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2017 (1) TMI 1055 - AT - Income TaxDisallowance of deduction claimed u/s 10AA in respect of trading, warehousing and consultancy income - Whether the provisions of Income Tax Act 1961 will prevail over the provisions of The Special Economic Zones Act, 2005? - Held that:- Service includes trading activity if it related to the import of the goods for the purpose of the export. The provisions as specified under The Special Economic Zones Act, 2005 would have overriding effect on the Income Tax Act. Denial of exemption in respect of warehousing and consultancy services - Held that:- The assessee has raised the bill for the warehousing charges and the payment was also received for the same. The FIRC is also placed in support of the payment. Indeed the assessee has recorded the transaction as purchase and purchase return along with quantitative details of the goods in the books of accounts. Now the question arises whether the accounting entries can change the substance of the transaction. Indeed the assessee has raised the invoice for the warehousing and handling charges as evident from the invoice placed on page 29 of the paper book. The lower authorities have not brought any defect in the bill, payment of the bill and the FIRC in support of the payment. Hence in our considered view the accounting entries cannot form the basis for denying the exemptions on account of warehousing charges to the assessee under section 10AA of the Act. Similarly the exemption was denied on the consultancy charges due to non-production of the necessary details. However the assessee has produced the bills along with FIRC before the ld. CIT(A) on which remand report was also called for which are placed on the record and no defect has been reported by the learned DR regarding this. In view of above we’re inclined to reverse the order of lower authorities. Hence this ground of appeal of the assessee is allowed.
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