COMMISSIONER OF INCOME TAX CENTRAL-II vs. MANOJ B MANSUKHANI

We heard learned advocate Ms. Mauna Bhatt for the appellant.

1 The assessee, who had a food processing unit at Kandala, filed his return of income for the Assessment Year 2005-2006 declaring his income. In the return of income, the assessee showed total export of 3,29,40,359/-, as export turnover claiming exemption under Section 10A of the Act to the tune of Rs. 12,58,711/-. The Assessing Officer declined the claim of deduction by his order dated 26.12.2007 taking view that there was no export of goods, which was a necessary condition for claiming a benefit under section 10A

2 The assessee preferred appeal before Commissioner of Income Tax (Appeals). The CIT(A) considered the explanation of the assessee that it was not engaged in any service industry but was a unit established in the Special Economic Zone selling the goods after processing them. According to the assessee, he was a deemed exporter and he claimed that he fulfilled the requisite conditions to get the deduction. The CIT(A) however, held against the assessee and confirmed the denial of exemption vide his order dated 17.12.2009.

3 The assessee filed appeal before Income Tax Appellate Tribunal. The Tribunal took a view that the assessee unit had been selling the goods after processing the same which was a final product and that the assessee deemed to be the exporter. It held that he was entitled to benefit of deduction under section 10A of the Act. The Tribunal observed inter-alia as under : “...The section 10A also includes production of things; therefore the activity of the assessee is eligible as production as defined by the Hon'ble Supreme Court. The another issue raised by the AO is that the assessee is not earning foreign currency, the assessee has furnished various documents and papers to prove that the earnings are in foreign currency, the assessee has submitted the bank advice in which the amount are received and credited in foreign currency, the copy of bills are also raised to various parties in foreign currency, in the shipping bill the name of the assessee has TAXAP/659/2011 4/5 been mentioned as processor. All evidences clearly prove that the goods are processed at SEZ and the same is exported outside India and the assessee has earned the receipt in foreign currency.....”

4 The Tribunal came to the conclusion that the assessee had executed direct physical export and the income was earned in foreign exchange, and that necessary conditions for claiming exemption under section 10A were met with.

The conclusion reached by the Tribunal about eligibility of the assessee for deduction under section 10A was based on considering the facts and material before it. Essentially the finding was in the realm of facts and appreciation thereof. The Tribunal considered the relevant material and recorded a finding that the goods were produced at the Special Economic Zone and they were exported.

No error was committed by the Tribunal in allowing the appeal of the assessee. No substantial question of law arises for consideration in the present facts and circumstances. Therefore, this appeal deserves a dismissal.

We are fortified in our view by decision of Division Bench of this Court dated 9.8.2011 in TA NO. 941 of 2010 on the identical issue in respect of assessment year 2004-2005, which was decided in favour of the assessee and came to be upheld.

Accordingly, the present appeal is dismissed. [V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi