TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2559
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....he ground that the Assessing officer has wrongly allowed deduction of Rs. 34954102/- claimed by the appellant u/s 10AA of the I. T. Act, 1961 alleging the deduction claimed by the assessee firm pertains to the profits derived 'purely from trading activity' while the profits derived by assessee firm were from the export of services in accordance with section 10AA of I. T. Act, 1961." ITA No. 384/JP/2013 - A.Y. 2008-09 ''1. That the invoking of provisions of Sec. 263 of the I. T. Act, 1961 in case of the appellant by the Ld. CIT was without jurisdiction, wrong and bad in law. 2. That on the facts and in the circumstances of the case the Ld. CIT is wrong, unjust and has erred in law in holding that the assessment completed by the assessing officer on 21.12.2009 u/s 143 (3) of the I. T. Act, 1961 in case of the appellant was erroneous on facts and in law and prejudicial to the interest of revenue on the ground that the Assessing officer has wrongly allowed deduction of Rs. 70751730/- claimed by the appellant u/s 10AA of the I. T. Act, 1961 alleging the deduction claimed by the assessee firm pertains to the profits derived 'purely from trading activity' while the profits derived by....
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....ows:- (a) Assessee should be entrepreneur (i.e. person who has granted approval by Development Commissioner) as per Section 2(j) of SEZ Act, 2005 (b) Units should begin to manufacture or produce articles or things or provide any services during the previous relevant to any assessment commencing on or after 01-04-2006 (c) Assessee should export his goods or services by any mode physical or otherwise. As submitted above the assessee firm is an approved unit of SEZ duly authorized by the competent authority i.e. Development Commissioner, Ministry of Commerce, Govt. of India, Surat SEZ, Sachin, Surat. A copy of said approval letter is enclosed at point no. 1 of this letter. The assessee firm's entire purchases are import. The entire goods are exported to foreign country. Further the assessee firm also fulfills all other terms and conditions laid down in Section 10AA of the I.T. Act , 1961 and as such deduction is claimed as per provisions of law.'' The ld. AR of the assessee company submitted Form No. 65 (see Rule 16D) vide his letter dated 30th Oct. 2007 indicating therein as under ( as part of Paper Book):- ''1. We have examined the account and records of M/s. Goenka Je....
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.... the I.T. Act, 1961, a unit is entitled to get exemption for manufacturing and trading. The relevant portion of Section 10AA is reproduced below:- 10AA. (1)Subject to the provisions of this section, in computing the total income of an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005 from his Unit, who begins to manufacture or produce articles or things or provide any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006, a deduction of (i) hundred per cent of profits and gains derived from the export of such articles or things or from services for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which the Unit begins to manufacture or produce such articles or things or provide services as the case may be, and fifty per cent of such profits and gains for further five assessment years and thereafter: The word services have been defined in sub clause (z) of section 2 of SEZ Act, 2005. (z) "services" means such tradable services which : - (i) are covered under the General Agreement ....
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....nt Commissioner) as per sec. 2(j) of SEZ Act, 2005. (a) The unit has provided services (trading i.e. import for the purpose of re-export only) during the previous year relevant to assessment year under consideration. (b) Assessee firm has exported goods or services by filing bills of entry/shipping bill in physical mode. In view of the above, `if imported goods are exported by a unit duly approved of Development Commissioner of concerned SEZ. The assessee firm's entire purchases are import. The entire goods are exported to foreign country. Further the assessee firm also fulfills all other terms and conditions laid down in Section 10AA of the I.T. Act, 1961and as such deduction is claimed as per provisions of law and allowable as such..'' 3.3 The case of the assessee was taken up by the ld. CIT who passed the order u/s 263 of the Act by holding that the assessee is not entitled to claim deduction u/s 10AA of the Act on purely trading activity. The relevant extract of the observations of the ld. CIT is as under:- 4. I have considered the submission put forth by the Ld. A/R of the assessee and found that there are two issues which are to be dealt with. One is regarding leg....
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....ter of legislative convenience. This does not mean that one can provide for something which the legislature did not want to provide in Sec. 10AA of the IT Act. The legislature intended only to use the definition of 'manufacture' from the SEZ Act and not the definition of 'Service'. If it had intended to do so it would have said so for definition of 'service' also as it did for 'manufacture'. Since 'service' as defined in SEZ Act is not to be used for the purpose of section 10AA of the IT Act, therefore the definition of service as per Rule 76 of SEZ Rules 2006 can also not be used for the purpose of section 10AA. In this respect the following head note from the decision of CIT V/s Buhari Sons Pvt. Ltd. (Madras High Court) (1983) 144 ITR 12 is reproduced below, and relied on : "It is well established that in the absence of any definition in the statute, words occurring in a statute will have to be understood with reference to the objects of the Act and in the context in which they occur. Consequently, the definitions given for the words in one statute cannot automatically be imported for interpreting the same words in another statute. The interpretation of the expression "manufa....
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....wels Ltd. (ITA No. 509/P/11 order dated 31.01.2012) for A.Y. 2008-09. Though the decision of Hon'ble ITAT is blinding but since the ITAT is not the final authority to decide a legislative issue. Therefore, the decision of Hon'ble ITAT is yet to achieve finality. 4.3 Therefore, keeping in view the above facts & discussion it is clear that the assessee is not entitled to claim deduction u/s 10AA of the I. T. Act on purely trading activity. Hence, the matter is referred back to the file of the AO for examining the issue afresh in the light of above discussion after Offering reasonable opportunity of being heard to the assessee. 3.4 The ld. AR relied on the order of the AO while the ld. DR relied on the order of ld. CIT who passed the order u/s 263 of the Act. 3.5 We have heard the rival contentions and perused the assessment order and the ld. CIT's order u/s 263 of the Act. On perusal of order of the AO as well as submission filed before the AO during the assessment proceedings, it is clear that the AO has raised a specific query in relation to deduction claimed by the assessee u/s 10AA of the Act. In response, the assessee has filed the reply alongwith report u/s 10AA in....