JUDGMENT judgment of court was delivered by Sanjiv Khanna J.- These two appeals by Revenue relating to assessment years 2007-08 and 2008-09 require adjudication on following substantial question of law: "Whether respondent-assessee is entitled to benefit under section 10B of Income-tax Act, 1961, as he was engaged in manufacture or production of article or thing?" These appeals arise from common order of Income-tax Appellate Tribunal ("the Tribunal", for short) dated April 18, 2013 (since reported in ITO v. Aar Ess Exim P. Ltd. [2013] 25 ITR (Trib) 14 (Delhi)). respondent-assessee is company engaged in business of manufacture, trading and export of engineering goods, etc., and also has factory located in Noida Export Processing Zone, Uttar Pradesh. said unit is 100 per cent. export oriented and located in customs-bonded area. For assessment year 2007-08, respondent-assessee had filed return declaring loss of Rs. 4,11,190 and had claimed deduction/exemption under section 10B of Income-tax Act, 1961 ("the Act", for short) on profit of Rs. 69,69,429 from Noida unit. Assessing Officer did not allow deduction under section 10B on ground that assessee had not manufactured any goods in Noida unit. He referred to reply received from R. N. Metals, Jaipur, M/s. Sustul Engg. Corporation, Mumbai, M/s. Chanderpur Works, Yamuna Nagar (Haryana) to effect that they had manufactured and exported various goods on behalf of respondent- assessee. He observed that aforesaid letters showed that assessee itself had not undertaken manufacturing activities. Assessing Officer noticed that assessee had incurred electricity expenditure of Rs. 19,771 during year and Rs. 2,27,694 in previous year, through they had turnover of Rs. 18.92 lakhs and had shown opening stock of work-in- progress of Rs. 1.6 crores. total turnover from Noida unit as declared was Rs. 6,19,35,990. For assessment year 2008-09, assessment order is more detailed and elaborate. assessee had filed return declaring nil income and had claimed exemption/deduction under section 10B of Rs. 12,17,41,816. assessee had claimed that they had earned exempt income as they had carried out upgradation of cement plant in Zambia and also received consideration for design, fabrication and commissioning of steel rolling mill in Kazakhstan. assessee had filed flow chart to explain nature of work undertaken to support their claim under section 10B of Act. It was asserted that respondent was multifaceted project engineering company having highly qualified engineers, technocrats, etc., who had extensive experience and expertise in executing turnkey projects of diverse nature. Assessing Officer, however, held that assessee was not carrying on manufacturing and assembling activities as they had erected steel rolling mill and cement plant abroad. assessee himself did not manufacture any goods but had removed various parts after testing and disassemble them for purpose of export. Testing, painting or pre-packaging for export cannot be construed as manufacture or assembling activity. assessee himself did not possess adequate plant, machinery or infrastructure to carry out manufacturing activities. written down value of plant and machinery in Noida unit was only Rs. 1,81,153. assessee had also purchased plant and machinery worth Rs. 6,45,659 during year, out of which Rs. 1,43,950 were paid for air-conditioners and EPABX. On site inspection at Noida, it was noticed that assessee had installed lathe machines, welding sets, cutting machine, weighing machine, cranes, electric hoists and chain pully. said plant and machinery were for loading, unloading of materials received, upkeep, painting, etc., for exports. assessee had incurred electricity expenses of Rs. 29,184 on export turnover of Rs. 26,00,63,634. assessee had not debited any generator expenses. salaries paid to workers were not proportionate to export turnover. inference drawn was that assessee was not engaged in manufacturing activity. Assessing Officer disallowed claim for deduction/exemption of Rs. 12,17,41,860 under section 10B, as made in return. He also made additions in alternative. total income of assessee on basis of aforesaid addition and other additions was computed at Rs. 10,86,14,708. assessee succeeded in first appeals as Commissioner of Income-tax (Appeals) decided issue in favour of assessee. Commissioner (Appeals) in addition to giving finding on merits in favour of respondent-assessee, applied principle of consistency. As is apparent, aforesaid findings have been affirmed in favour of respondent-assessee by Tribunal. In order to decide, controversy, we would like to reproduce section 10B(1), (2), (4) and Explanation 2, clauses (iii) and (iv), and Explanation 4 to section 10B which read: "10B. (1) Subject to provisions of this section, deduction of such profits and gains as are derived by hundred per cent. export oriented undertaking from export of articles or things or computer software for period of ten consecutive assessment years beginning with assessment year relevant to previous year in which undertaking begins to manufacture or produce articles or things or computer software, as case may be, shall be allowed from total income of assessee: Provided that where in computing total income of undertaking for any assessment year, its profits and gains had not been included by application of provisions of this section as it stood immediately before its substitution by Finance Act, 2000, undertaking shall be entitled to deduction referred to in this sub-section only for unexpired period of aforesaid ten consecutive assessment years: Provided further that for assessment year beginning on 1st day of April, 2003, deduction under this sub-section shall be ninety per cent. of profits and gains derived by undertaking from export of such articles or things or computer software: Provided also that no deduction under this section shall be allowed to any Provided also that no deduction under this section shall be allowed to any undertaking for assessment year beginning on 1st day of April, 2012, and subsequent years: Provided also that no deduction under this section shall be allowed to assessee who does not furnish return of his income on or before due date specified under sub-section (1) of section 139. (2) This section applies to any undertaking which fulfils all following conditions, namely:- (i) it manufactures or produces any articles or things or computer software; (ii) it is not formed by splitting up, or reconstruction, of business already in existence: Provided that this condition shall not apply in respect of any undertaking which is formed as result of re-establishment, reconstruction or revival by assessee of business of any such undertaking as is referred to in section 33B, in circumstances and within period specified in that section; (iii) it is not formed by transfer to new business of machinery or plant previously used for any purpose. Explanation.-The provisions of Explanation 1 and Explanation 2 to sub- section (2) of section 80-I shall apply for purposes of clause (iii) of this sub- section as they apply for purposes of clause (ii) of that sub-section... (4) For purposes of sub-section (1), profits derived from export of articles or things or computer software shall be amount which bears to profits of business of undertaking, same proportion as export turnover in respect of such articles or things or computer software bears to total turnover of business carried on by undertaking... Explanation 2.-For purposes of this section,... (iii)'export turnover' means consideration in respect of export by undertaking of articles or things or computer software received in, or brought into India by assessee in convertible foreign exchange in accordance with sub-section (3), but does not include freight, telecommunication charges or insurance attributable to delivery of articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing technical services outside India; (iv)'hundred per cent. export-oriented undertaking' means undertaking which has been approved as hundred per cent. exportoriented undertaking by Board appointed in this behalf by Central Government in exercise of powers conferred by section 14 of Industries (Development and Regulation) Act, 1951 (65 of 1951), and rules made under that Act;... Explanation 4.-For purposes of this section,'manufacture or produce' shall include cutting and polishing of precious and semiprecious stones." Sub-section (1) of section 10B states that deduction of such profits and gains as derived from 100 per cent. export oriented undertaking from export of articles, things or computer software would be allowed for 10 consecutive assessment years beginning from year in which undertaking begins to manufacture or produce articles, things or computer software. Thus for deduction/exemption to be allowed under section 10B of Act, undertaking in question should be 100 per cent. export oriented. profits derived by said undertaking from export of articles, things or computer software is treated as exempt/deductible for 10 consecutive years beginning from year when manufacture/production starts. provisos curtail quantum of deduction and stipulate how same is to be computed. Sub-section (2) stipulates that section 10B would only apply to undertaking which manufactures or produces, articles or things or computer software. Such undertaking should not be formed by splitting, reconstruction of existing business and not formed by transfer to new business, machinery or plant previously used. Explanation 2, clause (iv) states that 100 per cent. export oriented undertaking means undertaking approved as 100 per cent. export oriented undertaking by Board appointed in this behalf by Central Government in exercise of powers under section 14 of Industries (Development and Regulation) Act, 1951. Sub-section (3) states that sale proceeds of articles and things or computer software exported outside India should be received in India in convertible form within time limit so stipulated. Sub-section (4) prescribes method to compute profits derived from export of articles and things, which shall be proportionate amount which bears to profit of business of undertaking, as turnover of such article or thing or computer software bears to total turnover of business. term "export turnover" has been defined for purposes of said section in clause (iii) of Explanation 2 and means consideration received in convertible foreign exchange in respect of exports by undertaking, of articles or things of computer software, received or brought into India. It does not include freight, telecommunication charges or insurance attributable to delivery or expenses, if any, incurred in foreign exchange for providing technical services outside India. In Explanation 3, for removal of doubts, it has been declared that profits and gains derived from on site development of computer software, services for development of software outside India shall be deemed to be profits and gains derived from computer software exported outside India. Thus, on site development of computer software including services for development of software outside India would be treated as profits and gains derived from export of computer software. aforesaid Explanation begins with expression "for removal of doubts". use of this expression is significant and important. said Explanation was added by Finance Act, 2001, with effect from April 1, 2001. In Explanation 4, expression "manufacture or produce", it has been elucidated, would include cutting and polishing of precious or semi precious stones. reading of aforesaid clauses would indicate that section 10B of Act is beneficial provision and has been enacted to give tax concession or exemption to 100 per cent. export oriented units engaged in manufacture or production of articles, things or computer software. exemption is only granted if assessee has been declared as 100 per cent. export oriented undertaking which means undertaking approved by Board appointed in this behalf under Industries (Development and Regulation) Act, 1951. It is this behalf under Industries (Development and Regulation) Act, 1951. It is undisputed and factual position recorded by Tribunal that respondent assessee had export oriented unit in Noida Export Processing Zone, which was duly approved. Tribunal has also recorded that Development Commissioner, Noida Export Process Zone, had extended all facilities and privileges admissible to said unit under Export-Import Policy 1997-2002. One of conditions, for establishment of undertaking in said zone was that undertaking should be manufacturing engineering products and entire production should be exported, after excluding rejects and permissible sales in domestic tariff area. respondent has entered into agreement with said authority for carrying on said business. impugned order passed by Tribunal has referred to and accepted flow chart filed by respondent-assessee before Assessing Officer and same for sake of convenience is reproduced below: reading of aforesaid flow chart would disclose that respondentassessee had carried out detailed engineering analysis of system design, equipment specifications and development and preparation of engineering drawings. Thereafter, approval was taken from client. At next stage, assessee issued technical specification and drawings for production, which activity was outsourced to vendors. During course of production by third parties vendors, process inspection and final inspection was undertaken. After approval, goods were dispatched from vendors' factory to assessee. goods were then examined at Noida unit and approved. respondent-assessee had also undertaken in-house fabrication in addition to inspection at vendors factory to whom production or manufacture had been outsourced. Once goods were received at Noida unit, they were examined and assembled and tested. Rust protection was undertaken. Big assemblies were disassembled and repacked. Small assemblies were packed as such. Thereupon, goods were exported from India and erected at site, tested and then commissioned. Tribunal has referred to following activities specifically undertaken by assessee and relevant portion reads: Sl. Description of Manufacturing process -performed No. component by appellant AC frequency drive was purchased as per assessee's design specifications and integrated with squirrel cage motor by programming its programmed logic controller (PLC) to require operational parameters and mounting it on motor control panel; after 1. AC frequency drive abovesaid processing manufactured item is called motor speed controller and was sold as such vide our invoice dated August 19, 2006. other AC frequency drives were similarly processed and fixed to screw conveyor for its step-less speed control. equipment mentioned in column of this table were purchased by assessee as per its technical specifications and drawings and after inspection they were assembled into sub- (a) Aeration boxes assemblies and assemblies to (b) Aeration cloth (c) Air- manufacture pneumatic material lift assembly (d) Air-lift 2. conveyors and kiln feeding mechanism. with expander (e) Air equipment are assembled together to slides (f) Rotary vane slides (f) Rotary vane ensure exact mating of parts and feeder tested for efficiency by injecting compressed air. large sections are then disassembled into sub-assemblies, packed and containerised for shipment. For details lease refer to appendix 1. (a) Instruments (b) Kiln hood (c) Noduliser equipment mentioned in column feed hopper and overflow of this table were purchased by screw conveyor. (d) assessee as per its technical Pneumatic cylinder (e) specifications and drawings and after Refractory bricks and inspection they were assembled into sub- 3. powder (f) Repair kit for assemblies and assemblies to cylinder (g) Screw manufacture vertical shaft kiln. large conveyor (h) Settling sections are then disassembled into sub- chamber (i) VSK gearbox assemblies, packed and containerised for and accessories (j) VSK shipment. For details please refer to shell and chimney (k) appendix 2. Noduliser equipment mentioned in column of this table were purchased by assessee as per its technical (a) Forged hyper- specifications and drawings and after steel (b) Hot air furnace inspection they were assembled into sub- (c) Liners (d) Liner bolts assemblies and assemblies to for cement mill (e) Liner 4. manufacture raw mill and cement mill. bolts for raw mill (f) Raw liners are fitted on inner surface of mill accessories (g) Raw mill shell using nuts and bolts before mill parts. (h) Grit fixing end covers; they prevent wear of separator. mill shell. large sections are then disassembled into sub-assemblies, packed and containerised for shipment. For details please refer to appendix 3. equipment mentioned in column of this table was purchased by assessee as per its technical specifications and drawings and after inspection it was assembled with hammer mill using support and frame; it 5. Cyclone works to reduce pollution by trapping dust generated by hammer mill. After testing it is disassembled from hammer mill and dispatched as cyclone separator with support and embedded frame. For details please refer to appendix 4. equipment mentioned in column of this table were purchased by assessee as per its technical specifications and drawings and after (a) Bucket elevator inspection they were assembled together 6. parts (b)Chain for to make bucket elevator, elevator bucket elevator was tested for conformance with design parameters and there-after disassembled to shippable size for shipment. For details please refer to appendix 5. equipment mentioned in column of this table were purchased by assessee as per its technical specifications and drawings and after (a) Bags of dust inspection they were assembled together 7. collector (b) Sequential to make dust collector, dust collector timer (c) Solenoid valve was tested for conformance with design parameters and thereafter disassembled for safe shipment as they are delicate items. For details please refer to appendix 6. equipment mentioned in column of this table were purchased by assessee as per its technical specifications and drawings and after inspection they were assembled together (a) Table feeder (b) to make material proportionator by 8. Table feeder assembling with it scrapper, drive shaft, gearbox, motor, etc., and fixing assembly to hopper; after testing system is disassembled into sub-assembly called table type material proportionator. For details refer to appendix 7. equipment mentioned in column of this table were purchased by assessee as per its technical specifications and drawings and after inspection they was assembled together to 9. Grit separator make coarse particle cyclone which is fitted in raw mill section to perform its duty of recycling under done material to raw mill. For details please refer to appendix 3. equipment mentioned in column of this table was purchased by assessee as per its technical 10. Slide gate specifications and drawings and after inspection it was fixed to hopper to make material charging door. For details please refer to appendix 8. equipment mentioned in column of this table were purchased by assessee as per its technical specifications and drawings and after (a) Macc125A inspection they was assembled together to current collectors (b) make down shop lead for electrically Safetrack2, SF 2-200A operated tra-velling crane (EOT). After 11. aluminium shrouded testing for current carrying capacity and conductor system. (c) other factors they were disassembled and M.S. fabricated supports properly packed as there are number of small components which may get misplaced during transit. It is then installed on EOT at plant site. For details please refer to appendix 9. In respect of assessment year 2007-08, no division of cost of exported goods and erection or commissioning costs are available. This aspect was not elucidated and mentioned. In respect of assessment year 2008-09, assessment order refers to fact that assessee had erected cement/steel rolling mills abroad and, therefore, assessee was not engaged in export, manufacture or production of goods and things but again Assessing Officer did not bifurcate said figures into service element and export value of goods, etc. No such attempt of bifurcation was made before Tribunal or before us. We have referred to Explanation 2, clause (iii), which defines term "export turnover" to mean consideration in respect of export by undertaking of articles or things and excludes freight, telecommunication, insurance charges attributable to delivery of articles and, lastly, expenses incurred in foreign exchange in providing technical services outside India. Thus, expenses for providing technical services incurred outside India in foreign exchange are to be excluded from export turnover. In other words, expenses incurred in providing technical services outside India but not incurred in foreign exchange, form part of turnover and are not to be excluded. This is in spite of fact that under sub-section (1) and subsection (2) there is direct reference to profits and gains derived from export of articles or things or computer software by 100 per cent. export oriented unit. profits are to be computed with respect to export turnover under sub-section (4) in respect of such articles, things or computer software in proportion to total turnover of business carried on by undertaking. Thus, while computing export turnover in terms of clause (iii) of Explanation 2, expenses incurred for providing technical services outside India in connection with articles or things so exported would be included and added, provided said expenditure was not incurred in foreign exchange. Legislature was conscious that assessee engaged in export of articles or things may have to incur expenditure in nature of technical services in connection with said exports and in given case would be reimbursed or paid for said expenditure. payment received for aforesaid expenditure would be included in export turnover, provided expenditure was not incurred in foreign exchange. Explanation only excludes expenses incurred in foreign exchange in providing technical services outside India. services must be provided by assessee, i.e., in respect of services provided by assessee outside India. Explanation 3 which uses expression "for removal of doubts" in case of computer software states that on-site development including services for development of software outside India shall be deemed to be profits and gains derived from export of computer software outside India. use of expression "for removal of doubts" has to be contrasted from term "deemed" used in same Explanation but we feel that said expression shows underlying objective and purpose behind provision, i.e., section 10B of Act. Software developed outside India or even services for development of software outside India is to be and regarded as export. Read in this manner, we feel that fact that respondent-assessee had assembled entire plant outside India from goods supplied and manufactured in India would include expenditure incurred for commissioning and providing technical services outside India, after excluding expenses in form of payment made in foreign exchange for technical services provided outside India. It is not case of Revenue that respondent-assessee had made payment in foreign exchange for technical services provided outside India. next question which arises for consideration is whether assessee can be considered to be engaged in manufacture and production of articles or things. We have already recorded findings of Tribunal on said aspect. It is apparent that respondent-assessee did not self-manufacture or produce most of articles or things which were exported and used for setting up plant. assessee had undertaken detailed engineering drawings and as per specification and drawings, actual manufacture and production work was outsourced. Throughout said process, inspection was carried out and only after approval, goods were dispatched. goods were re- inspected, checked, assembled and disassembled, before they were exported out of India. Only upon satisfactory performance and ensuring that there was perfect matching, goods were exported. We are in agreement with findings recorded by Tribunal that aforesaid activities qualify and should be treated as manufacture or production of goods by assessee himself. On said aspect we would like to reproduce our finding in I.T.A. No. 141 of 2002, CIT v. Harig India Ltd., dated December 22, 2014- [2015] 370 ITR 424 (Delhi), which read (pages 435, 437, 438): "The next aspect or question is whether assessee was engaged in manufacture or processing of jewellery or was merely procuring jewellery from market as trader and, thereafter, exporting same. In latter case, he would be trader exporting jewellery and not manufacturer or processor. Assessing Officer has recorded that assessee had purchased gold from MMTC and had swapped same for readymade jewellery by paying extra amount and got it prepared from jewellers. Thus, assessee was neither manufacturer nor processor of jewellery exported. Commissioner of Income-tax (Appeals) had held that assessee had purchased gold from MMTC and, thereafter, paid labour and other charges to artisans who had manufactured jewellery on job work basis as per specifications provided by overseas buyers to assessee. contention of assessee that to be manufacturer or processor, they need not carry on manufacturing or processing activities by employing own labour or workers was specifically raised but not accepted. It was observed that assessee had swapped gold and had procured gold jewellery from reputed manufacturers, without giving further details. assessee, as observed by Commissioner of Income-tax (Appeals), had paid fixed rate as making charges. Thus, Commissioner of Income-tax (Appeals) held that assessee was not manufacturer of jewellery and had also not processed gold to make jewellery/ornaments, hence was trading in jewellery... factual findings of Tribunal is that after buying gold from MMTC, it was handed over to job workers with design and directions to make jewellery and ornaments. work undertaken by job workers was under supervision and control of assessee. assessee had paid labour charges to artisans. Thus, factual finding recorded is that assessee had handed over gold to artisans and received same in form of jewellery and ornaments as per assessee's directions and instructions. contention of Revenue that assessee was not processor or manufacturer of jewellery because it had engaged job workers and had not employed their own workers has to be rejected. Delhi High Court in Orient Longman Ltd. v. CIT [1981] 130 ITR 477 (Delhi), had approved view taken by Calcutta High Court in Additional CIT v. A. Mukherjee and Co. (P.) Ltd. [1978] 113 ITR 718 (Cal), that publisher who got manuscript for publication prepared after getting them printed and bound from third parties was engaged in manufacturing activity. This was in spite of fact that assessee did not possess or own any printing press. This, it was held, was not necessary as long as printing and binding was done under supervision of assessee. It was not necessary that assessee should own printing press or be book binder himself, provided that assessee who had acted as publisher and got book printed and bound from binder who was only acting as contractor of assessee. In said case, High Court was examining whether assessee was engaged in manufacture or processing of goods. same view has been taken by Bombay High Court in case of CIT v. Neo Pharma P. Ltd. [1982] 137 ITR 879 (Bom), CIT v. Acrow India Ltd. [1991] 188 ITR 485 (Bom) and CIT v. Anglo French Drug Co. (Eastern) Ltd. [1991] 191 ITR 92 (Bom). In these cases, it has been held that assessee was not trader but manufacturer/processor engaged in manufacturing and processing activities, when these activities were undertaken by third person, under control and supervision of assessee. In present case, we are not examining and deciding whether respondent-assessee was industrial undertaking but narrower and specific question, of distinction between manufacturer and trader, arises for consideration. manufacturer of jewellery or ornaments might not require huge investment in machinery, etc. mode and manner of engaging and undertaking manufacturing activity could be variable. aforesaid decisions are relevant as they differentiate between trader and manufacturer/processor, on principle of control and supervision, when manufacturing activity is undertaken. same test has been applied by Tribunal. In view of findings recorded above, it has to be held that subclause (a) to sub-section (3) of section 80HHC of Act would be applicable in view of factual finding recorded by Tribunal that aforesaid work was undertaken by job workers under supervision and control of assessee and under their directions/ check." aforesaid decision in case of Harig India Ltd. (supra) is in context of section 80HHC of Act and, therefore, would not be conclusive and completely apposite. ratio exposits, difference between manufacturer exporter and trader exporter. language and purport of section 10B of Act is somewhat different. term "manufacture" was defined in Explanation 3 to section 10B, prior to its substitution in 2001, by inclusive definition to mean any process, assembling or recording of programme. Thereafter, by Finance (No. 2) Act of 2009, with effect from April 1, 2009, term "manufacture" has been defined in sub-section (29AB) of section 2 to mean change in non-living physical object or article or thing resulting in transformation of object or article or thing into new and distinct object or article or thing having different name, character or use; or bring into existence new and distinct object or article or thing with different chemical composition or integral structure. aforesaid two definitions would not be applicable to these appeals, which relate to assessment years 2007-08 and 2008-09. Pertinently, in Explanation 4 to section 10AB of Act inserted by Finance Act, 2003, with effect from April 1, 2004, term "manufacture" or "produce" it stands elucidated would include cutting or polishing of precious or semi-precious stones. aforesaid definition reflects and illustrates legislative intent behind granting exemption/deduction under section 10B and wide scope Legislature wanted to bestow. Polishing or cutting of gem stones does not require elaborate machinery and can be done with minimal tools and small investment. Division Bench of this court in CIT v. Lovlesh Jain Income Tax Appeal No. 1223 of 2011, decided on December 20, 2011, with reference to sections 10A and 10B of Act went into question whether conversion of standard gold into ornaments would amount to "manufacture" or "production". It was held as under: "The word'manufacture' can be given, both wider as well as narrower connotation. In wider sense, it simply means to make, fabricate or bring into existence article or product either by physical labour or by mechanical power. Given narrower connotation it means transforming of raw material into commercial product/ commodity or finished product which has new, separate entity but this does not necessarily mean that material by which commodity is manufactured must lose its identity. latter connotation has been accepted and applied with some moderation/clarification in several decisions, keeping in view context in which word 'manufacture' has been used. Supreme Court in Gramophone Co. of India Ltd. v. Collector of Customs [2000] 1 SCC 549 and Union of India v. Delhi Cloth and General Mills Co. Ltd., AIR 1963 SC 791, has held that manufacture has to be understood to mean transformation of goods into new commodity commercially distinct and separate, and having its own character, use and name whether it be result of one or several processes. However, every change does not result in 'manufacture' though every change in article may be result of treatment or manipulation by labour or/and machines. If operation or process that renders commodity or article fit for use, which it is otherwise not fit, change/process falls within meaning of word'manufacture'. We may refer with profit to Supreme Court's elucidation in CIT v. Tara Agencies [2007] 292 ITR 444 (SC). Herein Supreme Court has turned to definition provided in Central Excise Act, 1944, among other relevant definitions. relevant paragraphs of this decision are reproduced below (page 450 of 292 ITR): (page 450 of 292 ITR): 'The term "manufacture" has not been defined in Income-tax Act, 1961. term "manufacture" has been defined in section 2(f) of Central Excise Act, 1944. Parts (i) and (ii) of section 2(f) read as under: "2. (f)'manufacture' includes any process- (i) incidental or ancillary to completion of manufactured product; and (ii) which is specified in relation to any goods in section or Chapter notes of Schedule to Central Excise Tariff Act, 1985, as amounting to manufacture".' Clause (f) gives inclusive definition of term'manufacture'. According to dictionary, term'manufacture' means process which results in alteration or change in goods which are subjected to process of manufacturing leading to production of commercially new article. In determining what constitutes'manufacture' no hard and fast rule can be applied and each case must be decided on its own facts having regard to context in which term is used in provision under consideration. term "manufacture" has been defined by Blacks Law Dictionary (5th Edition) as under: "Manufacture: process or operation of making goods or any material produced by hand, by machinery or by other agency; anything made from raw materials by hand, by machinery, or by art. production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine". word "manufacture" has been defined in Halsbury's Laws of England, third edition, volume 29, page 23, as under: "Manufacture has been defined as manner of adapting natural materials by hands of man or by man-made devices or machinery and as making of article or material by physical labour or applied power"; but practice is to accept as'manufacture' wider range of industrial activities than such definition would suggest. It includes articles made in situ as well as articles made in factory. Supreme Court of United States of America has defined term "manufacture" century ago in Anheuser-Busch Brewing Association v. United States [1907] 52 L. Ed. 336. definition has been followed in subsequent American, English and Indian cases. definition reads as under: "Manufacture implies change, but every change is not manufacture, and yet every change in article is result of treatment, labour and manipulation. But something more is necessary... There must be transformation; new and different article must emerge,.having distinctive name, character or use".' As noticed above, section 10A/10B is applicable when undertaking manufactures, or is engaged in production of articles or things. term'production' has larger magnitude and is more expansive and liberal than term'manufacture'. terms'manufacture' and 'produce' were interpreted in CIT v. TATA Locomotive and Engineering Co. Ltd. [1968] 68 ITR 325 (Bom), and it was held (page 333 of 68 ITR): 'In its roots word "manufacture" comes from Latin word "manus" which means "hand" (and "manu" is ablative of word "manus") and word "facere" which means "to make". In origin, therefore, word implied making of anything by hand, by with passing of time and in context of industrial development word has acquired number of shades of meaning. In connection with industry or in industrial undertaking, two shades of meaning are important. In Oxford Dictionary, volume 6, two shades of meaning are given as follows: (1) first is "the action or process of making articles or material (in modern use, on large scale) by application of physical labour or mechanical power." This is most generic meaning in its application to industry or industrial undertaking or establishments. (2) There is also another more limited meaning which is found referred to in authorities as meaning transforming of raw material into commercial commodity or finished product which has separate identity (CIT v. Ajay Printery Pvt. Ltd. [1965] 58 ITR 811 (Guj). This shade of meaning is more appropriately used in past participle "manufactured". See Oxford Dictionary, volume 6, at page 143, sense No. 1, where meaning is "fabricated from raw material". In Y. Aswathanarayana v. Deputy CTO [1964] 15 STC 795 (AP) at page 801 one finds useful compilation of meaning attached to word "manufacture" from various dictionaries and other sources. Similarly, word "produce" with reference to its meaning in industry or political economy has two different senses. In volume 8 of Oxford Dictionary, at page 1422, two meanings are given as follows: "To bring forth, bring into being or existence (a) generally to bring (a thing) into existence from its raw materials or elements or as result of process" and "(d) To compose or bring out by mental or physical labour (a work of literature of art); to work up from raw material, fabricate, make, manufacture (material object)". In Ajay Printer's case, Division Bench of Gujarat High Court pointed out that word "manufacture" has wider and narrower connotation. In wider sense it simply means to make, or fabricate or bring into existence article or product either by physical labour or by power. word "manufacturer" in ordinary parlance would mean person who makes, fabricates or brings into existence product or article by physical labour or power. other shade of meaning which is narrower meaning implies transforming raw materials into commercial commodity or finished product which has entity by itself, but this does not necessarily mean that materials with which commodity is so manufactured must lose their identity. Thus, both words "manufacture" and "produce" apply as well to bringing into existence of something which is different from its components. One manufactures or produces article which is necessarily different from its components.' difference in words'manufacture''production (to produce)' and'process' was examined by Supreme Court in CIT v. Tara Agencies [2007] 292 ITR 444 (SC); [2007] 6 SCC 429. On question of what is meant by term'production', it has been elucidated and explained as under (page 451 of 292 ITR): 'In Black's Law Dictionary (fifth edition), term "production" has been defined as under: "'Production''Process or act of producing'. That which is produced or made; i.e., goods. Fruit of labour, as productions of earth, comprehending all vegetables and fruits; productions of intellect, or genius, as poems and prose compositions; productions of art, as manufactures of every kind." term'produce', as defined in New Webster's Dictionary of English Language (Deluxe Encyclopaedic Edition), is as follows: "'Produce' To bring forth into existence; to bring about; to cause or effect, esp. intellectually or creatively; to give birth to; to bear, furnish, yield; to make accrue; to bring about performance of, as movie or play; to extend, as line-To bring forth or yield appropriate offspring, products, or consequences".' In ITO v. Arihant Tiles and Marbles P. Ltd. [2010] 320 ITR 79 (SC), it was observed that cutting of marble blocks into slabs or tiles per se may not amount to'manufacture' but activity would constitute 'production'. Further, when one refers to word'production', it means process plus something in addition thereto. Every manufacture can qualify as production but every production need not amount to manufacture. original marble block does not remain block when it becomes slab or tile and undergoes polishing, etc., and, therefore, amounts to production and qualifies for deduction under section 80-IA of Act. Even though chemical composition or basic material may be same but in commercial parlance, two products were different. In this case, Supreme Court noticed and observed that if contention of Revenue is accepted, it would have negative revenue consequences as assessees are also liable to pay excise duty, sales tax, etc., because of processing involved, resulting in said change. aforesaid change was held to be sufficient. After referring to CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC), it was observed that word'production' when used in juxtaposition with word'manufacture' takes within its ambit bringing into existence new goods by process which may or may not amount to manufacture. word'production' takes in all by-products, intermediate and residual products, which emerge in course of manufacture of goods. In CIT v. Emptee Poly-Yarn (P.) Ltd. [2010] 320 ITR 665 (SC), thermo mechanical process that converts partially oriented yarn into textured yarn, which is new and distinct product or article was regarded as manufacture as it brings about structural change in yarn itself. Partially oriented yarn cannot be used in warp or weft but texturised yarn can be used. It was held that structure, character, use and name of product are indicia, which are to be taken into account while deciding question whether process amounts to'manufacture' or not. We have referred to said decision, as chemical composition of partially oriented yarn and textured yarn is similar, but use, name and character of yarn becomes different after texturising. In present case, manufacture as well as production of goods, articles or things is covered under section 10A/10B. activity for converting gold bricks, biscuit or bars, into jewellery amounts to'production or manufacture' of new article. gold, silver or platinum in bar, biscuit or brick form, is converted by manual labour and by use of implements/tools or by machinery, culminating into entirely new article/thing called jewellery or ornaments. Jewellery is wearable item and is used by both men and women. This process has been referred to above in paragraph 6.4, while adverting to factual matrix in case of Shashi Kant Mittal. Jewellery/ornaments in common parlance or in commercial terms has distinct identity, treated as new article and not same as raw or standard gold in form of bricks, biscuits or bars. As result of said processing, commercially different saleable product comes into existence. Jewellery has distinctive name, character and use. It can no longer be regarded as original commodity, has separate consumers and is new commercial commodity. activity of respondent assessee amounts to'manufacture or production' and, therefore, qualifies for deduction under section 10A/10B." aforesaid passage refers to number of decisions on said subject. However, we would like to refer to judgment of Supreme Court in CIT v. Oracle Software India Ltd. [2010] 320 ITR 546 (SC), in which controversy was whether assessee was manufacturer and, thus, entitled to deduction under section 80-IA. Supreme Court interpreted term "manufacture" and held that process of commercial duplication of software requires four steps. Installation/transfer of virtual image of software on recordable media with checking of integrity would qualify as "manufacture". It was held that manufacture implies change but every change is not manufacture despite fact that every change in article is result of treatment of labour and manipulation. If operation/process renders commodity or article fit for use for which it is otherwise not fit, operation/process falls within meaning of word "manufacture". In CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC), which has been noticed in Lovlesh Jain's case (supra), Supreme Court at page 424 referred to principle that one must keep in mind context, since word takes its colour from context. In N. C. Budharaja's case (supra), it was observed that word "production" has wider connotation than word "manufacture" and illustratively every manufacture could be categorised as production but not vice versa. In present context, in section 10B, word "production" has been used in addition to word "manufacture" and also expanded scope and ambit is envisaged for said term in context of section 10B in Explanation 4. It would be incongruous and inappropriate in context of section 10B of Act to hold that respondent-assessee, 100 per cent. export oriented unit, who had refurbished mini cement plant in Zambia and established mini steel mill in Kazakhstan, were not engaged in "manufacture" or "production" of articles or things. fallacy in argument raised by Revenue is apparent. It is accepted that in case mini steel plant and refurbished cement mill had been completely assembled in unit in Noida and exported as such, assessee would qualify and would be manufacturer or person engaged in production of articles or things. However, benefit under section 10B, it is asserted by Revenue, should be denied for what was exported were separated or disassembled parts of mini cement and steel plant/mill, as it was not possible to export after fabrication and assembly entire plant/mill itself. said fabrication and assembly had to be undertaken in view of size and logistics at location where plant/mill had to be upgraded or set up. aforesaid reasoning and ratiocination is obdurate and deflates object and purpose of section 10B of Act. Such narrowness and curtailment should not be accepted. Export of goods and things can take various forms and section 10B accepts and admits such interpretation. In CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. [1992] 196 ITR 149 (SC), it was held that expression used in taxing statute should be ordinarily understood in sense it harmonises with object of statute to effectuate legislative intention. If language is plain and unambiguous, one can look fairly at language used and interpret it to give effect to legislative intent. Nevertheless, tax laws have to be interpreted reasonably and in consonance with justice adopting purposive approach. contextual meaning has to be ascertained and given effect to. Kerala High Court in Girnar Industries v. CIT [2011] 338 ITR 277 (Ker) with reference to section 10A of Act referred to definition of term "manufacture" in Chapter IX of Exim Policy clause 9.30 and noted that definition of term "manufacture" contained in section 2(r) of Special Economic Zones Act, 2005, was incorporated later under section 10AA of Act with effect from February 10, 2006. said definition includes make, produce, fabricate, assemble, process, etc., by hand or by machines, new product having distinct name, character, use and would also include processes such as refrigeration, cutting, polishing, blending, repair, re-making, re- engineering, etc. In view of aforesaid discussion, substantial question of law framed above is answered in favour of respondent-assessee and against appellant-Revenue. In facts of case, there will be no order as to costs. *** Commissioner of Income-tax v. Aar Ess Exim P. Ltd