2017 (9) TMI 1694 - HC - Income Tax

Deduction u/s 10AA - proof of manufacturing activity - Held that - The activity which was carried out comes within the area of manufacturing and trading will go together. In that view of the matter, taking into consideration the circular issued by the Ministry of Commerce of Industry as referred above the view taken by the authorities is required to be confirmed. The appeal preferred by the department against the same assessee. See COMMISSIONER OF INCOME TAX-I, JAIPUR (RAJ) VERSUS M/S GOENKA DIAMOND & JEWELLERS LTD 2017 (8) TMI 1405 - RAJASTHAN HIGH COURT . - Decided in favour of the assessee.

Summary

Issues:
Challenge to Tribunal's judgment allowing deduction under Section 10AA of the Act without considering specific findings of Assessing Officer. Interpretation of conditions for deduction u/s 10AA and scope of the definition of "Services" from SEZ Act and Rules.

Analysis:
The appellant challenged the Tribunal's judgment favoring the assessee regarding the deduction under Section 10AA of the Act. The Court framed substantial questions of law, questioning the Tribunal's justification for allowing the deduction without considering the Assessing Officer's findings. The first issue revolved around whether the Tribunal erred in granting a deduction of a specific amount without acknowledging the Assessing Officer's stance on the matter.

The second issue pertained to the entitlement of the assessee for deduction under Section 10AA, focusing on the fulfillment of conditions stipulated under the Act. The Court deliberated on whether the assessee met the criteria for the deduction, considering an expanded interpretation of the term "Services" from the SEZ Act and Rules. The debate included the scope of the definition of "Services" and the relevance of a literal interpretation by the Assessing Officer, contrasting with the legislative intent under the Income Tax Act.

In a previous judgment related to the same assessee, the Court had upheld the view that the activity conducted fell within the realm of manufacturing and trading, aligning with a circular from the Ministry of Commerce and Industry. Consequently, the Court ruled in favor of the assessee, dismissing the department's appeal. This precedent influenced the decision in the current appeal, leading to a similar outcome in favor of the assessee against the department.

Therefore, based on the previous judgment and the consistency in the issues raised, the Court reaffirmed its stance in favor of the assessee and against the department. The appeal was consequently dismissed, aligning with the earlier decision and maintaining coherence in the interpretation and application of the relevant legal provisions.