Section 80-IC of the Income Tax Act
The decision most relied on for Section 80-IC is Textile Machinery Corporation Ltd. v. CIT (107 ITR 195), cited in 165 of the 262 judgments on BharatTax that turn on this section.
Leading authorities on Section 80-IC
A new industrial undertaking is not considered a reconstruction of an existing business for tax deduction purposes if it is a separate, independent production unit manufacturing commercially tangible products that can operate without losing its identity in the old business. The transfer and substantial use of assets and manpower from an old business to a new one may indicate reconstruction.
Interest earned from the temporary parking of borrowed funds specifically intended for project development, prior to the commencement of business, constitutes a capital receipt inextricably linked to the project and is not taxable as 'income from other sources'.
For the purpose of claiming deductions under sections like 10B, 80IC, 80HHC, 80J, and 80I, a process must amount to 'manufacture' as defined under Section 2(29BA), involving genuine value addition or chemical transformation.
The activity of cutting jumbo roll films into flat and small rolls in desired sizes is considered manufacture or production for the purposes of the Income-tax Act.
The transformation of bulk powder into regulated, consumable capsules constitutes manufacturing under the definition provided in various statutes, qualifying for associated tax benefits and deductions.
The definition of 'production' includes mining activity for the purpose of producing mineral ores, as ore is a 'thing' resulting from effort.
When an existing unit undertakes substantial expansion under Section 80-IC, the previous year in which the expansion occurs becomes the initial assessment year, entitling the unit to 100% deduction for 10 years from that year.
For an activity to be considered 'manufacture', it must result in a transformation where a new and different article emerges with a distinctive name, character, or use.
Salary paid to a partner is merely a mode of sharing profits and retains the character of the firm's income. The payment is an adjustment of the amount the partner is entitled to receive based on their contribution of human capital, skill, and toil.
Specified intangible assets like business claims, information, records, contracts, employees, and know-how acquired under a slump sale are considered 'business or commercial rights' eligible for depreciation under section 32(1)(ii).
