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Intercraft Engineering Pvt. Ltd. Versus Commissioner of Income Tax, Kolkata- III, Kolkata

2016 (3) TMI 748 - ITAT KOLKATA

Revision u/s 263 - excessive deduction provided to the assessee u/s 10AA - Held that:- The total turnover/ export turnover and profit arising from the undertaking located at SEZ shall alone be considered for the working of the deduction under section 10AA(7) of the Act. The total turnover of the assessee shall not be taken into account while working out the deduction under section 10AA of the Act.

Thus it is amply clear that the assessee has correctly claimed the deduction under sect .....

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Accountant Member:- This appeal by the assessee is arising out of order of Commissioner of Income Tax, Kolkata-III in appeal No. CIT-III/DC(Ha)-3/Kol/281/u/s263/2013- 14/7264-66 dated 27.03.2014. Assessment was framed by ITO, Ward-8(2), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 28.12.2011 for assessment year 2009-10. Assessee raised the following grounds:- 1.0 Deduction under section 10AA of the Income tax Act, 1961 1.1 The learned .....

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e erred in appreciating that a proviso to the sub-section (7) was also inserted by the Finance Act, 2010, w.e.f. April 01, 2010 which state that the provisions of sub-section (7) [as amended ……] shall have effect for the assessment year beginning on April 01,2006 and subsequent assessment years.. 1.4 The appellant submits that the order passed by the learned commissioner of Income Tax under section 263 of the Income Tax Act, 1961 is erroneous and therefore ought to be quashed. 2. T .....

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(SEZ for short) and Domestic Tariff Area (DTA). Assessee s SEZ unit is located at 152, NSEZ, Phase-2, Noida-201305. The necessary details of the turnover of assessee are given below:- 1. Total turnover of assessee (including SEZ & DTA Units) Rs.14,38,79,959/- 2. Net profit of the assessee (including SEZ & DTA unit) ₹ 64,13,322/- 3. Total turnover of the SEZ unit ₹ 5,29,63,726/- 4. Export turnover of the SEZ unit ₹ 5,20,30,426/- 5. Total profit SEZ ₹ 22,27,285/- T .....

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143(3) of the Act has accepted the claim of the assessee under section 10AA in respect of its unit located at SEZ, Noida. However Ld. CIT found the order of AO is erroneous in so far as it is prejudicial to the interest of Revenue by observing that the assessee has claimed the excessive deduction u/s 10AA of the Act and worked out the deduction as under:- Total profit of SEZ X export turnover of SEZ = Rs.8,05,512/- Total turnover of SEZ As per the calculation of Ld. CIT the assessee has claimed .....

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im of assessee by observing as under that : 1) The AO has failed to interpret the provisions of section 10AA of the Act. 2) The ld. CIT also opined that the amended provisions of section 10AA of the Act are not applicable to the assessee for the current year. Therefore the ld. CIT held that the order passed by AO is erroneous in so far as it is prejudicial to the interest of revenue. Hence, matter was restored back to the file of AO for fresh adjudication after necessary verification of the fact .....

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ubmitted that the total turnover/ export turnover and profit arising from the undertaking located at SEZ shall alone be considered for the working of the deduction under section 10AA(7) of the Act. The total turnover of the assessee shall not be taken into account while working out the deduction under section 10AA of the Act. The assessee also submitted that the provisions of section 10AA are also applicable to the assessee for the year under consideration as amended provisions are effective fro .....

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icial to the interest of revenue. It is because that the assessee has claimed excessive deduction under section 10AA of the Act by an amount of ₹ 13,82,723.00 and AO has not verified this fact at the time of assessment under section 143(3) of the Act. Therefore the ld. CIT held the order erroneous in so far prejudicial to the interest of Revenue. Now to arrive at the correct conclusion of the case, we deem it necessary to reproduce the relevant provisions of section 263 of the Act. (1) The .....

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or cancelling the assessment and directing a fresh assessment…. The sum and substance of the above reproduced section 263(1) can be summarized in the following points:-: 1) The commissioner may call for an examine the record of any proceeding under the Act; 2) If he considers that the order passed by the AO is (i) Erroneous; and (ii) Is prejudicial to the interest of Revenue; 3) He has to give an opportunity of hearing in this respect to the assessee; and 4) He has to make or cause to ma .....

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of section 10AA(7) of the Act which reads as under : (7) For the purpose of sub-section (1), the profits derived from the export of articles or things or services (including computer software) shall be the amount which bears to the profits of the business of the undertaking, being the Unit, the same proportion as the export turnover in respect of such articles or things or services bears to the total turnover of the business carried don [by the undertaking] [Provided that the provisions of this .....

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