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TMI Blog2014 (7) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured computers and servers which is a new and distinct product other than the components of which it is made - it was a new and distinct product which was coming out, entitling the assessee deduction u/s 80IB of the Act – thus, there was no reason to interfere in the order of the Tribunal – Decided against Revenue. - Tax Appeal No. 1287 of 2010 - - - Dated:- 27-9-2011 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : Mrs. Mauna M. Bhatt For the Respondent : Mr. SN Soparkar, Sr. Counsel With Mrs. Swati Soparkar ORDER (Per : Honourable Ms. Justice Sonia Gokani) 1. Issue proposed for consideration of this Court in the present Tax Appeal is as follows : Whether the Appellate Tribunal is right in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It was vehemently submitted by the learned Counsel Mrs. Mauna Bhatt that the Tribunal has erred in deleting the addition by holding that the assessee respondent was in the business of manufacturing. It is further submitted that as rightly observed by the Assessing Officer, the assessee was merely buying basic items of computer system such as Monitor, Key board, Mouse, etc. and after adding protection cover, operating manual and software, it was selling them as computer system to BSNL and other such companies and also to sister concerns. Therefore, it cannot be said that new product came into existence, nor was it emerging that it employed minimum 10 workers in the manufacturing process so as to fulfill conditions under Section 80IB(2)(i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there had been no change in the manufacturing process nor has any contrary material produced in the year under consideration. Tribunal noted thus : 3.3 We have heard both the parties and gone through the facts of the case. Undisputedly, claim for deduction u/s.80IB has been allowed in the A.Y.2001-02, on the ground that the assessee has carried on manufacturing activity while there has been no change in the manufacturing process or the articles produced in the year under consideration. The ld. CIT(A) concluded in the impugned order that assembling various components by carrying on 'quality control through testing equipments. The assessee manufactured computers and servers which are entirely new and distinct products from the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to manufacture or production of any article or thing. The High Court in that case, while dismissing the appeal preferred by the Revenue, held that extraction and processing of iron ore did not amount to manufacture . However, it came to the conclusion that extraction of iron ore and the various processes would involve production within the meaning of Section 32A(2)(b)(iii) of the Income Tax Act, 1961 and consequently, the assessee was entitled to the benefit of investment allowance under Section 32A of the Income Tax Act. In that matter, it was argued on behalf of the Revenue that extraction and processing of iron ore did not produce any new product whereas it was argued on behalf of the assessee that it did produce a distinct new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct product comes into being which is different from the components utilised for preparing the new product and when the said process is carried on employing more than ten workers, there does not appear to be any error in such conclusion. 13. It would be pertinent to note at this stage that this Court in Tax Appeal No. 12/2010 in case of Commissioner of Income Tax v. Natasha Industries has taken a similar view when identical question had arisen for consideration. The issue raised and answered was thus : 1. Revenue is in appeal against judgement of the tribunal dated 5.6.2009 raising following questions for our consideration : Whether the Appellate Tribunal is right in law and on facts in holding that activity carried on by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er find that CIT(Appeals) also had on basis of evidence on record held that activities carried out by the assessee was one of manufacturing. We are unable to disagree with the view of the tribunal. Assessee after prescribing several different components and carrying out detailed process, manufactured computer and thereby brought into existence the whole new project. Assessee had to obtain various licenses from different statutory authorities for carrying on such manufacturing activities. Such licenses and registrations were also produced on record. We see no infirmity in the view of the tribunal, confirmed by CIT(Appeals). 4. We have also perused the definition of term manufacture contained in Section 2(29BA) of the IncomeTax Act which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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