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TMI Blog2016 (7) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year in which the claim was made and accepted is withdrawn or set aside. When there is no change in the facts which were in existence during the earlier years with that of a subsequent assessment year, then the Income Tax officer cannot withdraw the claim for exemption under section 10A of the Act for subsequent years. Therefore, it is not open to the department to deny the benefit of Section 10A for subsequent assessment years. AO had not reworked the profits attributable to SEZ and non SEZ unit to justify his suspicion. In any case, there cannot be any outright rejection of the claim of exemption u/s 10 A of the Act. We find that the entire disallowance of claim of exemption u/s 10A of the Act which has been consistently claimed by the assessee over the years have been made by the ld. AO only on suspicion , surmise and conjecture and accordingly we have no hesitation to delete the same - Decided in favour of assessee TDS u/s 194C - Non deduction of tds on payment towards job work charges - addition u/s. 40(a)(ia) - Held that:- We find that the issue needs to be set aside to the file of the ld.AO to decide the issue afresh in the light of the decision rendered in Ansal La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is pertinent here to mention that this is the seventh and the last year of availability of exemption u/s. 10A. The ld. AO disallowed the said claim of exemption u/s 10A of the Act on the ground that no activity in the nature of processing and manufacture was carried out in the said SEZ unit and that the profit of the said SEZ unit was grossly inflated to claim benefit of exemption u/s 10 A of the Act. This action of the ld. AO was upheld by the ld. CITA. Aggrieved, the assessee is in appeal before us on the following grounds :- 2. For that on the facts of the case, the Ld. C.I.T.(A) was wrong in dittoing the order of the A.O. and confirming the disallowance u/s. 10A of the Income Tax Act amounting to ₹ 73,44,491/- for its Special Economic Zone (SEZ) Unit which is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, the Ld. C.LT.(A) was wrong in not allowing deduction u/s.10A of the I.T. Act amounting to ₹ 73,44,491/- against profit of ₹ 146,88,982/- arising out of its 100% export business of manufacturing blended tea from its SEZ Unit set up at Coimbatore which is completely arbitrary, unjustified and illegal. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find from the assessment order wherein the assessee had procured raw tea leaves from India and Vietnam and after blending and processing, it exported such manufactured / processed tea to Afghanistan and Pakistan from its SEZ unit. We also find from the details filed in the paper book (pages 54 to 200 of PB) that the assessee, during the year under consideration, had income from manufacturing activities i.e blending, processing and packing of tea and its export thereafter. The assessee before the ld. AO vide letter dated 2.12.2013 had also explained the manufacturing process undertaken for manufacturing of tea and subsequent export thereof from the said SEZ unit by way of a flowchart which is reflected in page 55 of the Paper book. We find that the assessee has Central Excise Registration for both its SEZ units and tea is excisable goods under the Central Excise Act, 1944, which is a Central Legislation. The company is registered with the Asst. Commissioner of Central Excise, Coimbatore II Division for Manufacturing of Excisable Goods. A copy of Registration Certificate bearing Nos. AACCA5668BXM001 dtd. 24.11.2004 and AACCA5668BXM002 dated 17.05.2004 issued in favour of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspection charges security charges Rs.14300/- vii) Insurance charges ₹ 32549/- viii) Packating and handling charges ₹ 434,212/- ix) Service charges ₹ 36,813/- x) THC and BHF ₹ 286,417/- xi) Weighment expenses ---- Total Rs.29,21,000/- According to the ld. AO, none of the above expenses fall under the category of manufacturing expenses and accordingly the claim of assessee that it was engaged in manufacturing of tea has to be rejected. We find from the details of expenses listed above, the same are for the purpose of manufacturing operations only and hence the assessee was engaged in manufacturing operations during the year under appeal. We find that the ld. AO had accepted the sales made from SEZ unit amounting to ₹ 3,45,09,846/- as sales. We find that the assessee had merely stated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urer/ producer of the tea for the purpose of claiming exemption u/s. 10B of the Act. Further, assessees who are in the business of blending and processing of tea in respect of undertakings in free trade zones are manufacturer/producer of tea for the purpose of claiming exemption u/s. 10A of the Act. We have examined and discussed the facts in the case of Madhu Jayanti International Ltd. and found that there is blending of tea and consequently the assessee is eligible for exemption u/s. 10B of the Act as prayed for. Their appeal for the AY 2004-05 is allowed. As regards other appeals and that of the interveners, the matters are restored back to the Division Bench, with directions to decide those appeals in the light of principle laid down herein, so far as the claim for relief u/s. 10A or 10B of the Act in accordance with law. 2.2.4. We also find that the total profit as per profit and loss account of the assessee for the year ended 31.3.2011 was ₹ 4,04,55,228.57 (vide page 207 of the Paper Book) and profit of SEZ unit was ₹ 1,46,88,982.31 (vide page 228 of the Paper Book). We also find that the ld. AO himself had granted exemption u/s 10 A of the Act for the Asst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely arbitrary, unjustified and illegal. 3.2. We have heard the rival submissions. The ld. AR prayed for setting aside of this issue to the file of the ld. AO in the light of the decision rendered by the Hon ble Delhi High Court in the case of CIT vs Ansal Land Mark Township P Ltd reported in 377 ITR 635 (Del) wherein it was held that the second proviso to section 40(a)(ia) of the Act has been held to be retrospective in operation and accordingly no disallowance u/s 40(a)(ia) of the Act could be made in the hands of the payer (assessee herein). In response to this, the Ld. DR fairly agreed for the same. We find that the issue needs to be set aside to the file of the ld.AO to decide the issue afresh in the light of the decision rendered in Ansal Land Mark (supra) and the assessee is directed to produce evidence of the payee records to prove that the said job charges have been duly included in the returns filed by the said job worker. If the same is proved, then we direct the ld. AO not to make any disallowance u/s 40(a)(ia) of the Act in terms of second proviso to section 40(a)(ia) of the Act. Accordingly, the ground no. 6 raised by the assessee is allowed for statistical purp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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