1 ITEM NO.4 Court 4 (Video Conferencing) SECTION IX SUPREME COURT OF INDIA RECORD OF PROCEEDINGS Petition(s) for Special Leave to Appeal (C) No(s).6730/2021 (Arising out of impugned final judgment and order dated 22-10-2020 in TA No. 23/2012 passed by High Court of Judicature at Bombay at Goa) COMMISSIONER OF INCOME TAX Petitioner(s) VERSUS M/S SOCIEDADE DE FOMENTO INDUSTRIAL PVT. LTD. Respondent(s) (FOR ADMISSION and I.R.) WITH SLP(C) No. 5940/2021 (IX) SLP(C) No. 6201-6202/2021 (IX) (FOR ADMISSION and I.R.) SLP(C) No. 8001-8002/2021 (IX) (FOR ADMISSION and I.R.) SLP(C) No. 6854-6855/2021 (IX) (FOR ADMISSION and I.R.) Date : 25-01-2022 These petitions were called on for hearing today. CORAM : HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE SANJIV KHANNA For Petitioner(s) Mr. N. Venkataraman, ASG Mr. Rupesh Kumar, Adv. Mr. Manish Pushkarna, Adv. Mr. B.K. Satija, Adv. Mr. Mohammed Akhil, Adv. Mr. P.V. Yogeshwaran, Adv. Mr. Raj Bahadur Yadav, AOR For Respondent(s) Mr. Rafique Dada, Sr. Adv. Signature Not Verified Mr. Yashraj Singh Deora, AOR Ms. Jasmin Amalsadvala, Adv. Digitally signed by Sanjay Kumar Date: 2022.01.27 16:42:52 IST Reason: Mr. Nishant Thakkar, Adv. Ms. Prakriti Roy, Adv. 2 UPON hearing counsel Court made following ORDER SLP(C) No 6730/2021 1 In arriving at conclusion that respondent-assessee was entitled to benefit of provisions of Section 10B of Income Tax Act 1961, Income Tax Appellate Tribunal1, by its decision dated 24 March 2011, applied tests which have been formulated in decision of this Court in Textile Machinery Corporation Ltd v CIT2. These tests which have been formulated in decision of this Court are reproduced below: i. Manufacture or production of articles yielding additional profit attributable to new outlay of capital in separate and distinct unit is heart of matter. ii. fact that assessee by establishment of new industrial undertaking expands his existing business which he certainly does would not on that score, deprive him of benefit. Every new creation in business is some kind of expansion and advancement. iii. true test is not whether new industrial undertaking connotes expansion of existing business of assessee but whether it is all same new and identifiable undertaking separate and distinct from existing business, iv. In order that new undertaking can be said to be not formed out of already existing business, there must be new emergence of physically separate industrial unit which may exist on its own as viable unit. v. new unit may produce same commodities of old business or it may produce some other distinct marketable products, even commodities which may feed old business. vi. products produced by new unit may be 1 Tribunal 2107 ITR 195 (SC) 3 consumed by assessee in his old business or may be sold in open market. One thing is certain that new undertaking must be integrated unit by itself wherein articles are produced. vii. industrial unit set up must be new in sense that new plants and machinery are erected for producing either same commodities or some distinct commodities. viii. In order to deny benefit new undertaking must be formed by reconstruction of old unit which can take place only when assets of more than 20% value of new unit are transferred to new unit from old unit. 2 These tests have been reiterated in decision in CIT v Indian Aluminium3. 3 In coming to conclusion that tests which have been formulated in decision of this Court in Textile Machinery Corporation Ltd (supra) and reiterated in Indian Aluminium (supra) have been duly fulfilled, Tribunal has entered specific findings of fact which are contained in paragraph 19 of judgment which is extracted below: 19. It is thus submitted that following facts will go to establish assessee's claim that unit formed in 1998 is new undertaking: i. old unit approved under license No.CIL/420 (1985) dt.26-12-1985 started producing Iron ore in year 1986 and was setup at total cost of Rs.3 crores having capacity of producing 2 lac tons of beneficiated Ore per year; ii in these circumstances it was considered imperative to install new and more sophisticated beneficiation plant whose operations would result in production of higher ferrous content of about 63% plus; iii. accordingly appellant applied for allowing it to import plant and machinery, pursuant to approval from Ministry of Industry, agreement came to be entered into between appellant and Government which recognized setting up of new unit and required that unit should comply with fresh net foreign exchange earnings from date of commencement of 3108 ITR 367 (SC) 4 production of newly set up unit; iv. pursuant to approval appellant set up and installed primary beneficiation section (PBS-II) and other related plant and machineries along with slime treatment plant from Swedish company, this plant is independently capable of producing ore of higher ferrous content, i.e. up to 63% to 65% with lower content of alumina and silica as required in international market from low-grade ore which is mined; v. new unit was formed in financial year 1998-99 at cost of over Rs.30 crores and capacity of this unit is 15 lakhs tons compared to earlier capacity of 2 lakhs tons per annum in old unit; vi. photograph taken of new unit established in 1998- 99 (copy enclosed at pg.37 of paper book) clearly shows that new unit is completely different and independent unit which is located at separate plot adjacent to old unit; vii. certificate given by Engineer of appellant, one Mr. Y.S. Reddy establishes that Greater Ferro-met Unit is capable of independently producing ore on its own of desired ferrous" content. 4 Tribunal has noted that new unit was fully independent unit with production capacity of 15 lakh tons per annum as compared to earlier production capacity of 2 lakh tons per annum of old unit. Tribunal has also dealt with reasons which were furnished by CIT in coming to conclusion that what was set up was only expansion of old unit and not new unit. Ex facie, reasons which weighed with CIT were not compliant with tests which have been formulated in judgments of this Court. 5 In this backdrop, judgment of Division Bench of High Court of Bombay at Goa dated 22 October 2020 affirming judgment of Tribunal does not suffer from any error. Special Leave Petition is accordingly dismissed. 5 6 Pending application, if any, stands disposed of. SLP(C) Nos 5940/2021, 6201-6202/2021. 8001-8002/2021 and 6854-6855/2021 1 In view of order passed in SLP(C) No 6730/2021, we are not inclined to entertain Special Leave Petitions. Special Leave Petitions are accordingly dismissed. 2 Pending application, if any, stands disposed of. (SANJAY KUMAR-I) (SAROJ KUMARI GAUR) AR-CUM-PS COURT MASTER Commissioner of Income-tax v. Sociedade De Fomento Industrial Pvt. Ltd