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2022 (7) TMI 1003 - AT - Income TaxDeduction u/s 10B - assessee has not furnished any evidence like date of purchase of plant and machinery, place of instalment date and bank account - AO took his view that assessee-firm failed to establish that assessee set-up new plant and machinery for producing article for claiming deduction under section 10B in the initial year and also made certain other observation, which leads him to disallow the benefits under section 10B - HELD THAT - The Act does not specify that business has to be approved by Competent Authority of SEZ after 01.04.2004 for claiming such deduction. CIT(A) held that such fact is irrelevant and that the assessee commenced its business on 01.01.2009 and accordingly claim of deduction under section 10B in assessment year 2010-11 which was allowed in assessment order under section 143(3). CIT(A) further noted that the second reason for assessing officer was about the splitting of re-construction existing business. The Ld. CIT(A) after summarizing of objection of AO and the reply of assessee held that the AO has not doubted the purchased of plant and machinery in the earlier assessment order, otherwise the issue was to be examine in the scrutiny assessment for assessment year 2010-11. AO has not been able to point out any specific defect in the record in fulfilling the condition. The Ld. CIT(A) also noted that once the claim is similar deduction is allowed in the scrutiny assessment, in an initial year, the similar cannot be disallowed without withdrawing or disturbing the similar claim or relief in the earlier year as has been held in the case of Saurashtra Cement And Chemicals Industries Ltd. ( 1979 (2) TMI 21 - GUJARAT HIGH COURT held that assessee is eligible for deduction under section 10B. We find that during the hearing of the present appeal, no contrary facts or law is brought to our notice to take other view. The ld CIT(A) allowed relief to the assessee by following the binding decision of Jurisdictional High Court in Saurashtra Cement And Chemicals Industries Ltd. (supra). Therefore, we do not find any reason to interfere with the order passed by Ld. CIT(A), which we affirm. The ground of appeal raised by the Revenue is dismissed.
Issues Involved:
1. Justification of the Ld. CIT(A) in allowing the appeal despite the assessee's failure to prove the use of new plant and machinery for claiming deduction under section 10B of the Act. 2. Justification of the Ld. CIT(A) in allowing the appeal despite the assessee's failure to produce documentary evidence supporting the claim of rejection sale during assessment proceedings. 3. Whether the CIT(A) ought to have upheld the Assessing Officer's order. Issue-wise Detailed Analysis: 1. Justification of the Ld. CIT(A) in allowing the appeal despite the assessee's failure to prove the use of new plant and machinery for claiming deduction under section 10B of the Act: The assessee, a partnership firm engaged in importing and exporting rough and polished diamonds, claimed exemption under section 10B of the Income Tax Act for the assessment year 2011-12. The Assessing Officer (AO) disallowed this claim, arguing that the assessee failed to prove the use of new plant and machinery for producing articles. The AO noted discrepancies in the dates of purchase, installation, and use of the plant and machinery, and questioned whether the machinery was new and used for production purposes. The AO also mentioned that the assessee did not meet the minimum investment requirement of Rs. 1 crore as per the Foreign Trade Policy for establishing a 100% Export Oriented Unit (EOU). The Ld. CIT(A) reversed the AO's decision, noting that the assessee's claim for deduction under section 10B had been allowed in the previous assessment year (2010-11) under scrutiny assessment. The CIT(A) emphasized that there were no changes in the facts and circumstances between the two assessment years. The CIT(A) also pointed out that the Act does not specify that the business approval by the Competent Authority of SEZ must be after 01.04.2004 for claiming such deduction. The CIT(A) concluded that the AO's action lacked uniformity and that the assessee had commenced its business within the extended period approved by the Competent Authority of KSEZ. 2. Justification of the Ld. CIT(A) in allowing the appeal despite the assessee's failure to produce documentary evidence supporting the claim of rejection sale during assessment proceedings: The AO disallowed the exemption under section 10B, partly because the assessee did not provide documentary evidence to support the claim of rejection sale during the assessment proceedings. The assessee argued that the rejection sales were genuine and that the AO's observations were incorrect and misleading. The Ld. CIT(A) accepted the assessee's explanation, noting that the AO had not been able to disprove the assessee's contention. The CIT(A) also highlighted that the assessee had provided detailed submissions and evidence, which the AO had overlooked. The CIT(A) concluded that the AO's objections were not sufficient to disallow the exemption under section 10B. 3. Whether the CIT(A) ought to have upheld the Assessing Officer's order: The Revenue argued that the CIT(A) should have upheld the AO's order, given the alleged discrepancies and the failure to meet the conditions under section 10B. The Revenue emphasized that the assessee had not furnished the requisite details and had not complied with the conditions for claiming the exemption. The Tribunal, after considering the submissions of both parties, upheld the CIT(A)'s decision. The Tribunal noted that the AO had not taken any remedial action for the assessment year 2010-11, where a similar claim was allowed. The Tribunal also pointed out that the CIT(A) had followed the binding decision of the jurisdictional High Court in the case of Saurashtra Cement And Chemicals Industries Ltd., which supported the assessee's eligibility for deduction under section 10B. The Tribunal concluded that there was no reason to interfere with the CIT(A)'s order and dismissed the Revenue's appeal. Conclusion: The Tribunal affirmed the CIT(A)'s order, allowing the assessee's claim for exemption under section 10B for the assessment year 2011-12. The Tribunal found that the AO's objections were not sufficient to disallow the exemption and that the CIT(A) had correctly applied the relevant legal principles and precedents. The Revenue's appeal was dismissed.
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