Can beneficiation of Ore (particularly if it involves process wherein chemicals are also used to make it suitable for specific markets) is "produce or manufacture" for sec 10A/10B of IT Act?
After amendment per sec.2(29BA) from AY 2009-10, it may not fulfill definition of "manufacture". However, it satisfies criteria of 'production' keeping in view the judgments of Supreme Court in:
1. CIT vs Sesa Goa Ltd. (2004) 271 ITR 331 (SC) wherein it was held that extraction and processing of iron ore amounts to "production" within the meaning of the word in section 32A(2)(b)(iii) of IT Act
2. CIT Vs. N. C. Budharaja & Co., (1994) 204 ITR 412 (SC):
"The word production has a wider connotation than the word manufacture. While every manufacture can be characterised as production, every production need not amount to manufacture
3. Vijay Ship Breaking Corpn. & Ors. s CIT (2009) 314 ITR 309 SC:
"the Legislature has used the words 'manufacture' or 'production'. Therefore, the word 'production' cannot derive its colour from the word 'manufacture'. Further, even according to the dictionary meaning of word 'production', the word 'produce' is defined as something which is brought forth or yielded either naturally or as a result of effort and work (Webster's new international dictionary). It is important to note that the word 'new' is not used in the definition of the word 'produce'".
The Apex Court overruled Guj HC decision which held that assessee was not entitled to claim the benefit u/s. 80HH / 80I Act as there was neither production nor manufacture of new goods by the process of ship breaking.
Other inputs/ views will be of great help.
BKMahapatra
brajamahapatra@gmail.com
After amendment per sec.2(29BA) from AY 2009-10, it may not fulfill definition of "manufacture". However, it satisfies criteria of 'production' keeping in view the judgments of Supreme Court in:
1. CIT vs Sesa Goa Ltd. (2004) 271 ITR 331 (SC) wherein it was held that extraction and processing of iron ore amounts to "production" within the meaning of the word in section 32A(2)(b)(iii) of IT Act
2. CIT Vs. N. C. Budharaja & Co., (1994) 204 ITR 412 (SC):
"The word production has a wider connotation than the word manufacture. While every manufacture can be characterised as production, every production need not amount to manufacture
3. Vijay Ship Breaking Corpn. & Ors. s CIT (2009) 314 ITR 309 SC:
"the Legislature has used the words 'manufacture' or 'production'. Therefore, the word 'production' cannot derive its colour from the word 'manufacture'. Further, even according to the dictionary meaning of word 'production', the word 'produce' is defined as something which is brought forth or yielded either naturally or as a result of effort and work (Webster's new international dictionary). It is important to note that the word 'new' is not used in the definition of the word 'produce'".
The Apex Court overruled Guj HC decision which held that assessee was not entitled to claim the benefit u/s. 80HH / 80I Act as there was neither production nor manufacture of new goods by the process of ship breaking.
Other inputs/ views will be of great help.
BKMahapatra
brajamahapatra@gmail.com