TMI Blog2020 (9) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) order and reject the ground raised by the revenue. Similar view is also taken in case in Solitaire Diamond Exports [ 2019 (11) TMI 513 - ITAT MUMBAI] - Decided in favour of assessee. - ITA No. 71/Del/2019 - - - Dated:- 16-9-2020 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Prabhat Kumar, Adv For the Revenue : Shri H. K. Chaudhary, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld DCIT, Circle-23(2), New Delhi u/s 143(3) read with section 144C(5) of the Income Tax Act, 1961 dated 29.11.2018 for the Assessment Year 2014-15. 2. The assessee has raised the following grounds of appeal:- 1. On facts and circumstances of the case and in law, the ld Dispute Resolution Panel (DRP) erred in upholding the action of the learned Assessing Officer (AO) in denying the appellant its claim for exemption u/s 10AA of the Income Tax Act, 1961 of ₹ 4,74,14,726/-. 2. The learned DRP erred in passing its order without granting the appellant adequate opportunity of being heard. 3. The brief facts of the case sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld AR submitted a detailed note stating that the assessee fulfills all the conditions of the SEZ Act and also engaged in the services which includes trading and therefore, should be granted deduction u/s 10A of the Act. It was further stated that in subsequent AYs , i.e. 2015-16, 2017-18 assessee has claimed the deduction and only for AY 2017-18 the case of the assessee is being scrutinized and for other years same has been accepted as it is. 8. The ld DR vehemently objected and submitted that assessee is merely a trader and therefore, a trader is not eligible for deduction u/s 10AA of the Act. He further referred to the definition of trading and stared that it means import for the purpose of re-export. Therefore, he supported the order of the ld AO. 9. We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee is having a unit in SEZ at Taluka Panvel, Maharashtra. It is engaged in warehouse trading and storage activities. It stated its activities w.e.f 01.06.2013 as per initial registration dated 23.07.2012. The assessee claimed deduction of ₹ 47414726/-. The main reasons for denial of this deduction by the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pelines transport. 2 [Explanation.-The expression Trading , for the purposes of the Second Schedule of the Act, shall mean import for the purposes of re-export.] 10. The ld DRP has also held that claim of the assessee is coveredin favour of assessee by the decision of coordinate bench in 80 Taxmann.com 362 in DCIT Vs. Boommidal Enterprises Pvt. Ltd dated 07.04.2017. The above decision has been challenged by revenue before Honourable high court, challenged further before Honourable supreme court, Honourable supreme court sent it back to Honourable High court to decide it on merit. Thus, issue is pending before the Hon ble Andhra Pradesh High Court. Thus, at present decision of the coordinate bench binds us. Thus, at present the issue is squarely covered in favour of the assessee by the decision of coordinate bench. In that judgment as per para No. 12 wherein it has held that profit derived from a unit situated at SEZ that is engaged in the business of trading in the nature of import and re-export falls within the definition of services, hence eligible for deduction u/s 10AA of the Act. The coordinate bench held as under :- 9. We have heard both the parties, perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of goods as defined under SEZ Rules, 2006. The relevant portion of the order is extracted below: 5. None appeared on behalf of the assessee. We have heard the Ld. Departmental Representative in this regard and carefully perused the record. As per the SEZ rules, admittedly the activity carried on by the assessee has to be considered as an activity on which assessee is entitled to claim deduction u/s. 10AA of the Act. In our opinion, ratio of the decision of the Hon'ble Kerala High Court in the case of Girnar Industries v. CIT (230 CTR 401) squarely applies to the facts of this case. No contrary decision was placed before us by the revenue to take a different view on this matter. It is no doubt true that on a principle of law, rule of consistency may not be applicable but the fact remains that the order passed by the Ld. CIT (A) is based on cogent reasons in the light of the explanation given in SEZ rules as well as the definition contained in SEZ Act, 2005 and facts being identical in the earlier years, which was accepted by the assessing officer, in order to deviate from the decision taken in the earlier years, the burden is upon the A.O. to show that the view taken by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported goods. We therefore, feel that the assessee is entitled to deduction u/s. 10AA of the Act and therefore, the Ld. CIT (A) was justified in allowing the exemption. 12. Considering the facts and circumstances of this case and also following the ratios of the judgements discussed above, we are of the view that profit derived from the units situated at SEZ, engaged in the business of trading activity in the nature of import and re-export of goods falls within the definition of the term 'services' as defined in section 10AA of the Act. Consequently, the assessee is eligible for exemption u/s. 10AA of the Act, towards export profit derived from eligible unit located at SEZ. The CIT (A), after considering the relevant provisions of the Act, has rightly deleted additions made by the A.O. towards disallowance of exemption u/s. 10AA of the Act. We do not find any error in the order passed by the CIT (A). Hence, we uphold CIT (A) order and reject the ground raised by the revenue. 11. Similar view is also taken in case of [2020] 114 taxmann.com 176 (Mumbai - Trib.) Solitaire Diamond Exports v. Income-tax Officer-19(3)(4), Mumbai. No other judicial precedent contrary t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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