2013 (6) TMI 879 - AT - Income Tax

Summary

Issues Involved:

1. Deduction under Section 10A of the Income Tax Act.
2. Validity of the CIT(A)'s order.
3. Examination of manufacturing activities at SEZ, Surat Unit.
4. Consideration of evidence and additional grounds raised by the department.
5. Cross objections filed by the assessee.

Summary:

1. Deduction under Section 10A of the Income Tax Act:
The department objected to the CIT(A)'s direction to allow the deduction u/s 10A, arguing that no manufacturing activities were carried out at the SEZ, Surat Unit. The AO denied the deduction based on findings from a survey conducted u/s 133A, which indicated that the factory was closed, machinery was rusted, and there were no permanent employees. The CIT(A) found that the assessee had imported raw materials and exported finished goods, substantiated by documents from government agencies, and allowed the deduction.

2. Validity of the CIT(A)'s Order:
The department contended that the CIT(A)'s order was perverse and should be set aside. The CIT(A) considered the AO's findings and the assessee's submissions, concluding that the AO's denial of the deduction was incorrect. The CIT(A) noted that the survey findings were circumstantial and did not disprove the core evidence of manufacturing activities.

3. Examination of Manufacturing Activities at SEZ, Surat Unit:
The CIT(A) examined documents related to imports, exports, and approvals from the Customs and Central Excise Department, finding no discrepancies. The CIT(A) concluded that the assessee's unit was eligible for deduction u/s 10A, as the manufacturing activities were conducted with due approvals and proper documentation.

4. Consideration of Evidence and Additional Grounds Raised by the Department:
The department argued that the CIT(A) accepted additional evidence, but the CIT(A) clarified that all details were submitted to the AO during the assessment proceedings. The Tribunal found no reason to deny the deduction, as the CIT(A) had considered all relevant documents and submissions.

5. Cross Objections Filed by the Assessee:
The assessee's cross objections were dismissed as not pressed, following the confirmation of the CIT(A)'s order for all three assessment years.

Conclusion:
The Tribunal confirmed the CIT(A)'s order, allowing the deduction u/s 10A for the assessment years 2006-07 to 2008-09, and dismissed the department's appeals and the assessee's cross objections. The order was pronounced in the open court on June 19, 2013.