TaxTMI 
TaxTMI 
2026 (1) TMI 446
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....able as Deduction in Schedule BP ii. Double Taxation Relief u/s 90/91 iii. Exemption for Undertakings in FTZ/SEZ (Section 10A, 10AA) iv. Refund Claim v. Ind-AS Compliance and Adjustment vi. Deduction Claimed for Industrial Undertaking u/s 80IA/80IAB/80IAC/IB/IC/IBA/80ID/80IE/10A/10AA vii. Expenses Incurred for Earning Exempt Income 3. Accordingly, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee in response to which the assessee filed the requisite details. 4. During the course of assessment proceedings the Assessing Officer noted that the assessee has claimed deduction of Rs. 117,97,18,768/- u/s 10AA of the Act. In support of the said claim u/s 10AA the assessee filed Form 56F and the income computation statement in respect of each SEZ undertaking. The assessee also furnished the breakup of income eligible from various SEZ undertakings. However, the Assessing Officer noted that the amount eligible for deduction u/s 10AA of the Act as per Form 56F filed by the assessee is only Rs. 114,00,51,308/-. He, therefore, asked the assessee to reconcile the deduction u/s 10AA of the Act. The assessee submitted....
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....(va) r.w.s. 2(24)(x) of the Act. 8. Before the Ld. CIT(A) / NFAC, the assessee apart from challenging other things, challenged the order of the Assessing Officer in considering the starting point of the tax computation from the income determined u/s 143(1) instead of the returned income. The assessee also challenged the order of the Assessing Officer in not considering the submission in respect of deduction u/s 10AA of the Act to the extent of Rs. 17,72,231/-. Further it was argued that the disallowance, if any, made u/s 36(1)(va) of the Act to the extent of Rs. 2,18,89,134/- should be eligible for deduction u/s 10AA of the Act. 9. However, the Ld. CIT(A) / NFAC was not satisfied with the arguments advanced by the assessee. So far as the disallowance of deduction u/s 10AA of the Act to the extent of Rs. 17,72,231/- is concerned, he upheld the same by observing as under: 6.3.2 It is seen from the assessment order, the assessee has claimed deduction of Rs. 117,97,18,768/- under Section 10AA of the IT Act. In support of the said claim u/s 10AA, the assessee has filed Forms 56F and the Income Computation Statement in respect of each SEZ undertaking. The amount eligible f....
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....re the Tribunal by raising the following grounds: General 1. The learned AO NFAC and CIT(A) NFAC erred in law and on facts in assessing the Total Income of the Appellant at Rs. 102,59,65,115/- instead of the Returned Income of Rs. 95,13,15,400/-. Incorrect taxation of exempt dividend income 2. The learned AO NFAC and learned CIT(A) NFAC erred in considering the Starting Point of the Tax Computation as "Total Income" determined vide intimation u/s 143(1)(a), instead of "Returned Income" as per 139(1) return. Learned I-T authorities ought to have considered that due to erroneous assumption of starting point of computation of Total income, exempt dividend income of Rs. 4,99,02,049/- has been taxed, which is contrary to express provisions of ITA, 1961. 3. On the facts and in the circumstances of this case the learned AO NFAC and learned CIT(A) NFAC erred in treating the Exempt Dividend Income u/s 10(35) of ITA 1961 amounting to Rs. 4,99,02,049/- as a taxable income Deduction u/s 10AA 4. Appellant contends that, Appellant is entitled to claim deduction u/s 10AA of ITA 1961 to the extent of Rs. 17,72,231/- on analogy of non-r....
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....e computation of income. However, in the tax return the same remained to be disclosed as exempt income. The CPC made addition of the same in the intimation issued u/s 143(1) of the Act. The assessee filed objections before the CPC against the proposed addition which was dismissed by the CPC. 15. Before the Ld. CIT(A) / NFAC the assessee made detailed submissions stating that the exempt dividend ought not to be taxed. However, the Ld. CIT(A) / NFAC dismissed the ground by observing that a separate remedy of appeal is provided against addition u/s 143(1). He further observed that 143(1) intimation merges into 143(3) order. Aggrieved with such order, the assessee is in appeal before the Tribunal. 16. The Ld. Counsel for the assessee submitted that once such merger has taken place, the issue of error in reporting of exempt dividend in the return of income leading to incorrect taxation of exempt dividend ought to have been appreciated by the Ld. CIT(A) / NFAC. Further it is also his submission that the Ld. CIT(A) / NFAC should have decided the issue on merit. 17. Referring to the decision of Hon'ble Supreme Court in the case of CIT vs. Gujarat Electricity Board reported in (200....
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....ppeal against the intimation u/s 143(1) issued by the CPC. Since the issue has not been verified by the Ld. CIT(A)/NFAC, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law. Needless to say the Ld. CIT(A) / NFAC shall give due opportunity of being heard to the assessee. The grounds of appeal No.2 and 3 raised by the assessee are accordingly allowed for statistical purposes. 21. Ground of appeal No.4 relates to the claim of deduction of Rs. 17,72,231/- u/s 10AA of the Act. 22. Facts of the case, in brief, are that the Assessing Officer, on the basis of submissions made by the assessee, disallowed a part of the deduction claimed u/s 10AA of the Act on the ground that Forex proceeds were not received into India within the prescribed time period. The said disallowance was based on Form 56F issued by the assessee's CA. In the said Form 56F the assessee is required to state total exports vis-à-vis total foreign exchange earnings. Th....
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.... 10AA of the Act to the extent of Rs. 17,72,231/-. We find in appeal the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that there is no condition applicable for assessment year 2018-19 to bring foreign exchange into India on account of exports proceeds and therefore, the assessee cannot be deprived of the benefit of deduction granted u/s 10AA of the Act merely on the reasoning that the assessee did not receive convertible foreign exchange on deemed exports. 27. We find some force in the above arguments of the Ld. Counsel for the assessee. We find the Ahmedabad Bench of the Tribunal in the case of ACIT vs. Vishnu Export (supra) while dealing with an identical issue has held that the Finance Bill 2023 proposes to specify the time limit for brining consideration against exports proceeds into India for claiming the benefit of the deduction u/s 10AA of the Act which is effective from 01.04.2024. Accordingly it was held that there was no condition applicable for the year under consideration to bring foreign exchange in India on account....
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....ures Steel Ltd. (supra), which has been affirmed by the Supreme Court. In view of aforesaid enunciation of law, it is evident that the appellant is entitled to benefit of deduction under section 10B of the Act in respect of export made to third parties and inter unit transfers. 10.15 The above reasoning is further strengthened by the Finance Bill 2023 wherein it was proposed to specify the time limit for bringing consideration against exports proceeds into India for claiming the benefit of the deduction under section 10AA of the Act which is effective from 1 April 2024 for the assessment year 2024- 25. The relevant extract of the amendment is reproduced as under: 6. In section 10AA of the Income-tax Act, with effect from the 1st day of April, 2024,-- (a) ***** (b) after sub-section (4), the following shall be inserted, namely:-- '(4A) This section applies to a Unit, if the proceeds from sale of goods or provision of services is received in, or brought into, India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may al....
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....et aside the order of the Ld. CIT(A) / NFAC on this issue and direct the Assessing Officer to allow the deduction u/s 10AA of the Act. The grounds of appeal raised by the assessee on this issue are accordingly allowed. 29. Grounds of appeal No.7 and 8 relate to the order of the Ld. CIT(A) / NFAC in not enhancing the deduction u/s 10AA pro-rata on account of disallowance made on account of employees' contribution to PF and ESI. 30. After hearing both sides, we find the Assessing Officer in the body of the order disallowed an amount of Rs. 2,29,75,441/- being the delayed payment of employees' contribution to PF and ESI. We find the assessee took a ground before the Ld. CIT(A) / NFAC that in case the disallowance of employees' contribution to PF and ESI is sustained then the assessee should be allowed to get enhanced deduction u/s 10AA of the Act. However, a perusal of the order of the Ld. CIT(A) / NFAC shows that he has not adjudicated this issue. 31. The Ld. Counsel for the assessee submitted that the issue stands decided in favour of the assessee by the decision of the Hon'ble Bombay High Court in the case of CIT vs. Gem Plus Jewellery India Ltd. Reported in (2011) 330 ITR....