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2013 (3) TMI 705 - HC - Income Tax
Issues involved:
The judgment involves the following issues:
A. Granting exemption u/s.10AA of the Income Tax Act to the assessee regarding manufacturing jewelry in SEZ unit.
B. Granting exemption u/s.10AA based on separate assessments and the principle of res judicata.
C. Deleting the addition made on account of unexplained partners' capital.
Issue A: Granting exemption u/s.10AA for manufacturing jewelry in SEZ unit:
The Assessing Officer rejected the deduction claim of the assessee amounting to &8377; 3,87,83,095 in the return filed for the A.Y 2008-09, stating the inability to manufacture jewelry in the SEZ unit. The CIT [A] concurred with the Assessing Officer. However, the Tribunal allowed the claim of the assessee after detailed examination of purchase bills, plant, machinery, and other details. The Tribunal found no valid basis to doubt the purchase of machinery or the readiness of the unit for production. It concluded that the assessee's claim under Section 10AA was allowable, as per the facts and reasons presented.
Issue B: Granting exemption u/s.10AA based on separate assessments and res judicata:
The Tribunal noted that the grant of exemption in previous or subsequent years is not the sole ground for granting exemption u/s.10AA in the year under consideration. It found Question 'B' to be more argumentative and not raising any substantial question of law. Therefore, it rejected this question as it did not present any legal issue for further consideration.
Issue C: Deleting addition on account of unexplained partners' capital:
The Tribunal relied on the decision of the Court in the case of CIT v. Pankaj Dyestuff Industries, where it was held that the issue of unexplained partners' capital is covered. Consequently, the Tax Appeal was dismissed based on this precedent. The Tribunal emphasized that the firm is a separate entity and has to explain its sources of funds, indicating that the addition can be made only at the hands of the partner, not the firm itself.