TMI Blog2015 (6) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... erformed at Surat. Therefore, we find that apportionment of salary among the taxable and non-taxable unit is rightly done by the ld Assessing Officer and confirmed by the ld CIT(A). Accordingly, we uphold the order of the ld CIT(A). - Decided against assesse. - ITA No.645/JP/2012, CO No.54/JP/2012 - - - Dated:- 23-4-2015 - R P Tolani, JM And T R Meena, AM,JJ. For the Appellant : Mrs Rolee Agarwal, CIT For the Respondent : Shri G G Mundra, CA ORDER Per T R Meena, AM The appeal by revenue and cross objection by assessee arise from the order dated 25/04/2012 passed by the learned CIT(A)-I, Jaipur for A.Y. 2009-10. The ground of revenue's appeal and ground of the C.O. are as under:- Ground in Revenue Appeal. Whether on the facts and in the circumstances of the case and in law the learned CIT(A) is justified in allowing deduction of ₹ 25,37,14,968/- U/s 10AA of the I.T. Act, 1961 as condition laid down in the section 10AA of the I.T. Act, 1961 for claiming the deduction are not fulfilled. Ground in Assessee's C.O. That on the facts and in the circumstances of the case, the learned CIT(A) is wrong, unjust and has erred in law in uphol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction allowed in preceding years was not found convincing her to allow deduction U/s 10AA of the Act on importing the goods and reexporting the same. In the assessee's case, the ld CIT(A) had allowed 10AA deduction in A.Y. 2008-09 but which has been pending before the ITAT or higher forum of appeal, therefore, she disallowed the claim of the assessee. The assessee has debited various expenses in the P L account and had not segregated as per SEZ Unit and Mumbai Unit but it had been claimed wholly in the Mumbai Unit to inflate the profit in SEZ unit particularly remuneration to the Directors, therefore, she gave the another opportunity to apportion the expenditure between the units. The assessee submitted that Surat Unit was controlled by the employees and managers from Surat. However, policy decisions were taken by the Directors at the office of Mumbai but these submissions were also not found convincing to her. After considering the assessee's reply, she apportioned the Directors salary on the basis of turnover. Finally she made addition of ₹ 25,37,14,968/- in the income of the assessee. 3. Being aggrieved by the order of the Assessing Officer, the assessee ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve consecutive assessment years. The definition of manufacturing in Section 10AA has been assigned to it in clause (2) of SEZ Act, 2005, which includes polishing as manufacturing activity. The service word has been defined in SEZ Act, which also covered under the general agreement on trade in service. The Commerce Ministry vide Instruction No. 4/2006 has decided that while units in the Special Economic Zone, who hold approval to do trading activities will be allowed to carry out all forms of trading activity, the benefits U/s 10AA will exclude trading other than trading in the nature of reexport of imported goods. Section 51 of the SEZ Act reproduced as under:- Sec 51: The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. The ld AR further relied on the decision of Hon'ble Supreme Court in the case of Tax Recovery Officer Vs. Custodian Appointed under the Special Court (2007) 293 ITR 369 and the Hon'ble Supreme Court had interpreted this language that the law of the said Act will prevail over the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of honesty and good faith ? Why should the Government not be held to a high standard of rectangular rectitude while dealing with its citizens ? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations; but, let it be said to the eternal glory of this Court, this doctrine was emphatically negative and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppels and repudiate a promise made by it on the ground that such promise may fetter its future executive action. 2.19 Though vide Instruction no. 1/2006 dated 24-03-2006, it was clarified that trading units can be set up in the SEZ. However, the modification was made on 24-05-2006 in which it was made clear that the deduction u/s 10AA will be available in respect of the trading in the nature of reexport of imported good. Thus the assessees were promised that they will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully following the order of the Coordinate Bench in assessee's own case for A.T. 2008-09, we also uphold the order of the ld CIT(A). 6. Now we are coming on the C.O. of the assessee, which was against confirming the addition of remuneration of Director to the extent of ₹ 14,06,790/-. The assessee challenged this addition before the ld CIT(A), who had confirmed the addition by observing as under:- 4.3 I have carefully perused the order of the A.O. and submissions of the AR. And I do not concur with the submissions of the AR. It is perceived that the directors are also the promoters of the company and therefore the ultimate responsibility for the financial success of operations of all the units of the company rests with them and it is to this end that hefty salaries are being paid to them. Given the scale of the business operations of the company it is true that they may not have been employed with the day to day operations of a particular unit but they cannot abdicate responsibility for the overall planning supervision and execution of the business including the unit at Surat for which they were getting the remuneration. 7. Now the assessee is in C.O. before us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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