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2016 (7) TMI 206 - ITAT KOLKATA

2016 (7) TMI 206 - ITAT KOLKATA - TMI - Claim of exemption u/s 10 A - profit attribution between SEZ and non SEZ unit - Held that:- Assessee never stated before the ld. AO that no exports were made to Afghanistan and Pakistan from its non SEZ unit, instead it had only stated that exports from SEZ unit were made to Afghanistan and Pakistan. We hold that doubting the veracity of the transactions on this flimsy ground is not warranted. We hold that the assessee indeed had indulged in manufacturing .....

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disallowed unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside. When there is no change in the facts which were in existence during the earlier years with that of a subsequent assessment year, then the Income Tax officer cannot withdraw the claim for exemption under section 10A of the Act for subsequent years. Therefore, it is not open to the department to deny the benefit of Section 10A for subsequent assessment years. - AO .....

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- TDS u/s 194C - Non deduction of tds on payment towards job work charges - addition u/s. 40(a)(ia) - Held that:- We find that the issue needs to be set aside to the file of the ld.AO to decide the issue afresh in the light of the decision rendered in Ansal Land Mark [2015 (9) TMI 79 - DELHI HIGH COURT ] wherein it was held that the second proviso to section 40(a)(ia) of the Act has been held to be retrospective in operation and accordingly no disallowance u/s 40(a)(ia) of the Act could be mad .....

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ganesh, AM & Shri S. S. Viswanethra Ravi, JM For The Appellant: Shri Soumitra Choudhury, Advocate For The Respondent: Shri Arindam Bhattacharya, JCIT ORDER Per Shri M. Balaganesh, AM: This appeal by assessee is arising out of order of CIT(A)-21, Kolkata vide appeal No. 465/CC-3(4)/CIT(A)-21/14-15 dated 17.02.2015. Assessment was framed by DCIT, Central Circle-XXV, Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2011-12 vide his order dated 05.02.2 .....

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ice bran oil, HDPE etc. The primary activities of the assessee was to export tea to the countries located in Asia, through it's units located in Coimbatore, Tamil Nadu, through it's various units including unit located in SEZ in Coimbatore . During the year under consideration, the assessee disclosed profit of ₹ 146,88,982/- from SEZ unit i.e. 10% Export Oriented unit located in MEPZ Special Economic Zone unit in Coimbatore, vide Green card No. 1257/MEPZ dated 23/08/2004 and claime .....

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of exemption u/s 10 A of the Act. This action of the ld. AO was upheld by the ld. CITA. Aggrieved, the assessee is in appeal before us on the following grounds :- 2. For that on the facts of the case, the Ld. C.I.T.(A) was wrong in dittoing the order of the A.O. and confirming the disallowance u/s. 10A of the Income Tax Act amounting to ₹ 73,44,491/- for its Special Economic Zone (SEZ) Unit which is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, the Ld .....

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ame SEZ Unit, therefore, the order passed by the Ld. CIT(A) is completely arbitrary, unjustified and illegal. 5. For that on the facts of the case, the Ld. C.I.T.(A) has arbitrarily acted in confirming the A.O.'s observation that the assessee did not carry out any activity of processing and manufacturing in its SEZ Unit at Coimbatore and the profit in the said unit has grossly been inflated or created to claim benefit of exemption u/s. 10A of the I. T. Act which is based on mere surmise and .....

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both the units and accordingly the assessee had only tried to inflate the profits in SEZ unit in order to get the maximum benefit of exemption u/s 10A of the Act. We find that the ld. AO having made this observation had not resorted to disturb the profits disclosed in the respective units by the assessee by shifting of expenses, income, allocation of common expenses etc by applying the provisions of section 80IA(8) and 80IA (10) of the Act as mandated in section 10A(7) of the Act. We hold that .....

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. We find that the ld. AO had categorically recorded in the assessment order that the assessee has made sales to the extent of ₹ 3,45,09,846/- in the SEZ unit comprising of 531593 Kgs . We find from the assessment order wherein the assessee had procured raw tea leaves from India and Vietnam and after blending and processing, it exported such manufactured / processed tea to Afghanistan and Pakistan from its SEZ unit. We also find from the details filed in the paper book (pages 54 to 200 of .....

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th its SEZ units and tea is excisable goods under the Central Excise Act, 1944, which is a Central Legislation. The company is registered with the Asst. Commissioner of Central Excise, Coimbatore II Division for Manufacturing of Excisable Goods. A copy of Registration Certificate bearing Nos. AACCA5668BXM001 dtd. 24.11.2004 and AACCA5668BXM002 dated 17.05.2004 issued in favour of the assessee was submitted before the Ld. AO. The other certifications and approvals secured by the company are as un .....

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er the Ministry of Commerce & Industry, Govt. of India, as EOU unit in the food/agro & allied sector [for FYs 2005-06 and 2006-07 - copy of the said certificates were enclosed before the Ld. AO. It may be mentioned that in a SEZ only manufacturing units are registered. (iv) Registration under the Trade Marks Registry which also incorporates the term manufacturers, the Trademark No. being 1468580 dated 10.7.06 issued on 4.3.08. Copy of the Certificate was enclosed before the Ld. AO. It is .....

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ny is assessed under the Central Excise Act, 1944. 2.2.2. Another reason for the ld. AO rejecting the claim of exemption u/s 10 A of the Act is that the assessee had debited only a sum of ₹ 29,21,000/- towards manufacturing expenses as below:- Item Amount (Rs.) i) Carriage inward - ii) Clearing & Forwarding expenses ₹ 844518/- iii) Detention charges Rs.152,485/- iv) Electricity Rs.17,998/- v) Freight including freight on import Rs.1101 ,708/- vi) Inspection charges & security .....

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r the purpose of manufacturing operations only and hence the assessee was engaged in manufacturing operations during the year under appeal. We find that the ld. AO had accepted the sales made from SEZ unit amounting to ₹ 3,45,09,846/- as sales. We find that the assessee had merely stated the exports from SEZ unit had been made to Afghanistan and Pakistan. From the details of sales filed, the ld. AO found that the assessee had also made exports to Afghanistan and Pakistan from its non SEZ u .....

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ar under appeal and had only continued the same from the earlier years. The previous year relevant to the Assessment Year 2011-12 is the seventh and the last year of availability of exemption u/s. 10A of the Act. The assessee's claim for exemption under section 10A of the Act had been always allowed by the assessing officer in the preceding financial years. It is a settled principle of law that a claim made under section 10A for a particular year cannot be disallowed unless relief granted fo .....

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decision of the Hon'ble Bombay High Court rendered in the case of CIT V. Western Outdoor Interactive (P.) Ltd reported in (2012) 349 ITR 309 (Bom). 2.2.3. We also find that the issue as to whether the blending and processing of tea amounts to manufacturing of tea has been settled in favour of the assessee by the Special Bench decision of this Kolkata Tribunal in the case of Madhu Jayanti International Ltd vs DCIT reported in 137 ITD 377 (Kol) (SB) wherein it was held :- 37. Accordingly, we .....

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mined and discussed the facts in the case of Madhu Jayanti International Ltd. and found that there is blending of tea and consequently the assessee is eligible for exemption u/s. 10B of the Act as prayed for. Their appeal for the AY 2004-05 is allowed. As regards other appeals and that of the interveners, the matters are restored back to the Division Bench, with directions to decide those appeals in the light of principle laid down herein, so far as the claim for relief u/s. 10A or 10B of the Ac .....

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254 / 143(3) of the act dated 14.1.2015 which are enclosed in pages 2 to 3 ; pages 7 to 8 and pages 12 to 13 of the Paper Book. We find that section 10A of the Act is a special incentive introduced by the legislature in order to promote exports and therefore, the same has to be construed liberally. It has been held by the Hon ble Supreme Court in the case of Bajaj Tempo Ltd vs CIT reported in (1992) 196 ITR 188 (SC) - A provision in a taxing statute granting incentives for promoting growth and d .....

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sallowance of claim of exemption u/s 10A of the Act which has been consistently claimed by the assessee over the years have been made by the ld. AO only on suspicion , surmise and conjecture and accordingly we have no hesitation to delete the same. Accordingly the grounds raised by the assessee vide ground nos. 2 to 5 are allowed. 3. The next ground to be decided in this appeal is as to whether the disallowance u/s 40(a)(ia) of the Act could be made in the sum of ₹ 5,22,000/- in the facts .....

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