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TMI Blog2018 (5) TMI 1829X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 would have overriding effect on the Income Tax Act because Special Economic Zone Act, 2005 is a Special Act and a later Act of the Parliament. Moreover, we note that assessee’s claim u/s. 10AA was upheld by the Ld. CIT(A) for AY 2008-09, which order has been upheld by the Tribunal for the AY 2008-09 vide order dated 13/11/2013. We allow the claim of assessee in respect to its income from trading activity. Denial of exemption in respect of warehousing - Held that:- The assessee has received ₹ 23,06,539/- as warehouse charges from M/s. Gallaher Ltd. of UK. For corroborating this fact, the assessee has produced FIRC, ledgers, invoices for consultancy and warehousing charges which are placed on pages 28-43 of the paper book. On perusal of the records including the remand report of AO we note that the AO disallowed the exemption on warehousing charges by observing that the assessee initially had shown the import of the goods as purchases and thereafter showed it as purchase return. According to AO, on such transaction of purchase, and thereafter purchase return the assessee has shown warehouse income for ₹ 23,06,539/-. As per the AO, the assessee cannot earn wareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and AO and allow the appeal of the assessee. Ground of appeal of the assessee is allowed. - I.T.A. No. 2666/Kol/2013 - - - Dated:- 25-5-2018 - Shri A. T. Varkey, JM Shri M. Balaganesh, AM For the Appellant : Shri Subash Agarwal, Advocate For the Respondent : Shri Saurabh Kumar, Addl. CIT, Sr. DR ORDER Per Shri A.T.Varkey, JM The appeal filed by the assessee is against the order of Ld. CIT(A)-XXIV, Kolkata dated 28.10.2013 for AY 2009-10. 2. The sole issue involved in this appeal of assessee is against the order of Ld. CIT(A) in confirming the action of AO by disallowing the deduction claimed u/s. 10AA of the Income-tax Act, 1961 (hereinafter referred to as the Act ) in respect of trading, warehousing and consultancy income. 3. Briefly stated fact are that assessee is a Private Limited Company and engaged in the business of import and export of tobacco products, C F agent, trading of all types of FMCG products alcoholic and non-alcoholic beverages. The assessee, for the year under consideration has filed its return of income dated 11.02.2010 declaring total income of ₹ 58,769/- after claiming deduction u/s. 10AA of the Act for ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agency business or storing the goods as agent of the party. AO also took note that the bank releasing certificate was also not furnished in order to ascertain the nature of the payment received by assessee. Likewise, according to AO, assessee failed to furnish any documentary evidence in support of consultancy income shown by assessee in the year under consideration. In view of the above, the deduction claimed by assessee for the aforesaid income u/s. 10AA of the Act was disallowed and added back to the income of assessee. Aggrieved, assessee preferred an appeal before Ld. CIT(A), who dismissed the appeal of the assessee. Aggrieved, assessee is before us. 6. We have heard rival submissions and gone through the paper book as well as precedents relied upon before us. We note that the assessee is an exporter and importer of tobacco products, C F Agent, Trading of all types of FMCG products. The assessee company was engaged in international trading of commodities from their trading unit situated at Falta Special Zone, within the duty free sector. The assessee company has shown income from the trading activity, warehouse and consultancy services. The assessee in respect of the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of service cannot applied in the income tax proceedings. Similarly, according to Ld. CIT(A), assessee has shown warehousing income from storing its own goods which cannot be regarded as service eligible for deduction u/s. 10AA of the Act. Similarly, the consultancy charges claimed by assessee were not treated as service and accordingly the deduction u/s. 10AA of the Act was denied. While doing so, the ld. CIT(A) also observed that the provisions of SEZ Act, 2005 cannot override the specific provisions of Income Tax Act ,1961. So, the question before us is whether assessee in the present case is entitled for exemption under section 10AA of the Act in respect to trading, warehousing consultancy income. 7. First of all we take up the issue of trading income of the assessee. There is no dispute that the assessee is engaged in the import and export of the goods which is in the nature of trading activities. As per the Income-tax Act, the trading activity is not entitled for the exemption under section 10AA of the Act. However, we note that the SEZ Rules have been framed by Central Government by virtue of the delegated Rule making power given to it by the Special Economic Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the SEZ Rules as above reproduced can be read into for the purpose of claiming exemption u/s. 10AA of the Act; so that assessee can avail the benefit envisaged u/s. 10AA of the Act. We note that sec. 51(1) of The Special Economic Zones Act, 2005 gives an overriding provision over other laws which read as under: 51.(1) 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. 10. From the reading of the provisions it is clear that the provisions as specified under The Special Economic Zones Act, 2005 would have overriding effect on the Income Tax Act because Special Economic Zone Act, 2005 is a Special Act and a later Act of the Parliament. Moreover, we note that assessee s claim u/s. 10AA was upheld by the Ld. CIT(A) for AY 2008-09, which order has been upheld by the Tribunal in ITA No.30/Kol/2012 for the AY 2008-09 vide order dated 13/11/2013. The relevant extract of the order is reproduced below:- 3. We have heard the rival submissions and perused the relevant material on record. The first objection o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords including the remand report of AO we note that the AO disallowed the exemption on warehousing charges by observing that the assessee initially had shown the import of the goods as purchases and thereafter showed it as purchase return. According to AO, on such transaction of purchase, and thereafter purchase return the assessee has shown warehouse income for ₹ 23,06,539/-. As per the AO, the assessee cannot earn warehousing charges on such transaction and therefore such income is not entitled for exemption u/s 10AA of the Act. We note the Rule 76 of SEZ Rules 2006 (supra) defines Services includes warehouse activity also, so income from the said activity qualify for exemption u/s. 10AA of the Act on the same reasoning as that given for trading activity. As a matter of fact, we note that the assessee has raised the bill for the warehousing charges and the payment was also received for the same by foreign exchange. 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. So, the question arises as to whether the accounting entri ..... 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