufacturing process of terry towels at AMD Export Corporation Kandla Free-Trade Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt exporter or Manufacturer-Exporter manufacturer-Exporter 7. Year of Establishment of the 1983" applicant 10. Reliance was also placed upon the decision of the Apex Court in the case of CIT v. N.C Budharaja Co. [1993] 204 ITR 412 for the proposition that the word manufacture includes 'process'. Reliance was also placed upon the decision of the Gujarat High Court in the case of CIT v. J.R. Kharwar Sons [1987] 163 ITR 3942 wherein their Lordships held that when the assessee subjected grey cloth to the process of dyeing and printing, it produced a distinct article having distinct use as distinguished from the grey cloth still subsisted. As a result of the process to which grey cloth was subjected, there was transformation of grey cloth into a new commodity commercially known as a distinct and separate commodity having its own character, use and name. Transformation of grey cloth to the extent that it became a commercially different commodity was sufficient to hold that there was manufacture or production of articles within the meaning of clause (iii) of sub-section (4) of section 80J of the Act. The activity which the assessee carried on was a manufacturing activity irrespect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Export Income whether exempt; 5-9-1997: Their Lordships Mrs. Sujata V. Manohar and D.P. Wadhwa JJ. dismissed on the ground of delay of 327 days, but keeping the question open, the special leave petition filed by the Department to appeal against the judgment dated 22-2-1996 of the Gujarat High Court in ITA Nos. 9 and 10 of 1996, whereby the High Court rejected the reference application of the Department on the question whether the income of the assessee-company arising out of the transaction where it manufactured 50 tons of opium and sold it to its sister concern which in turn exported the material and received sale proceeds in foreign exchange was exempt under section 10A of the Income-tax Act, 1961 in CIT v. Cadila Exports (P.) Ltd : C.C.Nos. 6646 and 6647 of 1997." 13. Jindal Exports (P.) Ltd v. Asstt. CIT [1989] 31 ITD 217 (Delhi) was relied upon for the proposition that deduction under section 80HHC could not be denied to assessee simply because he enjoyed tax holiday under section 10A. Relying upon this it was argued by the Id. AR that merely because the partners had claimed deduction under section 80HHC the firm cannot be denied exemption for this reason. It was a subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sembling or (c) recording of programmes on any disc, tape, perforated media or other information storage device." 18. In reply the learned DR contended that the cases relied upon by the assessee had no relevance as it was not disputed by the Department that it did not amount to a manufacturing/processing but the condition that they had not been exported and a domestic sale has been made thereof, had not been rebutted by the assessee. A perusal of the provisions of the Act and the Circulars of the CBDT referred to before us clearly show that in order to avail the benefits of section 10(A) it is not necessary to export the goods manufactured/produced. The relevant circulars merely elaborate that the exemption under certain conditions were made in order to promote industrial activity in certain under-developed areas. The same extract from para 6.2 of the Circular No. 308 dated29-6-1981is reproduced:-- "6.2 The Kandla Free Trade Zone was established by the Government of India in 1965 not only as an export promotion venture but also as a pioneering scheme for industrialisation of the under-developed area ofKutchand also for the development of theKandlaPortas a substitute forKarach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit cannot be taken away by imposing any restrictions which do not find mention in the Act. This would be in consonance with the recognised principles of interpretation. It is also our opinion that the administrative authority or the court should not whittle down the plenitude of the exemption or relief granted by the legislation by laying stress on something which is not considered in that provision. Accordingly, ground Nos. 2 and 3 raised by the Revenue are rejected. 20. Before us, the case of the Revenue has been that the requirements laid down in the Standing Order placed on page 11 of the Paper Book have not been met. The ld. DR has heavily relied upon it for the contention that the requirements spelled out in clauses (iii) and (iv) were not met by the assessee and therefore, the benefits of exemption under section 10A could not be availed. The AR of the assessee rebutted this argument by relying on page 933 of 5th Edition Vol. I of Chaturvedi Pithisaria. The same has been reproduced earlier in this order. Apart from this, reliance was also placed on Jindal Exports (P.) Ltd.'s case. 21. Here it may also be pertinent to point out that in the current age of administratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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