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Issues involved: Eligibility to claim deduction u/s 10AA of the Income-tax Act, 1961.
Summary: The case involved a dispute regarding the eligibility to claim deduction u/s 10AA of the Income-tax Act, 1961. The assessee company, engaged in trading in tobacco, cigarettes, and alcoholic beverages, claimed a deduction u/s 10AA for profit from a unit in a Special Economic Zone (SEZ) in Cochin. The Assessing Officer (A.O.) disallowed the claim, stating that the activity of import and export by the assessee cannot be treated as "Services" for the purpose of section 10AA of the Act. On appeal, the Ld. CIT(A) held that the activity of importing and re-exporting goods by the appellant amounted to rendering services as defined under SEZ Rules, 2006, making the assessee eligible for exemption u/s 10AA. The Ld. CIT(A) noted that the activity had been accepted in earlier assessment years, and without any deviation in facts and circumstances, no basis existed for disallowing the claim in the current year. The Appellate Tribunal, after considering the SEZ rules and relevant legal provisions, upheld the Ld. CIT(A)'s decision. The Tribunal emphasized the principle of consistency and the burden on the A.O. to show that the view taken was the only possible interpretation of the law. As the Ld. CIT(A) provided cogent reasons for allowing the deduction u/s 10AA based on legal provisions and past acceptance by the assessing officer, the appeal by the revenue was dismissed. Therefore, the Tribunal affirmed the eligibility of the assessee for exemption u/s 10AA of the Act, concluding that the order passed by the Ld. CIT(A) was legally sound and consistent with previous decisions. Judges: Shri D. Manmohan, Vice President and Shri BR Baskaran, Accountant Member.
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