It is not necessary for the assessee to produce its products so as to become eligible for claiming exemption under section 10B of the Income-tax Act, 1961

PrintPDF

Taurus Merchandising Pvt. Ltd. v. ITO (ITAT Delhi)- It was held that the new export-oriented unit of the assessee cannot be said to be formed by the reconstruction or splitting of a business already in existence. The Tribunal has also held that it is not necessary for the assessee to produce its products so as to become eligible for claiming exemption under section 10B of the Income-tax Act, 1961 (the Act). While pronouncing the ruling, the Tribunal has observed that the provisions of section 10B of the Act do not place any bar on the assessee having a separate new undertaking for the manufacture and production of the same or similar goods, as done earlier. For the purposes of section 10B of the Act, what is important is a new undertaking. The Tribunal has also observed that ‘there is no legal bar against outsourcing of activities involved in manufacture or processing of goods. What is required is that the undertaking must mainly engage itself in the manufacture or processing of goods, either itself, or through some agency under its supervisory control or direction.