By K. B. Bhujle, Advocate
Pr.
CIT(Appeals) vs. Lakshminarayan Mining Company.; 404 ITR 522 (Karn);
Date
of Order : 6th April, 2018
A.
Ys.: 2009-10 to 2011-12
The
assessee was a firm in the business of mining and export of iron ore and was
granted a mining lease for an area of 105.2 hectors in Siddapura Village in
Bellary district. The assessee had entered into an operation and maintenance
agreement with NAPC, which operated the plant and machinery installed in the
export oriented unit and non-export oriented unit both belonging to the
assessee firm. The export oriented unit had started production on 23/09/2006
and accordingly the assessee claimed deduction u/s. 10B of the Act on the
profits derived from the production of iron ore from the export oriented unit
for the A. Ys. 2009-10 to 2011-12. The Assessing Officer disallowed the claim
with respect to production of iron ore said to have been outsourced by the
export oriented unit to the non-export oriented unit and restricted the claim
to the profits derived by the export oriented unit from its production.
The
Tribunal allowed the assessee’s claim.
In appeal
by the Revenue, the Karnataka High Court upheld the decision of the Tribunal
and held as under:
“i) The processing of the iron ore
in a plant belonging to the assessee being in the nature of job work was not
prohibited and formed an integral part of the activity of the export oriented
unit; the mere fact that the plant was situated outside the bonded area was of
no legal significance as the benefit of customs bonding is only for the limited
purpose of granting benefit as regards customs and excise duty.
ii) The entitlement to deduction under the Act is
to be looked into independently and the benefit would stand or fall on the
applicability of section 10B. Hence the mere location of the plant outside the
export oriented unit and customs bonded area was not a disqualification to
claim deduction u/s. 10B. The assessee was entitled to exemption u/s. 10B.”
