TaxTMI 
TaxTMI 
2014 (10) TMI 430
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....manufacturing activities being carried out in its SEZ Sachin Unit. 3. Since the issue involved in both the grounds of appeal is inter-connected and the facts are common, hence both the grounds of appeal are being disposed off together. 4. The facts as well as grievance of the Revenue against the order of the Commissioner of Income Tax (Appeals) as filed by the Department alongwith appeal memo in Form No. 36 reads as under: "3.1 The assessee was engaged in Manufacturing and Export of Diamond studded gold & silver Jewellery during the year under consideration. 3.2 During the course of assessment proceeding on perusal of the submission made by the assessee, it was found that the assessee firm had given intimation regarding the commencement of production work on 22.02.2007. This legal information was required to be passed on to the Special Economic Zone authorities as and when the production work gets started. The assessee furnished the copy of intimation letter addressed to the Asstt. Development Commissioner, SEZ, Sachin, Surat, but no acknowledgement thereof/any seal & signature from authorities are found. Therefore, the assessee has not fully complied with the conditions as lai....
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.... Tax Act should not be disallowed because of the lapses found manufacturing considering period & consumption of consumable item nor many of the purchases confirmed by the third evidences. 3.9 The AO further observed that the assessee furnished list of details of employees to whom the salary paid wherein three employees as Jewellery manufacturing workers. The assessee had debited such expenses as manufacturing expenses and later on it was stated the Jewellery workers expenses. In view of the above, the AO rejected books result of the assessee u/s. 145(3) of the Income Tax Act. Since, sales of the assessee was established & profit of Rs. 10,00,653/-, showing by the assessee & offered for taxation, same was accepted as Income of the assessee. In view of the AO had disallowance of exemption claimed us 10AA of Rs. 10,00,653/-. 4. Decision of the Ld.CIT (A) The Ld. CIT(A)-V Surat has allowed claimed of exemption u/s 10A of Rs. 10,00,653/-relief to the assessee While doing so the Ld.CIT observed that :- A) The AO in the para 13 has observed that "Considering the above and defect as pointed out in above paras, the book results of the assessee is rejected u/s 145(3) of the I.T. Act. Sin....
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.... M/s. Leora Jewellery, Surat. For A.Y. 2007-08 authorities as and when the production work gets started. The assessee furnished the copy of intimation letter addressed to the Asstt. Development Commissioner, SEZ, Sachin, Surat, but no acknowledgement thereof/any seal &. signature from authorities were found. Therefore the assessee failed to, fulfill any one of the conditions of Leave and License issued by the SEZ intimation in order was not found. B) During the course of assessment proceeding the AO that the closing stock of consumable of Rs. 34,052/-. However, as its submission dated 16.12.2009, the assessee given a showing the closing stock only which is under the head "others". There is no bifurcation of revenue and capital expenditure many of the items are having long life and usable again and again. There is no detail of day to day purchase or consumptions of materials. C) During the course of assessment proceeding the AO observed that assessee stated to have produce the copy of bills for the Roshan International , Bombay and stated to have no agreement for purchase of machinery specific written in the bill and order is verbal the agreement is not executed stated that the m....
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....he assessee commenced the commercial production from 22.07.2007 & dispatched the goods for exports on 05.03.2009. It was surprising to note that assessee firm exported finished goods amounting to Rs. 32,93,111/- with in a short period of 12 days only. 3. The Ld. CIT (A) has not appreciated that the assessee manufactured 317 Silver Rings Wtg. 413.707 grams passing through the all the process of manufacturing, which required so many processing step as furnished by the assessee and period does not establish manufacturing of goods sold. 4. The Ld. CIT(A) has not appreciated that AO has disallowance the exemption u/s 10AA of the I.T. Act after found of the lapses in manufacturing period & consumption items nor the many of the purchase confirmed by the third evidences. 5. The Ld.CIT (A) has not appreciated that the A.O. has made detailed discussion in para 1 to 13 and rebuttal thereon in the Assessment order. 6. In view of above discussion, the Hon'ble ITAT is prayed to set aside the order of the CIT(A) and restore the order of the A.O." 6. The Departmental Representative relied on the above Statement of Facts filed before us. 7. On the other hand, the Authorized Representative....
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....derstand how the rejection of books of account is linked with disallowance of claim of exemption in this case. Either the books of account can be rejected or the exemption cannot be allowed. Both cannot be done at the same time. iv. On the one hand the A.O. observed that the electricity consumption has been shown less by the assessee, the quantum of article cannot be produced within such a short period of time as claimed by the assessee etc. while on other hand, he did not hesitate in accepting the sales as genuine and the profit shown by the assessee as correct. v. All the observations made by A.O. in the assessment order are not in congruence with his conclusions mentioned in para 13 of the order. In view of the above facts, I am of the opinion that the assessee's claim of exemption appears to be genuine and should be allowed. Accordingly, the A.O. is directed to allow the exemption as claimed by the appellant in its return of income. Hence, the ground of appeal is allowed." 10. The Departmental Representative pointed out before us that the Commissioner of Income Tax (Appeals) has not been able to rebut the finding of he Assessing Officer and therefore was not justified i....