2017 (11) TMI 1685 - HC - Income Tax

Exemption / deduction u/s 10AA - failure to fulfill the conditions of Section 10AA(4)(ii) - manufacture and export of jewellery - modernization of existing unit or new undertaking - Held that - it is clear that the new unit in the name of M/s. Green Fire Exports has not been formed out of new funds, but it merely reflects shift of money from the original business i.e. M/s. Green Fire to the new one. - Following the decision in the case of M/s. Green Fire Exports 2017 (5) TMI 1571 - RAJASTHAN HIGH COURT , decided against the revenue.

Summary

Issues:
1. Application for dispensing with filing certified copy of the order.
2. Common question of law and facts in two appeals.
3. Appeal against tribunal's order confirming CIT(A)'s decision.
4. Substantial question of law framed by the appellant regarding disallowance under Section 10AA.

Analysis:
1. The judgment begins with an application filed to dispense with the filing of a certified copy of the order in one of the appeals, which is allowed due to the copy being filed in another appeal. Other defects are waived.
2. Both appeals involve a common question of law and facts, leading to a joint judgment.
3. The appellant challenges the tribunal's decision affirming the CIT(A)'s order, which dismissed the department's appeal.
4. The substantial question of law raised by the appellant pertains to the disallowance under Section 10AA of the Income Tax Act, 1961, concerning the formation of a new unit by the appellant.

5. The case involves M/s. Green Fire Exports, a firm claiming 100% deduction under Section 10AA as a SEZ unit. The firm's history and capital transactions are detailed, indicating a transfer of funds from a previous concern to the new unit.
6. The issue is analyzed in reference to a previous court decision involving the same appellant, emphasizing the establishment of a new and independent production unit with substantial new capital for eligibility under Section 10AA.
7. The judgment discusses the observations of the Tribunal and various High Courts, highlighting the necessity of substantial new investment in plant and machinery for a new unit to qualify for deduction under Section 10AA.
8. After considering the Tribunal's conclusion and precedent judgments, the Court finds no grounds for interference and dismisses the appeals, stating that no substantial question of law arises in the matter.