ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(2), SURAT vs. M/S MUKTA ENTERPRISE, SURAT

Assessee by ShriDeven K. Kapadia, CA& Miss. Mitali Mehta, CA Revenue by Mrs. Anupama Singla,Sr-DR Date of hearing 27.09.2021 Date of pronouncement 09.11.2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of ld. Commissioner of Income tax (Appeals)-2Suratdated 08.09.2017for assessment year (AY) 2013-14. The Revenue has raised the following grounds of appeal:-

1. Whether on the fact and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance made by the Assessing Officer of exemption claimed u/s 10AA by the assessee in respect of Turnover for trading and treated entire sum as taxable income by not giving any specific findings in his decision?

2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance made by the M/s Mukta Enterprise Assessing Officer by invoking provisions of Section 80(IA)(10) r.w.s. 10AA(9) in giving deductions of interest on Capital and Remuneration to partners of the assessee firm after finding that the assessee had taken undue benefits of Section 10AA by not claiming interest on capital and Remuneration to partners which resulted increase in exempted profit of the assessee?

3. Whether on the facts and circumstances of the case and in law, the CIT(A) is justified in not appreciating the fact that by not providing interest and remuneration to the partners, the firm has claimed higher profits leading to higher claim of deduction u/s 10AA of the Act and thus, devoiding the revenue from due amount of tax?”

raised by the revenue are covered by the decisions of Tribunal or High Court, either in assessee’s own case or in similar cases wherein similar deductions under section 10AA is allowed by the various bench of Tribunal and the same was upheld by the High Court. Against the ground No.1, the ld AR for the assessee submits that this ground of appeal is covered by the decision of Jurisdictional High Court in PCIT Vs Florence Exports (Tax Appeal No. 686 of 2018 dated 21.06.2018) and by the decision of Surat Tribunal in Vijaylaxmi Exports in dated 24.07.2019, EnnEnn Corporation Ltd., in IT(SS)A No.43/AHD/2016 and ITA No.190/AHD/2016 dated 19.07.2019. The ld AR for the assessee further submits that ground No. 2 & 3 are covered by the decision of 2 M/s Mukta Enterprise Jurisdictional High Court in PCIT Vs Alidhara Taxspin Engineers (Tax Appeal No. 265 of 2017 dated 2nd May 2017).

3. On the other hand, the ld.Sr. Departmental Representative (Sr.DR) for the revenue strongly relied upon the order of Assessing Officer (AO). The ld.Sr.DR further submitted that assessee made corrigendum in the partnership deed on 14.03.2012 to increase the eligible income under section 10AA of the Act.

4. We have considered the rival submission of both the parties and have gone through the orders of Lower Authorities. We find that that the almost similar set of facts, the Hon’ble jurisdictional High Court in PCIT vs. Florence Exports(supra) while considering the question of law – “whether on the facts and circumstances of the case and the law, Hon’ble ITAT has wrongly allowed deduction u/s 100 to the assessee. By importing the word “Trading” from SEZ Act, 2005 into Income Tax Act, 1961. The legislature has allowed deduction u/s 10AA to business doing activities of “manufacturing” and “providing services” from SEZ area. Trading of goods from SEZ is nowhere the intention of legislature. Whether on the facts of the act and law, Hon’ble ITAT has erred in importing the word “Trading” from SEZ Act, 2005 into Income Tax Act, 1961 and gone beyond the intended scope of Section 10AA of the I.T.Act.” The Hon’ble High Court while considering the aforesaid