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2019 (11) TMI 513 - AT - Income TaxDisallowance of deduction claimed u/s 10AA - importing diamonds for re-export - whether activity of the assessee comes within the expression ‘services’? - HELD THAT:- In the absence of definition of ‘services’ under Section 10AA of the Act, ‘services’ as defined under the SEZ Act and rules framed thereunder would be relevant. As discussed earlier, the definition of ‘services’ under the SEZ Act and rules framed thereunder encompasses trading activity also. Therefore, import of diamonds for re-export though, may be in the nature of a trading activity, but is certainly in the nature of ‘services’, hence would qualify for deduction under Section 10AA of the Act. In the case of Goenka Diamonds & Jewellers Ltd. [2017 (8) TMI 1405 - RAJASTHAN HIGH COURT] the Tribunal, after examining the provisions of Section 10AA of the Act vis-à-vis the SEZ Act and rules framed thereunder, had concluded that since the definition of ‘services’ under the SEZ Act also includes trading activity, the activity relating to import of diamonds for re-export would qualify for deduction under Section 10AA of the Act. The aforesaid decision of the Tribunal was upheld by the Hon’ble Rajasthan High Court while discussing a batch of appeals filed by the Revenue against the decision of the Tribunal. It is relevant to observe, in the aforesaid case also, the assessee had its unit in Surat SEZ. The other decisions cited by the learned AR also express similar view. Therefore, consistent with the view taken by the different Benches of the Tribunal, we are of the view that assessee is eligible to claim deduction under Section 10AA of the Act, since, the activity of import of diamonds for re-exporting comes within the nature of ‘services’ as provided under Section Section 10AA of the Act. We must observe that learned Commissioner (Appeals), while sustaining the disallowance of deduction claimed by the assessee under Section 10AA of the Act, has referred to the decision of the Hon’ble Supreme Court in the case of M/s. Dilip Kumar and Company & Ors. [2018 (7) TMI 1826 - SUPREME COURT] . However, the ratio laid down in the said decision rather supports the claim of the assessee, since, the assessee has fulfilled the basic conditions of Section 10AA of the Act and comes within the framework of the provision. As discussed earlier, the activity of the assessee comes within the expression ‘services’ as per Section 10AA of the Act, as per the definition of ‘services’ under the SEZ Act and rules framed thereunder. Therefore, in our considered opinion, reference to the decision in the case of M/s. Dilip Kumar and Company & Ors. (supra) would be of no help to the Revenue. In view of the aforesaid, we direct the Assessing Officer to allow assessee’s claim of deduction under Section 10AA - Decided in favour of assessee.
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