TaxTMI 
TaxTMI 
2017 (2) TMI 109
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....of the Act vide order dated 27.11.2013; wherein the assessee's income was determined at Rs. 4,83,19,020/- in view of the following disallowances/treatment of an item of income: - '(i) Disallowance of deduction under section 10AA Rs. 3,61,19,032/- (ii) Treatment of interest on FDs as 'income from other sources' Rs. 1,23,10,695/- 2.2 Aggrieved by the order of assessment dated 27.11.2013 for A.Y. 2011- 12, the assessee preferred an appeal before the CIT(A)-29, Mumbai. The learned CIT(A) disposed off the appeal vide the impugned order dated 12.01.2015 allowing the assessee partial relief by (i) allowing the assessee's claim for deduction under section 10AA of the Act, and (ii) by upholding the AO's action in treating interest on FDs as being exigible to tax as 'income from other sources'. 3. Both Revenue and the assessee, being aggrieved by the impugned order of the CIT(A)-29, Mumbai for A.Y. 2011-12 dated 12.01.2015, have preferred cross appeals in respect of the issues held against them in the aforesaid impugned order. Their appeals will be disposed off in seriatum hereunder: - 4. Revenue's appeal in ITA No. 2024/Mum/2015 for A.Y. 2011-12 4.1 In this appeal Revenue ....
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....oordinate Bench of the Tribunal in the case of; (i) Geetanjali Exports Corporation Ltd. & Others in ITA No. 6947/Mum/2011 dated 08.05.2013, following the decision of the ITAT, Jaipur Bench in the case of Goenka Diamonds and Jewellers Ltd. in ITA No. 509/JA/2011 dated 31.01.2012; have allowed the assessee's claim in those cases for deduction under section 10AA of the Act. It is prayed that in view of the above factual position of the case on hand and the judicial pronouncements cited (supra) which are on identical facts, the learned CIT(A)'s order allowing the assessee's claim for deduction under section 10AA of the Act following the aforesaid decisions of the ITAT (supra) be upheld and Revenue's grounds/appeal be rejected. 4.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited (supra). On an appreciation of the material on record, it is seen that in the course of assessment proceedings, while examining the assessee's trading activities in connection with its claim for deduction under section 10AA of the Act, the AO observed that assessee had merely imported diamonds from Dubai and the same ....
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...., Unit No.374, situated in Surat SEZ areas because he was not agreeable with the arguments of the appellant that trading activity carried out by the appellant are red by service. The Assessing Officer was of the view that such exemption ct is available only on manufacturing activity and not on trading of goods. He has relied upon the decision of Delhi High Court and Supreme Court to understand the meaning of the word 'service' because the service has not been denied in the Income-tax Act. After considering the entire facts and case laws as well as circular relied by the appellant I find merit in the claim of the appellant because it is very clear from Circular 17 of 29.05.2006 issued by the. Export Promotion Council For EOUs & SEZ Unit (Ministry of Commerce & Industry, Government of India) para 2 of which reads as under :- "In the meantime, sourcing from domestic area may be permitted by units in the SEZs which are allowed to do trading subject to this circular being cited on prescription of an undertaking by the concerned unit that no Income-tax benefit will be availed by the Unit for trading except in the nature of re-export of imported goods". 2.3 The appellant has....
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....IT(A) has taken into consideration these observation of the AO and thereafter he found that the Government of India has issues a circular No.17 of 29.5-2006, which was issued by Export Promotion Council For EOUs & SEZ Unit (Ministry of Commerce & Industry, Government of India). The contents of the Circular have also been incorporated in the finding of the learned CIT(A), which have also been reproduced somewhere above in this order. Therefore, we are not repeating the contents of that circular issued by the Ministry of Commerce & Industry, Government of India). Under Section 51(1) of the SEZ Act, it has been clearly provided that the provision of this Act has overriding effect in case of contradiction between the SEZ Act and other Act. Hence, by virtue of Section 51 of the SEZ Act, the provision of SEZ Act and rules will have overriding effect over the provision contained in any other Act. Learned CIT(A) has taken into consideration this circular issued by Government of India and the provision of Section 51 of the SEZ Act and found that trading done by the assessee is a service and, therefore, deduction under Section 10AA is allowable. We further noted that on similar facts in case....
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....3 In view of the factual and legal matrix of the case as discussed above and following the decision of the Coordinate Bench of the Tribunal in the case of Geetanjali Exports Corporation Ltd. (supra), we are of the considered opinion and hold that the assessee in the case on hand is eligible for deduction of its income earned from trading exports of diamonds under section 10AA of the Act and therefore uphold the finding of the learned CIT(A) on this issue in the impugned order. Before us, the learned D.R. was not able to contravene the decision of the learned CIT(A) in the impugned order on this issue. Consequently the grounds raised by Revenue are dismissed. 5. In the result, Revenue's appeal for A.Y. 2011-12 is dismissed. 6. Assessee's appeal in ITA No. 1650/Mum/2015 for A.Y. 2011-12 6.1 In this appeal, the assessee has raised the following grounds: - "1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in law treating the income from Fixed Deposit as income from other source where in the nexus of business transaction was already proved. 2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in law in h....
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....learned D.R. supported the finding of the authorities below that the income earned on the aforesaid FD constitutes income from other sources and since it was not part of the assessee's business income, would not be entitled for deduction under section 10AA of the Act. 7.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncement cited. The facts on record indicate that the assessee in the course of its business of import/export trading in diamonds earned interest income from FDs kept in Bank as per instructions of Bank by way of margin money for the purpose of assessee's business and the assessee considering the same as business receipts/income, claimed deduction thereon under section 10AA of the Act. Revenue, however, treated the same as 'income from other sources' and thereby disallowed the assessee's claim thereon for deduction under section 10AA of the Act. 7.3.2 Before us, the learned A.R. has submitted that the said FDs with Banks were not made out of it excess funds or with the intention of earning interest income, but out of business funds. As per the details filed before us (placed at page 75 o....
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....-2009) and others dated 31.1.2014, Ld Counsel for the assessee mentioned that the said decision is relevant for the proposition that, under the identical factual matrix, the receipts were treated as "business receipts‟ and declared as eligible for deduction u/s 80IA of the Act. In this regard, he brought our attention to the relevant paras 14 to 16 of the said Tribunal's order (supra). Further, bringing our attention to other decisions of the Tribunal, Ld Counsel for the assessee mentioned that they relate to prior to the amendment to section 10A(4) of the Act. He also relied on the Judgment of the Apex Court in the case of CIT vs. Karnal Cooperative Sugar Mills Ltd 243 ITR 2 (SC) and the judgment of the Bombay High court in the case of CIT vs. Indo Swiss Jewells Ltd 284 ITR 389 (Bom) and also on various precedents of the Hon'ble Supreme Court as well as various High Courts, copies of which are placed in voluminous paper book, and submitted that the said judgments were relied upon by the Tribunal in adjudicating the issue in favour of the assessee in the said case dated 31.1.2014 (supra). 5. After hearing both the parties and on perusal of the said order of the Tribunal....