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[2009] 311 ITR 389 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. Balaji Hotels & Enterprises Ltd. D. MURUGESAN AND P. P. S. JANARTHANA RAJA, JJ. TAX CASE (APPEAL) NO. 1085 OF 2007 JULY 30, 2007 Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters Manufacture Printing of paper labels constitutes manufacturing so as to entitle assessee engaged in such activity to deduction under section 80-IA [Assessment year 1999-2000] [In favour of assessee] CIT v. Balaji Hotels & Enterprises Ltd. [2009] 311 ITR 389 (Mad.) The assessee-company was, deriving income from various other units and divisions by selling IMFL, beer, steel and labels. During the year, the assessee reported an income from its printing unit at Pondicherry and claimed 100 per cent, deduction under section 80-IA. The assessee furnished details pertaining to the machinery and raw materials and the process of printing labels. The Assessing Officer rejected the claim of the assessee on the ground that the assessee was not engaged in the manufacture or production of any article or thing, as contemplated under section 80-IA(2)(iii). Held that the Commissioner, Villaianur Commune Panchayat, Pondicherry, had issued the licence to the assessee-company for manufacture of printed paper label. The Government of Pondicherry, Industries Department had issued a certificate to the effect that the assessee-company was a medium-scale unit set up for the manufacture of printed paper labels. Further, it has granted exemption from the payment of CST/PGST for a period of five years. The Factory Inspectorate, Pondicherry, had issued registration and licence to the assessee-company to work as factory. The printing unit of the assessee-company was mainly engaged in the manufacture of printed paper labels. The assessee-company used paper, ink, fountain solution and varnish as raw materials and transformed them into printed labels, books and pamphlets, depending on the nature of the order. The raw materials mentioned above were converted into different and distinct commercial products. In these circumstances, the printing process would constitute manufacturing activity. In the present case, both the…

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