COMMISSIONER OF INCOME TAX Vs. ITC FILTRONA LIMITED

JUDGEMENT

(1.) In all four appeals, the appellant and respondent are the same. The appellant in all four appeals is the State. The Commissioner of Income tax (Administration) (for short 'CIT(A)') and the Assistant Commissioner of Income tax, Circle-2(V), Queens Road, Bangalore have filed these appeals against the order of the Appellate Tribunal. The assessee is a manufacturer of cigarette filter rods, which is used in manufacture of filter cigarette. The assessee claimed exemption of profits earned from the sale of the above, vide Section -80-IB for the assessment years 2003-04 and 2004-05.

(2.) The Assessing Officer found that the cigarette filter rods are used in the manufacture of the cigarette. The provisions of sub-section - (2), clause (iii) of Section - 80IB read with item - 2 of IX Schedule discloses that - "tobacco and tobacco preparations, such as, cigars and cheroots, cigarettes, bidis, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff" are not entitled for exemption, The cigarette filter rods are basically used for manufacture of cigarettes. Therefore, would not be entitled for exemption.

(3.) The following question of law was formulated for consideration: