TaxTMI 
TaxTMI 
2022 (6) TMI 1162
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....IT(A) may be set aside and that of the AO be restored to the above extent. 3. The only issue raised by the Revenue is that the learned CIT-A erred in granting the exemption under section 10AA of the Act to the assessee which was denied by the AO during the assessment proceedings on account of various reasons. 4. The facts in brief are that the assessee in the present case is a partnership firm and engaged in the business of manufacturing and export of Gold & Diamond studded ornaments. The assessee came into existence with effect from 10th October, 2010. The factory of the assessee was located in SEZ Sachin, Surat and the approval/Letter of Permission for carrying out the manufacturing activity from the SEZ unit was granted by the competent authority dated 1st September, 2011. The assessee started its manufacturing activity of gold and diamonds studded ornaments effective from 25th February, 2012. The assessee for the year under consideration has filed the return of income declaring income of Rs. Nil after claiming the exemption of Rs. 2,63,41,547/- under section 10A of the Act dated 13th September, 2013 which was supported by form 56F duly signed by the auditor. The assessee, acc....
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....ion u/s 10AA of the Act in pursuance to the provisions of section 80A(5) of the Act. 4.6 The AO on perusal of the ITR Form-5 of AY 2015-16 observed that the assessee for the AY 2015-16 had claimed the deduction amounting to Rs. 5,68,63,487/- u/s 10A as well as u/s 10AA and claimed refund of Rs. 1,05,00,000/- paid as advance tax. 4.7 The assessee has also not selected/specified the date in ITR form where it has been asked that "if liable to furnish the audit report u/s 115JC of the Act mentioned the date of furnishing the audit report". Therefore the contention of the assessee that the calculation of tax under the provisions of section 115JC was not made due to software system error was rejected by the AO on the reasoning that the assessee has specified the deduction amount under the column of section 10AA for the A.Y. 2015-16 still the tax was not computed in pursuance to the provisions of section 115JC of the Act. 4.8 The AO thus was of the view that the assessee in order to avoid the payment of tax under the provisions of section 115JC i.e. Alternate Minimum Tax (AMT) of the Act claimed the exemption u/s 10A of the Act. The assesse with mala fide intention claimed the deductio....
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....t and 721.240 respectively. The assessee had purchase the uncut polished diamonds in small quantity comparatively from cut polished diamonds. As such uncut polished diamonds is subject to further processing however such processing activity is not covered under the manufacturing activity. In addition, the further process like cutting and polishing such uncut diamonds require special blades, laser equipment and 3D computer analyzing whilst the assessee had no such type of tool which proves that it engaged in the processing activities. v. The conditions as specified under section 10AA of the Act that the manufacturing unit of assessee that should not be formed by purchasing the old plant and machinery which have been used previously, have not been satisfied by the assessee for the reason that it has purchased HP scanner and printer of Rs. 13,000 from its sister concern namely CVM & Co. which is not into the business of computer and ancillary items. vi. The assessee had not obtained the report in form 29C from an accountant who certifies that the Adjusted Total Turnover and Alternate Minimum Tax was in accordance to the provision of section 115JC of the Act and furnished the report....
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.... jewellery and started the manufacturing activity from 25th, February, 2012. b- The unit was approved by the Commissioner of SEZ as manufacturer of gold jewellery. Likewise, the assessee in the VAT registration was categorized as the manufacturer of the gold ornaments & Studded jewellery manufacturing unit. There was no doubt raised either by the commissioner of SEZ/GVAT authorities with respect to the manufacturing activities carried out by the assessee. c- It has entered into an agreement on stamp paper of Rs. 100/- with its sister concern namely Chokshi Vachhraj Makanji & Company to purchase the raw material "Gold Ornaments Components" which is manufactured according to the design specified by the importer of the gold/jewellery items and make it Studded Gold Ornaments. The assessee in support of its claim has furnished the copy of the invoice and the agreement. d- The labour charges paid to artisans were supported by the labour charges voucher and gate passes issued by the SEZ authority. e- The manufacturing activity in the SEZ was subject to inspection by SEZ authorities and therefore the manufacturing activity register along with annual returns filed before the SEZ aut....
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....ssessee was not required to pay the taxes, had it been intending to claim the deduction u/s 10A of the Income Tax Act. iv- The assessee cannot be deprived to enjoy the beneficial section merely it makes some technical error during the filing of the return of income. v- The assessee can also not to be refrained to claim the deduction u/s 10AA of the Act, merely failed to furnish the report in Form-56F/29C along with return of income. Furnishing of the said form along with return of income is merely directory in nature and used to test the allowability of claim made under section 10A/10AA of the Act. Moreover, the AO also not demanded the respective form/ reports before rejecting the claim of the assessee. vi- Scanner and Printer has not made any significance as it has merely used as plant and machinery in the manufacturing activity of jewellery. 7. Being aggrieved by the order of the Ld. CIT-A the Revenue is in appeal before us. 8. The learned DR before us contended that the assessee is not carrying out any manufacturing and therefore the benefit of deduction under section 10AA of the Act. Likewise, the assessee has never claimed the deduction under section 10AA of the Act i....
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....able for claiming the deduction under section 10A of the Act. However, we find that at that point of time when the assessee was claiming the exemption under section 10AA of the Act, there was no form prescribed by the CBDT. Thus in the absence of any specific form prescribed by the CBDT, the assessee has opted to use form 56F for claiming the exemption. To our understanding, it was an inadvertent mistake and therefore the assessee cannot be deprived from the benefit available under the provisions of law. 11.3 Furthermore, the assessee has made the claim for the exemption under section 10AA of the Act before the issuance of show cause notice by the Income Tax Department with respect to the deduction claimed under section 10A of the Act. Thus, the revised claim by the assessee was made before detection of the same by the AO. 11.4 We also find that the Hon'ble Rajasthan High Court in the case of CIT versus Rajasthan fasteners Ltd reported in 43 taxmann.com 175 has held as under: "When facts and circumstances reveal that the assessee was eligible even this year for exemption under section 10B and it has been found to be in order except that instead of mentioning exemption under sec....
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....iew that the assessee is entitled to benefit u/s 10AA of the Act though it wrongly claim the deduction u/s 10A of the Act at the time of filing the return of Income. 11.6 Another issue came before us is that whether the assessee is engaged in the manufacturing activity or not. As such to claim the deduction u/s 10AA of the Act one of the prerequisite condition is that the assessee manufactures goods/produce article or things. Regarding this we referred the cl. (iii) of Explanation 1 to the provisions of section 10AA of the Act which is as under; "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 222 of the Special Economic Zones Act, 2005, from his Unit, who begins to manufacture or produce articles or things or provide any services22a during the previous year relevant to any assessment year commencing on or after the 1st day of 23[April, 2006, but before the first day of April, 2021, the following deduction shall be allowed]- ==================" Explanation 1.-For the purposes of this section,- ======= ====== (iii)"manufacture" shall have the same meaning as ....