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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘SMC’ MUMBAI
Before: Shri Joginder Singh
आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 16/02/2015 of Ld. Commissioner of Income Tax, Mumbai.
The first ground agitated by the Revenue, before this Tribunal, is with respect to holding that the assessee is eligible for deduction under section 10AA of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, Shri Rajesh Ojha, learned D.R. defended the conclusion arrived at in the assessment order. On the other hand, Shri J.P. Bairagra, learned counsel for the assessee defended the impugned order.
We have considered the rival submissions and perused the material available on record. Facts in brief are that the assessee, claimed to be engaged in the business of duty free import and export of goods, mainly sold at duty free shops in India and abroad, mainly in cigarettes and foreign made liquor and claimed deduction amounting to Rs.48,78,973/- under section 10AA of the Act. During scrutiny proceedings the learned Assessing Officer asked the assessee to furnish necessary details which were filed by the assessee. The assessee vide letter dated 13.10.2012 and 09.03.2013 made submissions claiming that the assessee is a trading concern and engaged in trading service of import and export of FMFL and cigarettes from the SEZ and therefore eligible for deduction under section 10AA. The assessee placed reliance on section 51 (1) of the SEZ Act read with rule 76 of SEZ Rules, 2006, wherein the “services” has been defined to include trading. However, the learned Assessing Officer disallowed the claimed deduction and taxed the same under the normal provisions of the Act.
3.1 On appeal before the learned CIT(A) the factual matrix/ submissions as mentioned in para 3.2 of the impugned order were considered and by following various decisions including Hotel Ashoka (ITDC) vs. ACIT (2012) STPL (Web) 89 (SC), Gitanjali Exports (ITA No. 6947 & 6948/Mum/2011), Goenka Diamonds and Jewellers Ltd. 146 TTJ 68 (JP), Midas DFS Pvt. Ltd. 37 CCH 264 (Kol.), decided in favour of the assessee. The Revenue is aggrieved and is in appeal before this Tribunal. 3.2 If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we find the claimed deduction under section 10AA of the Act was started in 2007 for which approval was granted by CSEZ Development Commissioner, permitting the assessee to establish the unit at SEZ to undertake its trading activity. The assessee purchases item like cigarettes and foreign liquor, beside other foreign suppliers, from Flamingo DFS Pvt. Ltd. and from Flamingo Duty Free Shop Pvt. Ltd. having their registered office at Navi Mumbai. These two concerns import the item from aboard and Flamingo got the licence to operate duty free shops at various air ports/sea ports in India and also has bonded warehouses in different cities in India wherever its duty free shops. The purchases made by the assessee are by way of high seas purchases wherein the goods are sold by Flamingo to the assessee, while the cargo is on the high seas. These are done through high seas sales contract. The necessary documents were duly examined by the learned CIT(A) and this factual matrix is not controverted by the Revenue. Original bill of lading, bill of entry were also examined. The purchases were made on the high seas and not in India. There is not a single instance where the local purchases were made within in India. We find that the ratio laid down in the cases like Gitanjali Exports, Midas DFS Pvt. Ltd. and Goenka Diamond and Jewellers Ltd. (supra), support the case of the assessee. The issue of allowability was duly considered by the Jaipur Bench in 146 TTJ 68 (supra). The totality of facts/provisions of SEZ Act and SEZ Rules provides that the benefit of section 10AA is available on trading. The ratio laid down in Gitanjali Exports Corporation and Gitanjali Gents Ltd. also supports the case of the assessee. The relevant findings have been reproduced at page 6 on wards of the impugned order. Considering the totality of facts and the judicial pronouncements discussed hereinabove we find no infirmity in the conclusion drawn by the learned CIT(A).
So far as the next ground, i.e. deleting the addition while computing book profit under section 115JB of the Act is concerned it is consequential to the disallowance made under section 10AA while computing the book profit under section 115JB. Since we have upheld the claimed deduction under section 10AA of the Act in favour of the assessee there is no question of adding the same while computing the book profit under section 115JB of the Act. Thus we find no merit in the appeal of the Revenue. Finally the appeal of the Revenue is dismissed.