2018 (12) TMI 1389 - HC - Income Tax

Entitlement to exemption u/s 10AA - whether the assessee who is operating his business from the unit of SEZ and to carries on trading activities in the nature of exporting shall eligible for exemption under Section 10AA? - Held that - When the learned CIT(A) as well as learned Tribunal has observed and held that the assessee shall be entitled to exemption / deduction under Section 10 AA of the Act it cannot be said that the learned Tribunal has committed any error. Learned counsel for the Revenue is not in a position to point out any contrary decision. Under the circumstances no substantial question of law arise. See DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2 VERSUS GOENKA DIAMOND & JEWELLERS LTD. 2012 (3) TMI 258 - ITAT JAIPUR - decided in favour of assessee

Summary

Issues:
1. Eligibility for exemption under Section 10AA of the Income Tax Act.
2. Interpretation of the word "Trading" in relation to SEZ activities.
3. Fulfillment of prescribed conditions under Section 10AA.

Analysis:
1. The primary issue in this case revolved around the eligibility of the assessee for exemption under Section 10AA of the Income Tax Act. The dispute centered on whether an assessee conducting trading activities in the nature of exporting from a unit in SEZ would qualify for such exemption. The court considered precedents from the ITAT, Jaipur Bench, and Mumbai Bench, where similar issues were decided in favor of the assessee. The court noted that no appeals were made against these decisions, and in the absence of any contrary decisions, it was held that the assessee was entitled to the exemption under Section 10AA. The court found no error in the decision of the learned Tribunal and CIT(A) in granting the exemption.

2. The second issue raised was regarding the interpretation of the word "Trading" in the context of SEZ activities and its relevance to the deduction under Section 10AA. The Revenue contended that the word "Trading" should not be imported from the SEZ Act, 2005 into the Income Tax Act, 1961 for the purpose of granting deductions under Section 10AA. The court examined the legislative intent behind Section 10AA, which allows deductions for business activities like manufacturing and providing services in SEZ areas. The court dismissed the Revenue's argument, stating that the Tribunal did not err in considering trading activities for the exemption under Section 10AA, as supported by previous decisions and the absence of contrary rulings.

3. Lastly, the issue of whether the assessee fulfilled the prescribed conditions under Section 10AA was raised. The Revenue argued that the assessee failed to meet the conditions for claiming a deduction of a specific amount. However, the court, after considering the arguments and precedents, found no merit in the Revenue's contentions. The court upheld the decisions of the CIT(A) and the Tribunal, confirming that the assessee was indeed entitled to the exemption under Section 10AA. As a result, the court dismissed the appeal, concluding that no substantial question of law arose in the case.