2022 (6) TMI 797 - Income Tax

Head Note / Extract:
Disallowance of exemption u/s.10AA - assessee did not have adequate and sufficient fixed assets, manpower and power/ fuel to carry out any manufacturing or processing activity to the extent shown by the assessee - CIT-A deleted the disallowance - whether CIT(A) is not justified in holding that provisions of the SEZ Act have overriding effect over provision of section 10AA of the Income-tax Act? - HELD THAT:-From the above findings of CIT(A) it is vivid that provisions provided under the SEZ Act overrides the provisions of section 10AA of the Act and the SEZ Rules includes trading to be services - DR pointed out that SEZ Rules can not override the provisions of section 10AA of the Income Tax Act, as these SEZ Rules do not have mandatory force as that of main provisions of the Act. He further pointed out that Rules can not override the main provisions of the Act. Even SEZ Rules cannot override the main provisions of the SEZ Act.Therefore, ld DR prays the Bench that matter may be remitted back to the file of the assessing officer to examine the facts of the assessee`s case in the light of main provisions of SEZ Act and Income Tax Act. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly. Therefore, we set aside the order of ld CIT(A) and remit this issue back to the file of the assessing officer to examine the conditions of section 10AA of the Act and SEZ Act and adjudicate the issue afresh in accordance with law. Therefore, statistical purposes, the appeal of the Revenue is treated to be allowed.