ITO 3(2)(3), MUMBAI vs. KANANI INDUSTRIES LTD, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य लेखा सद�य,राजे�� के अनुसार लेखा सद�य लेखा सद�य राजे�� के अनुसार राजे�� के अनुसार -Per Rajendra,AM: राजे�� के अनुसार Challenging the order dated 10/10/2014 of the CIT(A)-4,Mumbai the Assessing Officer (AO) has filed the present appeal.Assessee-company,engaged in the business of manufacturing and export of diamond studded jewellery,filed its return of income on 27/09/2011,disclosing income of Rs.Nil.The AO completed the assessment u/s.143 (3)of the Act,assessing its income as shown in the return,under the normal provisions.However,book profit for the purpose of levy of income tax u/s.115 JB was determined at 16.22 crore.While computing the income under the MAT provisions,the AO did not exclude profit of the assessee’s SEZ unit holding that the mandate of section 115 JB (6) of the Act was very clear. He held that amendment made to clause (f) of the Explanation-1 to the section 115 JB (2) prohibited the benefits available under the said section.Accordingly,he did not reduce the profits of SEZ unit while computing the book profit. He referred to circular number 3/2008, dated 12/03/ 2008 issued by the CBDT. 2.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA).Before him, it was argued that during the year under consideration the assessee had not carried out any other business except manufacturing and export of jewellery in its SEZ unit, that the AO had allowed exemption u/s.10 AA of the Act in the earlier years, that from the plain reading of sub-section 6 to section 115 JB it would be clear that provisions of the said sub-section were not applicable to the income derived from SEZ unit, that the income of SEZ was to be excluded while determining the text liability u/s.115

7180/M/14-Kanani(11-12)

JB of the Act. It relied upon the cases of Genesys International Corporation Ltd. (28 taxmann. com 134)and Nissan Renault Technology Business Centre India Ltd. (ITA/108/Madras/2012- AY. 2008-09, dated 03/07/2013).After considering the available material, the FAA held that in the earlier year the identical issue was decided in favour of the assessee, that he had passed a detailed order in that year. Referring to the cases relied upon by the assessee, he allowed the appeal filed by it.

4.Before us,the Departmental Representative (DR)stated that matter could be decided on merits.The Authorised Representative (AR) supported the order of the FAA and relied upon the same cases which were referred to by the FAA.