2020 (3) TMI 1163

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....o appreciate the fact that in Form 56F the deduction was claimed in the name of proprietary concern whereas the business was taken over by the partnership firm, for which no fresh approval had been obtained. 3. The appellant prays that the order of the CIT (Appeals) on the above grounds be set aside and that of AO be restored. 3. Brief facts of the case are being discussed hereunder with reference to facts and figures for A.Y. 2013-14, since facts for both years are identical. The disallowance u/s. 10AA in this regard was made by the Assessing Officer by holding as under :- In the computation of Income, the assessee had shown Gross total income of Rs. 2,08,63,034/- which entire amount was claimed as deduction u/s. 10A, resulting in total income shown at Rs. Nil. Vide questionnaire submitted to AR on 01.12.2015 the query was raised to assessee in respect of the deduction claimed. In response, the AR in his letter dtd. 18.01.2015 submitted details of various other queries, however no details or explanation was submitted in respect of deduction claimed. Incidentally, in response to other query requiring to submit copy of all Partnership Deeds since beginn....

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....f SEZ in place given to two different manufacturing units of Mr. Albert Kallati in his individual capacity. In name of Kallati Jewels vide letter dtd. 18.10.2004 for setting up unit in Gala No. 186/C, which unit commenced production activities w.e.f 01.08.2005 and the LOA is valid till 31.03.2015 & in the name of Lorey Jewel vide letter dtd. 04.01.2010 for setting up unit in Gala No. 186/B, which unit commenced production activities w.e.f. 28.09.2011 and the LOA is valid till 27.09.2016. Mr. Albert Kallati was carrying on the manufacturing activity from above two nearby locations. Earlier in one proprietary concern M/s. Kallati Jewels, and thereafter in two different proprietary concerns. It is interesting to note that in Form 56F the Auditors have given Report u/s. 10A, stating that they have examined the accounts and records of Albert Kallati, and the Annexures A to said report gives details relating to claim of deduction in name of Lorey Jewel for AY 2013-14 at Rs. 2,08,63,034/-. The name and PAN mentioned is that of Mr. Albert Kallati, whereas the deduction of Rs. 2,08,63,034/- is as claimed by assessee firm. It appears that the Auditors do not recognize any difference....

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....uthorities; vi) Even the auditors in Form 56F have not differentiated between the proprietary concern and the partnership firm as the auditors has mentioned the name and PAN of the proprietor Mr. Albert Kallati, which is unacceptable as both are separate legal entities; vii) Details of export proceeds received in convertible foreign currency is not submitted either in Form 56F or in course of assessment proceedings, even though specifically called for, the deduction u/s. l0AA of the Act cannot be allowed. 5. Thereafter learned CIT(A) noted that the deduction of section 10AA is unit specific and it is not dependent upon the ownership. For this proposition he placed reliance upon several case laws learned CIT(A) held as under :- 4.9. I have gone through the provisions of section 10AA of the Act. As per the provisions of section 10AA of the Act and more particularly sub-clause (i) to subsection (1) of Section 10AA of the Act, the deduction is allowed of the 100% of profits derived from the export for a period of 5 consecutive assessment years beginning with the assessment year relevant to the previous year in which the UNIT begins to manufacture or produce & 50....

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....t has relied upon decisions in their submissions, which in my view directly covers the issue at hand. The Hon'ble Allahabad HC in the case of CIT v. Bullet International (2012) 349 ITR 267 (All) dealt with the same issue arising in the present case of the appellant. In that case also, there was change in constitution from proprietary concern to partnership firm and the issue arose whether the partnership firm is entitled to deduction u/s.l0A of the Act. The High Court relied upon the circular issued by CBDT and allowed the claim of deduction u/s.l0A of the Act. Similarly, the decision relied upon in the case of Samsung India Software Operations P. Ltd v. ACIT (Bang) ITAT- unreported (copy filed in Paper book), wherein the facts were that deduction u/s.l0A of the Act was sought to be claimed in respect of the undertaking purchased via slump sale. The argument placed in that case was that the deduction is undertaking (unit) specific and the same could not be denied on the ground that the undertaking (unit) has a new owner. The ITAT therein relied upon earlier decisions of the ITAT on the same issue and held that a mere organizational change was not a ground for the AO to hold tha....