2016 (5) TMI 357 - HC - Income Tax

High Court affirms deduction for gold jewelry exporter under Income Tax Act

Commissioner of Income Tax Versus M/s. Gia Exports

Commissioner of Income Tax Versus M/s. Gia Exports - TMI Issues Involved:- Challenge to the order of the Income Tax Appellate Tribunal confirming the deduction under Section 10A of the Income Tax Act- Disallowance of deduction under Section 10A based on survey report- Dispute regarding manufacturing activity and export claims- Appeal to the Commissioner of Income Tax (Appeals)- Appeal to the Tribunal and its findings- Concurrent findings of fact by the CIT(A) and the TribunalAnalysis:1. The case involves three appeals challenging the common order passed by the Income Tax Appellate Tribunal regarding the deduction under Section 10A of the Income Tax Act for assessment years 2006-07, 2007-08, and 2008-09. The primary question raised is whether the Tribunal was justified in confirming the order of the CIT(A) to allow the deduction under Section 10A of the Act.2. The respondent-assessee, engaged in manufacturing gold jewelry for export in a Special Economic Zone (SEZ) at Surat, claimed the benefit of deduction under Section 10A for all three assessment years. However, the Assessing Officer disallowed the deduction based on a survey report indicating discrepancies in the manufacturing unit, such as rusted machinery and lack of evidence supporting production and exports.3. The CIT(A) overturned the Assessing Officer's decision after finding that the machinery was operational, materials were under the control of customs, and supporting documents proved import, production, and export activities. The CIT(A) allowed the deduction for all three assessment years, leading to the revenue-appellant appealing to the Tribunal.4. The Tribunal concluded that the survey report was not sufficient to deny the deduction for the earlier assessment years as it pertained to a different period. It highlighted the absence of evidence for no manufacturing or export activities in the relevant years, ultimately dismissing the Revenue's appeal for all three years.5. The High Court upheld the findings of the CIT(A) and the Tribunal, emphasizing that the survey report could not be the sole basis for denying the deduction for the earlier assessment years. The Court noted the presence of manufacturing activities under the control of the Customs and Excise Department, along with proper documentation of imports and exports through approved channels.6. With no substantial question of law arising from the concurrent findings of fact by the CIT(A) and the Tribunal, the High Court dismissed the appeals, affirming the allowance of the deduction under Section 10A of the Income Tax Act for the respondent-assessee.