TMI Blog2013 (6) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... partment has also raised an additional ground that the order of the CIT(A) is perverse in nature. Thereafter the appeals of the department and the cross objections of the assessee were taken for hearing. 5. Learned DR, firstly, placed reliance on the order of the AO, thereafter entire order of the AO for assessment year 2006-07 was read also. After reading the order of the AO, learned DR read the finding of the CIT(A) also. Accordingly, it was submitted that objections raised by the AO have not been considered by the learned CIT(A) in right perspective, therefore, the order of the learned CIT(A) is perverse in nature. Accordingly, the order of the learned CIT(A) is liable to be set aside and the order of the learned AO is liable to be restored. It was further submitted that the AO has examined the issue threadbare and it was found that there was no manufacturing activity at SEZ Unit at Surat. Since, the conditions were also not satisfied, therefore, the AO was correct in denying deduction under Section 10A for all the three years i.e. for assessment year 2006-07 to assessment year 2008-09. 6. On the other hand, learned counsel of the assessee placed reliance on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The contention of the assessee was considered by the CIT(A) in detail and thereafter the CIT(A) found that the AO was not correct in denying the deduction. The CIT(A) has noted that in fact the AO has placed reliance on the finding of survey party which was conducted under Section 133A. It was noted by the CIT(A) that survey was conducted sometime in the month of October, 2007 whereas the activity of the manufacturing carried out much earlier. Books of accounts as well as other records i.e records of Excise Department, records of Custom Authority and import of gold and manufacturing bills were examined by the CIT(A) and it was found that no adverse material was there to hold that the assessee has not carried out any manufacturing activity. After discussing the issue in detail, learned CIT(A) concluded that the assessee is eligible for deduction under Section 10A. Accordingly, he allowed the deduction for all the three years. It was further explained that in same unit similar manufacturing activity conducted by the assessee in earlier years, the department itself has allowed deduction under Section 10A. It was further submitted that for assessment year 2006-07 in regular a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard rival submissions and considered them carefully. We have also perused the orders of the AO as well as the order of the learned CIT(A) for all the three years i.e. for assessment years 2006-07 to 2008-09. We have also perused the other material placed on record. After going through the relevant material, we found that the survey was conducted under Section 133A of the Act on 8-10-2008 at the premises of the assessee. It was further noted that regarding assessment years 2006-07 2007-08, the return of income was filed in due course claiming deduction under Section 10A. Since the search was conducted at the premises of the Auro Gold Jewellery Pvt. Ltd. and certain material was found relating to the assessee, accordingly, notice under Section 153C was also issued on the assessee. Thereafter case of the assessee was selected for scrutiny and the assessment proceeding was started after issuing relevant notices. The AO has mentioned all these in his order and thereafter the finding of the survey party have been taken into consideration by the AO. At the time of survey, the unit of the assessee was not functional because there was no order and machines were lying idle. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity and value in US$; Export Insurance cover note mentioning therein the description, quantity and value; Clearing Forwarding Agent's WII on export of consignment mentioning therein the description, quantity and value; G. R. Form prepared at Surat Customs department mentioning therein the description, quantity and value; Air Way Bill of Airline on export of consignment mentioning therein the description, quantity and value; Payment advice from bank on sending foreign outward remittance to supplier of raw material for tile payment made by the appellant to them towards the cost of import; Credit: advice from bank on receiving inward foreign remittance from overseas customer towards the proceeds of export invoice; D. R. C. issued by the bank on their receiving export proceeds in convertible foreign exchange. From the aforesaid details, the appellant submits that it has proved beyond any doubt that the raw material i.e. gold bar is imported and after manufacturing the finished product i.e. bangles have been exported and this is certified by the various government authorities including that of customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmanent employee or permanent labour was employed in this unit. But the objection of the A.O. was that the plant and machinery was not working was not admitted by the appellant because he has stated that even in the assessment proceedings, he has requested the A.O. to visit the unit and verify that the machinery was in working condition. Regarding the allegation of the power consumption, the A. R. of the appellant has submitted that the firm has power connection and it was used only when it has got the export orders. The A. R. of the appellant has emphasized that the SEZ unit is working only for export purposes. All the raw material is imported under the supervision and control of Custom and Central Excise department. No item can be entered or removed without the approval of the Custom and Central Excise department. No material produced from these units can be sold in India because it is only for export purposes which is again under the supervision and control of Custom and Central Excise department. It was further stated that all the Import and Export raw material and finished goods was made through shipment and proper invoices of sales have been maintained and foreign remittances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit of the firm is eligible for deduction u/s. 10A because the A.O. has not found any incriminating document during the course of survey and search operation to point out that no Import or Export has been made by this unit. The evidences collected during the survey that the unit was locked, machinery was not .working, no labour employed and no power connection etc. are only the circumstantial evidences. On the basis of these evidences we cannot ignore the core evidence i.e. the clearance from the Customs and Central Excise department, bills of shipment, proper invoices, foreign remittances through banking channels with the approval of the RBI and machines installed in the SEZ unit. No documents were found and seized to disprove these facts. Secondly, during the search/survey year i.e. 2008, there was no Import/Export orders with the firm that is why the unit was closed. Therefore, the AO is directed to allow the deduction u/s. 10A as claimed by the appellant. Thus, the ground of appeal is allowed. Similar findings have been recorded by the learned CIT(A) for other two years i.e. for assessment years 2007-08 2008-09. 14. After considering the order of the AO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther noticed that even there is no finding in the order of the AO that survey party has conveyed to the AO or in detailed report that there was no export or import of items manufactured by the assessee at the premises. The survey party in fact noted that irregularities or discrepancies at the time of survey and not of the past. The AO has assumed that in the past as the unit was not functioning, neither there was any employee nor there was any sufficient power consumption to manufacture such a huge quantity. However, the AO has not taken into consideration the fact that the assessee is manufacturing only heavy kadas, which are purchased by the various parties in abroad. The items manufactured by the assessee, were not jewellery items but kadas only. In our view, in manufacturing kadas, power consumption is less and employees are also required less. Moreover, the import of gold made by the assessee was subject to Custom clearance and Excise Department, which were cleared after due verification. Approval was there, thereafter material was sold to abroad and again subject to custom and excise clearance which were obtained. Copies of all these details were filed before the AO as well ..... X X X X Extracts X X X X X X X X Extracts X X X X
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