Chemoli Adani Pvt. Ltd., Ahmedabad V. The DCIT, Circle-1(1)(2), Ahmedabad

CO 25/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7869 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N R SONI
• Assessee Lawyers: PARIN SHA
• Keywords: Business income; Transfer pricing; International transaction; Proportionate interest; Initiation of penalty proceedings; Speculation loss; Competent authority
• Section: 143(3); 92B; 10AA; 234B; 14A; 201; 144C; 43; 13; 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO .1555/AHD/2016 WITH C.O. 112/AHD/2016 / ASSTT. YEAR : 2010 - 2011 & ./ IT (TP) A NO.1102/AHD/2017 WITH C.O. 25/AHD/2018 / ASSTT. YEAR: 2011 - 2012 D. C . I . T, CIRCLE - 1(1 ) (1) , AHMEDABAD. VS. M/S.CHEMOIL ADANI PVT. LTD. , ADANI HOUSE, NR. MITHKHALI SIX ROAD , NAVRANGPURA, AHMEDABAD - 380006 . PAN: AADCC3765G (APPLICANT) (RESPON D ENT) REVENUE BY : SHRI N.R. SONI, CIT . D.R ASSESSEE BY : SHRI S.N. SOPARKAR , SHRI VARTIK CHOKSHI & SHRI PARIN SHAH , A.R S / DATE OF HEARING : 10 / 10 / 201 9 / DATE OF PRONOUNCEMENT: 07 / 01/2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER : THE CAPTIONED A PPEAL S ARE FILED BY THE REVENUE AND THE CO IS FILED BY THE ASS ESSEE AGAINST THE SEPERATE ORDER S OF THE LEARNED COMMISS IONER OF INCOME TAX ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 2 (APPEALS) AHMEDABAD , [ LD. CIT (A) IN SHORT] DATED 30/03 / 2016 AND 28/02/2017 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) R.W.S 144C(3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 27 / 02 /2014 AND 27/04/2015 . THE A SSESS E E HAS FILED CROSS OBJECTION IN THE REV E NUE S APPEAL S BEARING ITA NO S .1555 /AHD /2 016 & IT(TP)A NO.1102/AHD/2017 FOR THE ASSESSMENT YEAR S 2010 - 2011 & 2011 - 2012. ITA NO.1555/AHD/2016 FOR A.Y. 2010 - 11 (APPEAL BY THE REVENUE) THE REVENUE HAS RAIS ED FOLL OWING GROUNDS OF APPEALS . 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S.10AA OF THE ACT OF RS.4,72,67,584/ - 2. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO REWORK THE DISALLOWANCE OF HEDGING LOSS OF RS.4,81,48,554/ - MADE BY THE AO. 3. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.60,00,560/ - U/S.36(I)(III) OF THE ACT. 2. THE 1 ST ISSUE RAISED BY THE R EVENUE IS THAT THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 4,72,67,584/ - ON ACCOUNT OF THE DEDUCTION CLAIMED UNDER SECTION 10AA OF THE ACT 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF DEALING IN FUEL OIL AND HIGH SPEED DIESEL AND ALL TYPES OF PETROLEUM PRODUCTS. THE ASSESSEE HAS ITS PROCESSING UNIT IN SEZ AND THUS IT CLAIMED THE DEDUCTION FROM THE OPERATIONS CARRIED OUT THEREIN (SEZ UNIT) UNDER SECTION 10AA OF THE ACT AMOUNTING TO RS. 4,72,67,584/ - . 3.1 AS PER THE ASSESSEE, IT WAS CARRYING OUT THE ACTIVITY OF BLENDING OF DIFFERENT OILS IN THE OIL TANKS SITUATED WITHIN SEZ. THE ASSESSEE FOR THIS PURPOSE HAS HIRED 7 ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 3 TANKS OF DIF FERENT CAPACITY FOR FUEL OIL STORAGE FROM ADANI PORTS AND SPECIAL ECONOMIC ZONE LIMITED (FOR SHORT APSEZ ) . DURING THE PROCESSING/BLENDING ACTIVITY OF DIFFERENT OIL, CERTAIN REPORTS USED TO BE GENERATED BY THE ASSESSEE AS DETAILED UNDER: THE FOLLOWING REP ORTS ARE GENERATED DURING THE MANUFACTURING I.E BLENDING PROCESS CARRIED ON BY THE ASSESSEE COMPANY. THE SAMPLE COPIES OF THE SAID REPORTS ARE SUBMITTED HEREWITH VIDE ANNEXURE - 1. IMPORT DOCUMENTS BE/OTR/TEST REPORTS STOCK IN THE TANK BEFORE RECEIPT OF NEW PRODUCT. SPECIFICATION SURVEY REPORT OF TANK STOCK. SPECIFICATION DURVEY REPORT OF NEW PRODUCT. SPECIFICATION SURVEY REPORT OF TANK PRODUCT AFTER RECEIPT OF NEW PRODUCT. INTER TANK TRANSFERS - DOCUMENTS - OTR/TEST REPORTS/PORT BILLS STOCK IN THE TANKS BEFORE ITT SPECIFICATION - SURVEY REPORT OF TRANSFER TANK SPECIFICATION - SURVEY REPORT OF TRANSFEREE TANK SPECIFICATION - SURVEY REPORT OF TANK AFTER TRANSFER OF THE PRODUCT HEATING/CIRCULATION - DOCUMENTS - SURVEYOR REPORT/PORT BILLS DIP LEVEL AND TEMPE RATURE IN A PARTICULAR TANK BEFORE HEATING/CIRCULATION - REPORT OF SURVEYOR AND PORT. DIP LEVEL AND TEMPERATURE IN A PARTICULAR TANK AFTER HEATING/CIRCULATION - REPORT OF SURVEYOR AND PORT. 3.2 ACCORDINGLY, THE ASSESSEE CALIMED THAT A S A RESULT OF SUCH PROCE SSING, A DIFFERENT PRODUCT WITH DIFFERENT CHEMICAL COMPOSITION USED TO BE PRODUCED. 3.3 THE ASSESSEE ALSO CLAIMED THAT THE IMPUGNED ACTIVITY HAS BEEN CLASSIFIED BY THE DEVELOPMENT COMMISSIONER MUNDRA PORT AND SPECIAL ECONOMIC ZONE, MINISTRY OF COMMERC E AND INDUSTRY, GOVERNMENT OF INDIA AS MANUFACTURING ACTIVITY IN THE LETTER OF APPROVAL DATED 17 DECEMBER 2008. 3.4 IN VIEW OF THE ABOVE, THE ASSESSEE CLAIMED THAT SUCH PROCESSING IS MANUFACTURING ACTIVITY WITHIN THE MEANING OF THE PROVISION AS DEFINED IN CLAUSE (III) OF EXPLANATION 1 TO SECTION 10AA R.W. CLAUSE (R) OF SECTION (2) OF SPECIA L ECONOMIC ZONES ACT, 2005. THE ASSESSEE WITHOUT PREJUDICE TO THE ABOVE ALSO CLAIMED THAT EVEN THE ACTIVITY OF THE ASSESSEE IS ASSUMED AS TRADING ACTIVITY AND NOT MAN UFACTURING ACTIVITY, THEN ALSO IT IS ENTITLED FOR THE DEDUCTION UNDER SECTION ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 4 10AA OF THE ACT WITHIN THE MEANING OF THE SERVICES DEFINED UNDER SECTION 2(Z) OF SEZ ACT R.W.R. 76 OF SEZ RULES 2006. 3.5 HOWEVER, THE AO WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS SHOWN PLANT AND MACHINERY WORTH OF RS. 8,46,899/ - AS EVIDENT FROM TAX AUDIT REPORT IN FORM 3 CD. BUT THE ASSESSEE CLAIMED TO HAVE DISPATCH ED THE OIL AFTER PROCESSING FROM ITS SEZ TERRITORY AT 531113 METRIC TONS AND GENERATED THE SALES OF RS. 1127,97,15,686/ - . AS PER THE AO THE EQUIPMENT/MACHINERY USED IN PROCESSING OF DIFFERENT OIL WAS NOT SUFFICIENT ENOUGH TO CARRY OUT THE PROCESSING OF SUCH A HUGE QUANTITY OF OIL. 3.6 THE REPORTS SUBMITTED BY THE ASSESS EE WHICH WERE GENERATED IN THE PROCESSING ACTIVITIES WERE PERTAINING FOR THE FINANCIAL YEAR 2013 - 14 . T HEREFORE THE SAME CANNOT BE REFERRED/CONSIDERED FOR THE YEAR UNDER CONSIDERATION. 3.7 THE AO ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE TRADI NG ACTIVITY FALLS WITHIN THE MEANING OF THE SERVICES AS DEFINED UNDER SECTION 2(Z) OF SEZ ACT R.W.R. 76 OF RULES 2006 BY OBSERVING THAT THE ASSESSEE HAS SHOWN INCOME FROM THE SERVICES FOR RS. 33,52,920/ - WHICH IS ONLY ELIGIBLE FOR THE PURPOSE OF DEDUCTION UNDER SECTION 10 AA OF THE ACT. 3.8 THE AO ALSO OBSERVED THAT THE IMPUGNED PROCESSING/BLENDING ACTIVITY IS NOT MANUFACTURING ACTIVITY WITHIN THE MEANING OF SECTION 2(29BA) OF THE ACT. IT IS BECAUSE THE FINAL PRODUCT AFTER THE PROCESSING/BLENDING HAS NOT U NDERGONE FOR ANY CLASS TRANSFORMATION AND NO NEW PRODUCT HAS COME INTO EXISTENCE, HAVING ANY DISTINCT OBJECT OR ARTICLE OR THING HAVING A DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STRUCTURE. 3.9 THE AO FURTHER OBSERVED THAT THE ASSESSEE WHILE CLAIMING THE DEDUCTION UNDER SECTION 10AA OF THE ACT HAS CONSIDERED THE DOMESTIC SALES, INTEREST INCOME, ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 5 INCOME FROM EXCHANGE FLUCTUATION AMOUNTING TO RS. 20.75 CRORES, RS. 82,89,467/ - AND RS. 6,40,73,699/ - R ESPECTIVELY. HOWEVER, THE AO WAS OF THE VIEW THAT SUCH INCOME IS NOT ARISING FROM THE ACTIVITIES ELIGIBLE FOR THE EXEMPTION UNDER 10AA OF THE ACT . ACCORDINGLY, THE AO HAS IGNORED THE ABOVE INCOME TO WORK OUT THE INCOME FROM SEZ UNIT WHICH RESULTED LOSS FRO M IT AMOUNTING TO RS. 23,73,44,823/ - . IN VIEW OF THE ABOVE THE AO HELD THAT THE AMOUNT OF RS. 4,72,67,584/ - IS NOT ELIGIBLE FOR THE DEDUCTION UNDER SECTION 10AA OF THE ACT AS CLAIMED BY THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEAR NED CIT (A). 4. THE ASSESSEE BEFORE THE LEARNED CIT (A) SUBMITTED THAT THE AO ERRED IN REFERRING THE DEFINITION OF MANUFACTURING AS PROVIDED UNDER SECTION 2(29BA) OF THE ACT. AS SUCH THE PROVISIONS OF SECTION 10AA OF THE ACT CLEARLY STATES THAT THE MEANI NG OF MANUFACTURING FOR THE PURPOSE OF THIS SECTION IS AS DEFINED UNDER THE PROVISION OF SECTION 2(R) OF THE SPECIAL ECONOMIC ZONE ACT 2005. ACCORDINGLY, THE ACTIVITY OF THE ASSESSEE I.E. BLENDING OF THE VARIOUS OILS IS A PROCESSING ACTIVIT Y AMOUNTING TO THE MANUFACTURE . 4.1 THE ASSESSEE TO CARRY OUT THE BLENDING ACTIVITY HAS HIRED 7 TANKS ON LEASE HAVING TOTAL CAPACITY OF 74127 KILO LITRES WHICH ARE EQUIPPED WITH SPECIFIC PUMPS, CHURNERS AND OTHER REQUISITE FACILITIES SUCH AS INSULATED TO MAINTAIN TEMP ERATURE, SPECIFIC IT SYSTEMS CONTROL THE TEMPERATURE, DIP MEASUREMENT, LEVEL OF CARGO. THEREFORE VARIOUS TECHNICAL SURVEY REPORTS GENERATED DURING THE BLENDING PROCESS . AS SUCH, THE FINDING OF THE AO THAT THE ASSESSEE DOES NOT POSSESS SUFFICIENT PLANT AND MACHINERY TO CARRY OUT THE BLENDING ACTIVITY IS BASED ON WRONG ASSUMPTION OF FACTS. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 6 4.2 THE ASSESSEE ALSO SUBMITTED DURING THE ASSESSMENT PROCEEDINGS THAT EVEN IF THE ACTIVITY OF THE ASSESSEE IS CONSIDERED AS TRADING IN NATURE THEN ALSO IT WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT IN PURSUANCE TO THE PROVISIONS OF THE SERVICES DEFINED UNDER SECTION 2(Z) OF THE SEZ ACT. BUT THE AO HAS WRONGLY ASSUMED THAT THE SERVICE INCOME SHOWN BY THE ASSESSEE IN THE AUDITED FINANCIAL STATEMENTS IS ONLY ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. AS SUCH THE SERVICES DEFINED UNDER SECTION 2(Z) OF THE SEZ ACT INCLUDES THE TRADING ACTIVITIES. AS SUCH THE WORDS TRADING UNDER THE SEZ ACT MEAN S IMPORT FOR THE PURPOSE OF RE - EXPORT. ACCORDINGLY THE ASS ESSEE WAS IMPORTING THE VARIOUS OILS WHICH WERE BLENDED FOR THE RE - EXPORT PURPOSES. THUS THE TRADING ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. 4.3 THE ASSESSEE ALSO SUBMITTED THAT DEDUCTION CLAIMED UNDER SECTION 10AA OF THE ACT WAS BASED ON THE REPORT FURNISHED BY THE QUALIFIED CHARTERED ACCOUNTANT IN THE FORM NO. 56 - F AND NOT ON THE TAX AUDIT REPORT FURNISHED UNDER SECTION 44 AB OF THE ACT. BUT THE AO WRONGLY REFERRED TO SUCH TAX AUDIT REPORT AND CONCLUDED THAT THE ASSESSEE IS ENGA GED IN THE TRADING ACTIVITIES. THE ASSESSEE FURTHER SUBMITTED THAT EVEN THE REFERENCE MADE BY THE AO TO THE TAX AUDIT REPORT UNDER SECTION 44 AB OF THE ACT IS PRESUMED CORRECT, THEN ALSO THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN PURSUANCE TO THE PROVISIONS OF SECTION 2(Z) OF THE S EZ ACT READ WITH RULE 76 OF SEZ RULES AS SUBMITTED IN THE PRECEDING PARAGRAPH. 4.4 THE ASSESSEE FURTHER CLAIMED THAT IT HAS NEVER CLAIMED ANY DEDUCTION UNDER SECTION 10AA OF THE ACT WITH RESPECT TO THE PROFIT ATTRIBUTABLE TO THE DOMESTIC SALES MADE BY THE SEZ UNIT. AS SUCH THE AMOUNT OF PROFIT SHOWN BY IT IN ITS SEZ UNIT WAS FURTHER BIFURCATED BETWEEN THE EXPORT SALES AND THE DOMESTIC SALES. ACCORDINGLY, THE PROFIT OF THE SEZ UNIT WAS REDUCED FROM RS. 4,81,53,426/ - TO THE AMOUNT O F RS. 4,72,67,584/ - WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 10AA OF THE ACT. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 7 4.5 SIMILARLY, THE ASSESSEE CLAIMED THAT THE FOREIGN EXCHANGE GAIN OF RS. 6,40,73,699/ - WAS REPRESENTING THE INCOME ON ACCOUNT OF DIFFERENCE IN THE RATE OF FOREIGN CURRENCY IN RESPECT OF THE EXPORT ACTIVITIES. THERE IS A DIRECT NEXUS BETWEEN THE GAINS FROM CUR RENCY RATE FLUCTUATION WITH THE SEZ OPERATION, THEREFORE THE SAME SHOULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. AS SUCH THE AO HAS MISUNDERSTOOD SUCH GAIN AS CURRENCY SWAP LOSS/GAIN AND ACCORDINGLY TREATED THE SAME AS SPECULATION INCOME. THUS, THE AO DENIED THE DEDUCTION OF SUCH INCOME ON WRONG ASSUMPTION OF FACTS. 4.6 THE ASSESSEE ALSO SUBMITTED THAT THE INTEREST INCOME WAS EARN ED FROM THE MARGIN MONEY DEPOSITED WITH THE BANK FOR AVAILING THE CREDIT FACILITIES IN ORDER TO MEET THE WORKI NG CAPITAL DEMAND AND CREDIT BACKED EXPORT DISCOUNTING IN FOREIGN CURRENCY FACILITY. ACCORDINGLY THE ASSESSEE CLAIMED THAT THE INTEREST INCOME FROM FIXED DEPOSITS MADE AS MARGIN MONEY FOR OPENING OF THE LETTER OF CREDIT HAS A DIRECT NEXUSES WITH ITS BUSINE SS CARRIED ON FROM SEZ . THUS THE IMPUGNED INTEREST INCOME OF RS. 82,89,467/ - IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. 5. THE LEARNED CIT (A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE FINDING OF THE AO OBSERVED THAT: REGARD ING THE MANUFACTURING ACTIVITY I. T HE ASSESSEE HAS HIRED THE TANKS FOR THE PURPOSE OF STORAGE AND BLENDING THE VARIOUS OILS IMPORTED BY IT. THESE TANKS WERE WELL EQUIPPED WITH THE NECESSARY FACILITIES SUCH AS TURNER, JACK PUMP, HOT WATER PIPELINE, BOILER E TC WHICH WERE ALREADY INSTALLED WITHIN THE TANK FOR PROPER BLENDING. II. THESE TANKERS WERE COMPLETELY INSULATED TO MAINTAIN TEMPERATURE AND SPECIFIC IT SYSTEMS WHICH WERE INSTALLED AT THE STORAGE TERMINAL TO HAVE BETTER CONTROL OVER TEMPERATURE, DIP MEASUREM ENT, LEVEL OF CARGO. III. THE TECHNICAL SURVEY REPORTS FILED BY THE ASSESSEE BEFORE THE AO WERE MAINLY FOR THE PURPOSE OF THE REFERENCE THOUGH THEY WERE PERTAINING TO ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 8 THE YEAR 2013 - 14. AS SUCH THE AO NEVER DEMANDED THE ASSESSEE TO FURNISH THESE REPORTS FOR THE YEAR UNDER CONSIDERATION. IN FACT THE ASSESSEE IN ORDER TO EXPLAIN THE BLENDING PROCESS FILES THE REPORTS. HOWEVER THE ASSESSEE DURING THE APPELLATE PROCEEDINGS FURNISHED THE REPORTS FOR THE YEAR UNDER APPEAL. THESE REPORTS WERE SUFFICIENT ENOUGH TO ESTABL ISH THAT THE ASSESSEE WAS CARRYING OUT THE BLENDING ACTIVITIES. IV. FOR CLAIMING THE DEDUCTION UNDER SECTION 10AA OF THE ACT, THE DEFINITION OF MANUFACTURE HAS BE EN PROVIDED UNDER THE SEZ ACT BUT THE AO ERRONEOUSLY MADE REFERENCE TO THE DEFINITION AS PROVIDED UNDER SECTION 2(29BA) OF THE ACT. REGARDING THE TRADING ACTIVITY V. IT WAS ALSO OBSERVED THAT EVEN IF THE ACTIVITY OF THE ASSESSEE IS ASSUMED AS OF TRADING THEN ALSO SUCH ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT IN PURSUANCE TO THE PRO VISIONS OF SECTION 2(Z) OF THE SEZ ACT. REGARDING THE QUANTIFICATION OF DEDUCTION UNDER SECTION 10AA OF THE ACT, VI. THE ASSESSEE HAS CORRECTLY CALCULATED THE AMOUNT OF DEDUCTION IN PROPORTION TO THE EXPORT SALES VIZ A VIZ DOMESTIC SALES OF THE SEZ UNIT AS PR OVIDED UNDER SUBSECTION 7 OF SECTION 10AA OF THE ACT. THUS THE AO ERRONEOUSLY HAS REDUCED THE AMOUNT OF DOMESTIC TURNOVER FROM THE TOTAL TURNOVER OF THE ASSESSEE SEZ UNIT WHICH RESULTED LOSS TO THE ASSESSEE. VII. THE AMOUNT OF INCOME OF RS. 6,40,73,699/ - IS RE PRESENTING THE GAIN ON ACCOUNT OF CURRENCY FLUCTUATION BUT THE AO HAS WRONGLY ASSUMED THE SAME AS SPECULATION IN NATURE. AS SUCH THE IMPUGNED INCOME WAS REALISED IN THE COURSE OF THE EXPORT BUSINESS CARRIED ON BY THE ASSESSEE. THEREFORE THE SAME IS ELIGIBL E FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 9 VIII. SIMILARLY THE INTEREST INCOME SHOWN BY THE ASSESSEE WAS DERIVED BY IT IN THE COURSE OF ITS BUSINESS ACTIVITIES AND THEREFORE THE SAME IS PART AND PARCEL OF BUSINESS INCOME. THUS THE SAME IS ELIGIBLE FOR DEDUC TION UNDER SECTION 10 AA OF THE ACT IN VIEW OF THE ABOVE THE LD. CIT - A ALLOWED THE DEDUCTION UNDER SECTION 10AA OF THE ACT TO THE ASSESSEE. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT - A, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DR BEFORE US SUBM ITTED THAT THE ACTIVITY OF BLENDING IS NOT A MANUFACTURING ACTIVITY. THEREFORE THE ASSESSEE IS INELIGIBLE FOR THE DEDUCTION/EXEMPTION UNDER SECTION 10AA OF THE ACT. 7. ON THE OTHER HAND THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 198 AND RETITERATED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW. 7.1 BOTH THE LD. DR AND THE AR BEFORE US RELIED ON THE ORDER OF THE AUTHORITIES BELOW AS FAVORABLE TO THEM. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT CASE RELATES WHETHER THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION UNDER SECTION 10AA OF THE ACT WITH RESPECT TO THE PROFIT GENERATED FROM THE ALLEGED ACTIVITY OF THE PROCESSING/BLENDING OF OIL. THE PROVIS IONS OF SECTION 10 AA OF THE ACT HAS DIRECT BEARING ON THE ISSUE ON HAND. THEREFORE IT IS IMPERATIVE TO REFER THE PROVISIONS OF SECTION 10 AA OF THE ACT WHICH READS AS UNDER: 14 [ SPECIAL PROVISIONS IN RESPECT OF NEWLY ESTABLISHED UNITS IN SPECIAL ECONOMIC ZONES. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 10 10AA. (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, BEING AN ENTREPRENEUR AS REFERRED TO IN CLAUSE ( J ) OF SECTION 2 15 OF THE SP ECIAL ECONOMIC ZONES ACT, 2005, FROM HIS UNIT, WHO BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR PROVIDE ANY SERVICES DURING THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2006, A DEDUCTION OF XXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX EXPLANATION 1. FOR THE PURPOSES OF THIS SECTION, XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX ( III ) MANUFACTURE SHALL HAVE THE SAME MEANING AS ASSIGNED TO IT IN CLAUSE ( R ) OF SECTION 2 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 19 ; 8.1 FROM THE ABOVE EXPLANATION, IT IS REVEALED THAT THE MEANING OF MANUFACTURING SHALL REMAIN THE SAME FOR THE PURPOSE OF CLAIMING THE DEDUCTION UNDER SECTION 10 AA OF THE ACT AS ASSIGNED IN CLAUSE ( R ) OF SECTION 2 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 19 ; WHICH READS AS UNDER: MANUFACTURING MEANS TO MAKE, PRODUCE, FABRICATE, ASSEMBLE, PROCESS OR BRING INTO EXISTENCE, BY HAND OR BY MACHINE, A NEW PRODUCT HAVING A DISTINCTIVE NAME, CHARACTER OR USE AND SHALL INCLUDE PROCESSES SUCH AS REFRIGENRATION, CUTTING, POLISHING, BLENDING, REPAIR, REMARKING, RE - ENGINEERING AND INCLUDES AGRICULTURE, AQUACULTURE, ANIMAL HUSBAN DRY, FLORICULTURE, HORTICULTURE, PISCICULTURE, POULTRY, SERICULTURE, VITICULTURE AND MINING; (EMPHASIS SUPPLIED) 8.2 FROM THE ABOVE DEFINITION, IT EMERGES THAT THE ACTI VITY OF BLENDING IS COVERED WITHIN THE MEANING OF MANUF ACTURING AS PROVIDED UNDER THE S PECIAL E CONOMIC Z ONE ACT 2005. NOW THE QUESTION ARISES WHETHER THE ACTIVITIES CARRIED OUT BY THE ASSESSEE AMOUNT S TO THE BLENDING AS CLAIMED BY THE ASSESSEE. IN THIS CONNECTION WE NOTE THAT THE ASSESSEE HAS IMPORTED VARIOUS FUEL OIL IN BULK WHICH WERE BLENDED IN THE TANKS HIRED BY IT AT MUNDRA PORT AS EVIDENT FROM THE SUBMISSION OF THE ASSESSEE BEFORE THE AO. THE RELEVANT EXTRACT OF THE SUBMISSION OF THE ASSESS EE IS REPRODUCED AS UNDER: THE ASSESSEE COMPANY HAS MADE IMPORT OF VARIOUS FUEL OIL IN BULK AND OUT OF SUCH IMPORTS FEW QUANTITY SHALL BE BLENDED AT MUNDRA PORT. THUS IT SHALL CARRY THE PROCESS OF BLENDING AT MUNDRA PORT. FURTHER AFTER BLENDING THE OIL/FUEL, THE SAME SHALL BE RE - EXPORTED AS BUNKER FUEL SUPPLY TO FOREIGN RUN VESSELS DIFFERENT VESSELS AS PER THEIR REQUIREMENT, VARYING MAINLY IN TERMS OF VISCOSITY, SULFUR AND OTHER PARAMETERS AT PORTS OF GUJARAT. THE A SSESSEE COMPANY HAS HIRED 7 TANKS OF DIFFERENT CAPACITY FOR FUEL OIL STORAGE FROM APSEZ ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 11 THE BLENDING ACTIVITY TAKES PLACE AT THE TIME OF IMPORT OF CARGO/ NEW ARRIVAL. THE PRODUCT BEING IMPORTED HAVE THE SPECIFICATION OF I.G. 'B' GRADE. THE PRODUCT OF B G RADE IS RECEIVED IN TANK WHICH ALREADY HAVE THE PRODUCT OF A GRADE, HENCE THE SPECS OF IMPORTED CARGO IS CHANGED TO C GRADE, WHEN IT IS BLENDED WITH A GRADE CARGO ALREADY IN THE TANK. AT THE TIME OF IMPORT THERE REMAINS SOME PRODUCT IN THE TANKS WHICH HAV E SPECIFICATION OF I.G. 'A' GRADE THE BLENDING ACTIVITY TAKES PLACE ALSO WHEN THE PRODUCT OF DIFFERENT GRADES LYING IN VARIOUS TANKS IS MIXED AND A PRODUCT OF A NEW GRADE COMES INTO EXISTENCE. AS AN OPERATIONAL REQUIREMENT OR SPECIFIC ORDER FOR SUPPLY THE ASSESSEE COMPANY NEEDS TO CARRY OUT INTER - TANK TRANSFERS. IN THIS ACTIVITY THE SPECS OF TWO DIFFERENT GRADE PRODUCTS ARE BLENDED AND THE SPECS OF THE MIXED PRODUCT EMERGE DIFFERENT FROM THE SPECS OF CARGO TRANSFERRED. DURING THE PROCESS OF INTER - TANK TRAN SFER CIRCULATION, CHURNING, HEATING ACTIVITY ALSO CARRIED OUT TO HAVE PROPER BLENDING AND HOMOGENEOUS PRODUCT AT ALL THE LEVELS IN THE TANK. THERE ARE SPECIFIC EQUIPMENT LIKE CHURNERS, JET PUMPS, HOT WATER LINES, BOILERS ETC. ARE INSTALLED IN THE TANKS F OR PROPER BLENDING. - (SPECIFIC COST TO HAVE MANUFACTURING - FACILITY).TANKS ARE INSULATED TO MAINTAIN TEMPERATURE. SPECIFIC IT SYSTEMS ARE INSTALLED AT STORAGE TERMINAL TO HAVE BETTER CONTROL OVER TEMPERATURE, DIP MEASUREMENT, LEVEL OF CARGO. THE ABOVE S UBMISSION OF THE ASSESSEE HAS NOT BEEN DOUBTED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, THE AO DOUBTED ON THE MANUFACTURING ACTIVITY CARRIED OUT BY THE ASSESSEE MAINLY FOR 2 REASONS, FIRSTLY, THAT THERE WAS NOT SUFFICIENT EQUIPMENT AVAILABLE WITH THE ASSESSEE SECONDLY, AND THE AO REFERRED THE DEFINITION OF MANUFACTURE AS PROVIDED UNDER SECTION 2(29B) OF THE ACT. 8.3 REGARDING THE AVAILABILITY OF EQUIPMENT, WE NOTE THAT THE ASSESSEE HIRED THE TANKS WHICH WERE WELL EQUIPPED FOR CARRYING OUT THE BLENDING ACTIVITIES AS DESCRIBED ABOVE. FURTHERMORE, THE ACTIVITY OF BLENDING CANNOT BE LINKED WITH THE VALUE OF THE EQUIPMENT SHOWN BY THE ASSESSEE IN THE FINANCIAL STATEMENTS. 8.4 WE ALSO NOTE THAT THE DEFINITION OF THE MANUFACTURING UNDER SECTION 10AA OF THE ACT HAS ALREADY BEEN PROVIDED FOR THE ASSESSEE S CLAIMING THE BENEFIT THEREIN. THUS THERE WAS NO NEED TO IMPORT THE DEF INITION PROVIDED UNDER SECTI ON 2(29B) OF THE ACT WHILE EVALUATING THE FACT WHETHER THE ASSESSEE IS CARRYING OUT ANY MANUFACTURING ACTIVITY. IN OUR CONSIDERED VIEW, THE ASSESSEE IN THE PRESENT FACTS ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 12 AND CIRCUMSTANCES IS CARRYING OUT BLENDING ACTIVITY WHICH IS MANUFACTURE WITHIN THE MEANING AS PROVIDED UNDER SEZ ACT. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING ACTIVITY. 8.4 IT IS ALSO PERTINENT TO TAKE A NOTE OF THE FACT THAT THE DEDUCTION UNDER SECTION 10AA IS ALSO AVAILABLE TO THE ASSESSEE ENGAGED IN PROVIDING ANY SERVICES. AS SUCH WE ARE INCLINED TO ELABORATE THE SERVICES ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. 8.5 THE WORD SERVICE HAS NOT BEEN DEFINED UNDER THE ACT, THEREFORE IT IS IMPERATIVE TO REFER THE DEFINITION OF THE SERVICES PROVIDED UNDER THE SEZ ACT I.E. 2(Z) OF THE ACT WHICH READS AS UNDER: (Z) SERVICES MEANS SUCH TRADABLE SERVICES WHICH (I) ARE COVER ED UNDER THE GENERAL AGREEMENT ON TRADE IN SERVICES ANNEXED AS IB TO THE AGREEMENT ESTABLISHING THE WORLD TRADE ORGANISATION CONCLUDED AT MARRAKESH ON THE 15 TH DAY OF APRIL, 1994. (II) MAY BE PRESCRIBED BY THE CENTRAL GOVERNMENT FOR THE PURPOSES OF THIS AC T AND (III) EARN FOREIGN EXCHANGE; 8.6 FURTHER, THE RULE 76 OF S PECIAL E CONOMIC Z ONE R ULES 2006 DEFINES THE SERVICES FOR THE PURPOSE OF THIS SECTION 2(Z) OF THE SEZ ACT WHICH READS AS UNDER: 76. THE SERVICES FOR THE PURPOSES OF [1] [CLAUSE] (Z) OF SECTION 2 SHALL BE THE FOLLOWING, NAMELY: - TRADING, WAREHOUSING, RESEARCH AND DEVELOPMENT SERVICES, COMPUTER SOFTWARE SERVICES, INCLUDING INFORMATION ENABLED SERVICES SUCH AS BACK - OFFICE OPERATIONS, CALL CENTRES, CONTENT DEVELOPMENT OR ANI MATION, DATA PROCESSING, ENGINEERING AND DESIGN, GRAPHIC INFORMATION SYSTEM SERVICES, HUMAN RESOURCES SERVICES, INSURANCE CLAIM PROCESSING, LEGAL DATA BASES, MEDICAL TRANSCRIPTION, PAYROLL, REMOTE MAINTENANCE, REVENUE ACCOUNTING, SUPPORT CENTRES AND WEB - SI TE SERVICES, OFF - SHORE BANKING SERVICES, PROFESSIONAL SERVICES (EXCLUDING LEGAL SERVICES AND ACCOUNTING) RENTAL/LEASING SERVICES WITHOUT OPERATORS, OTHER BUSINESS SERVICES, COURIER SERVICES, AUDIO - VISUAL SERVICES, CONSTRUCTION AND RELATED SERVICES, DISTRIB UTION SERVICES (EXCLUDING RETAIL SERVICES), EDUCATIONAL SERVICES, ENVIRONMENTAL SERVICES, FINANCIAL SERVICES, HOSPITAL SERVICES, OTHER HUMAN HEALTH SERVICES, TOURISM AND TRAVEL RELATED SERVICES, RECREATIONAL, CULTURAL AND SPORTING SERVICES, ENTERTAINMENT SERVICES, TRANSPORT SERVICES, SERVICES AUXILIARY TO ALL MODES OF TRANSPORT, PIPELINES TRANSPORT. [ EXPLANATION - THE EXPRESSION TRADING , FOR THE PURPOSES OF THE SECOND SCHEDULE OF THE ACT, SHALL MEAN IMPORT FOR THE PURPOSES OF RE - EXPORT.] ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 13 ON READING O F THE ABOVE RULE, IT IS TRANSPIRED THAT EVEN THE TRADING ACTIVITY CARRIED OUT BY THE ASSESSEE FROM ITS SEZ UNIT, THE PROFIT FROM SUCH ACTIVITY IS ALSO ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. 8.7 NOW THE NEXT QUESTION ARISES WHETHER THE PROVISIONS OF INCOME TAX ACT 1961 WILL PREVAIL OVER THE PROVISIONS OF THE SPECIAL ECONOMIC ZONES ACT, 2005. AT THIS POINT IT IS RELEVANT TO REFER THE RELEVANT PROVISIONS OF SECTION 51 OF SEZ ACT 2005 WHICH IS GIVEN BELOW: - 51.(1) THE PROVISIONS OF THIS AC T SHALL HAVE ACT TO HAVE EFFECT NOTWITHSTANDING ANYTHING INCONSISTENT OVERRIDING EFFECT, THEREWITH CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR IN ANY INSTRUMENT HAVING EFFECT BY VIRTUE OF ANY LAW OTHER THAN THIS ACT. 8.8 FROM THE READING O F THE PROVISIONS IT IS CLEAR THAT THE PROVISIONS AS SPECIFIED UNDER THE SPECIAL ECONOMIC ZONES ACT, 2005 WOULD HAVE OVERRIDING EFFECT ON THE INCOME TAX ACT. THE SAME VIEW HAS ALSO BEEN HELD IN THE CASE OF THE MIDAS DFS (P) LTD. BY THE HON BLE KOLKATA ITAT IN ITA NO.30/KOL/2012 FOR THE AY 2008 - 09 VIDE ORDER DATED 13/11/2013. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FIRST OBJECTION OF THE ASSESSING OFFICER WAS THAT THE BENEFIT OF SECTION 10AA OF THE ACT IS LOST WHEN THE ASSESSEE IS ENGAGED SOLELY IN TRADING ACTIVITIES. IT HAS BEEN NOTICED ABOVE THAT SECTION 10AA(1) ALLOWS BENEFITS, INTER ALIA, FOR THE PROVISIONS OF ANY SERVICES BY AN ELIGIBLE ENTERPRISE. OBVIOUSLY, THE ERSTWHILE PARTNERSHIP FIRM I.E., M/S MIDAS INTERNATIONAL WAS PERMITTED TO DO TRADING BY THE COMPETENT AUTHORITY. THE FIRM GOT CONVERTED INTO ASSESSEE COMPANY AND CONTINUED THE SAME BUSINESS WITH THE PRIOR PERMISSION FROM THE COMPETENT AUT HORITY UNDER THE SEZ ACT. THE DEFINITION OF SERVICE IN THE SEZ ACT INCLUDES TRADING ACTIVITY. IN THAT VIEW OF THE MATTER, IT BECOMES MANIFEST THAT THE TRADING ACTIVITY HAS BEEN PERMITTED BY THE COMPETENT AUTHORITY UNDER THE SEZ ACT. AS SUCH, THERE CAN BE NO QUESTION OF DENIAL OF EXCEPTION US/S 10AA OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD A COPY OF AN ORDER PASSED BY THE JAIPUR BENCH IN DCIT VS. GOENKA DIAMOND & JEWELLERS LTD . IT APPEAL NO. 509(JP) OF 2011 2012(050) - SOT - 0307 - TJA I IN WHICH IT HAS BEEN HELD THAT TRADING OF THE ELIGIBLE GOODS ENTITLES THE SE TO THE BENEFIT OF SECTION 10AA OF THE ACT. SIMILARLY, THE COPY OF ANOTHER ORDER PASSED BY MUMBAI BENCH IN M/S GITANJALI EXPORTS CORPORATION LIMITED VS. ADCIT IN ITA NO. 6947 & 6 948/MUM/2011 DATED 08 - 05 - 2013 HAS ALSO BEEN PLACED ON RECORD IN WHICH THE VIEW EXPRESSED BY THE JAIPUR BENCH HAS BEEN REITERATED. NO CONTRARY PRECEDENT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. IN VIEW OF THE TWO TRIBUNALS ORDERS AVAILABLE ON THE POINT ALLOWING EXEMPTION U/S. 10AA OF THE ACT IN RESPECT TO TRADING ACTIVITIES, WE ARE OF THE CONSIDERED OPINION THAT NO EXCEPTION CAN BE TAKEN TO THE VIEW EXPRESSED BY THE LD. CIT(A) IN GRANTING THE EXEMPTION. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 14 8.9 IN THIS RESPECT WE ALSO DR A W SUPPORT AND GUIDANCE FROM DECISION OF HON BLE ITAT JIAPUR B BENCH IN CASE OF DCIT VS. GOENKA DIAMOND & JEWELLERS LTD. REPRTED IN 19 TAXAMMAN.COM 91. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: - IT IS TRUE THAT THE WORD 'SERVICES' IS NOT MENTIONED EITHER IN SECTION 10AA OR IN SECTION 2 OF THE INCOME TAX ACT WHICH CONTAINS THE DEFINITION OF VARIOUS WORDS. DEDUCTION UNDER SECTION 10AA IS AVAILABLE IN CASE THE UNIT BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLE OR THINGS OR PROVIDE SERVICES. IT IS NOT DISPUTED THAT THE UNIT OF THE ASSESSEE HAS DONE TRADING ACTIVITY BY IMPORTING THE ITEMS AND THEREAFTER SELLING THEM. HOWEVER, IT IS DISPUTED BY THE REVENUE THAT THE ASSESSEE HAS DONE ONLY TRADING AND NO VALUE ADDITION HAS BEEN MADE. [PARA 2.10] THE EXPLANATION 1 T O SECTION 10AA CONTAINS THE DEFINITION OF THE WORD 'EXPORT TURNOVER', EXPORT IN RELATION TO SPECIAL ECONOMIC ZONE, MANUFACTURE RELEVANT TO SECTION 10AA SPECIAL ECONOMIC ZONE AND UNIT. THE WORD MANUFACTURE IS TO BE CONSIDERED TO HAVE THE SAME MEANING AS ASS IGNED IN CLAUSE ( R ) OF SECTION 2 OF SEZ ACT, 2005. SIMILARLY, SEZ UNIT WILL HAVE THE SAME MEANING AS ASSIGNED TO THEM UNDER CLAUSE ( ZA ) OF SECTION 2 OF SEZ ACT. [PARA 2.11] IT IS NOTED THAT SECTION 10AA WAS NOT INSERTED BY THE FINANCE BILL. SECTION 10AA W AS INSERTED BY THE SEZ ACT, 2005 WITH EFFECT FROM 10 - 2 - 2006. SECTION 27 OF SEZ ACT SAYS THAT PROVISION OF INCOME - TAX ACT SHALL APPLY TO, OR IN RELATION TO, THE DEVELOPER OR ENTREPRENEUR FOR CARRYING ON THE AUTHORIZED OPERATIONS IN A SPECIAL ECONOMIC ZONE O R UNIT SUBJECT TO THE MODIFICATIONS SPECIFIED IN THE SECOND SCHEDULE. THUS, IF THE OPERATIONS ARE AUTHORIZED THEN THE PROVISION OF THE INCOME - TAX ACT SHALL BE SUBJECT TO MODIFICATIONS OF SEZ ACT. THE SEZ ACT PROVIDES THAT SERVICES MAY BE PRESCRIBED BY THE CENTRAL GOVERNMENT FOR THE PURPOSE OF SEZ ACT AND SERVICES HAVE BEEN PRESCRIBED IN RULE 76 OF SEZ RULES. AS PER INSTRUCTION NO. 1/2006, DATED 24 - 3 - 2006 ISSUED ON THE BASIS OF BOARD OF APPROVAL MEETING HELD ON 17 - 3 - 2006 ON THE ISSUE OF SETTING UP TRADING UN ITS IN THE SPECIAL ECONOMIC ZONE IT WAS STATED THAT RULE 76 OF SEZ RULES WOULD BE CONFINED TO IMPORT OF GOODS FOR EXPORT. SUCH INSTRUCTION WAS MODIFIED VIDE INSTRUCTION NO. 4/2006, DATED 24 - 5 - 2006. [PARA 2.16] IN THE SAID INSTRUCTION, A REFERENCE HAS BEEN MADE TO SECTION 10AA. IT IS MADE CLEAR TO THE ENTREPRENEUR HAVING UNITS IN SEZ THAT BENEFIT UNDER SECTION 10AA WILL EXCLUDE OTHER TRADING EXCEPT IN THE NATURE OF RE - EXPORT OF IMPORTED GOODS. THUS, THERE IS A PROMISSORY ESTOPPEL BY THE GOVERNMENT TO THE ENT REPRENEUR PUTTING UP THE UNITS IN THE SEZ THAT BENEFIT UNDER SECTION 10AA WILL BE AVAILABLE ON TRADING IN THE NATURE OF RE - EXPORT OF IMPORTED GOODS. [PARA 2.17] VIDE INSTRUCTION NO. 1/2006, DATED 24 - 3 - 2006 OF MINISTRY OF COMMERCE, IT WAS CLARIFIED THAT TRA DING UNITS CAN BE SET UP IN THE SEZ. FURTHER, MODIFICATION WAS MADE ON 24 - 5 - 2006 IN WHICH IT WAS MADE CLEAR THAT THE DEDUCTION UNDER SECTION 10AA WILL BE AVAILABLE IN RESPECT OF THE TRADING IN THE NATURE OF RE - EXPORT OF IMPORTED GOODS. THUS THE ASSESSEES W ERE PROMISED THAT THEY WILL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA IN RESPECT OF THE PROFIT EARNING ON TRADING OF RE - EXPORT OF IMPORTED GOODS. THE REVENUE HAD NOT BEEN ABLE TO SHOW US THAT SUCH INSTRUCTION WAS NOT WITHDRAWN OR THE BOARD HAS ISSUED IN STRUCTION THAT INSTRUCTION DATED 24 - 5 - 2006 FROM THE MINISTRY OF COMMERCE WILL NOT BE APPLICABLE FOR THE PURPOSE OF ALLOWING EXEMPTION UNDER SECTION 10AA. HENCE, IN VIEW OF THE DOCTRINE OF PROMISSORY ESTOPPEL, THE ASSESSEE IS ENTITLED TO DEDUCTION. [PARA 2. 19] SECTION 51 OF THE SEZ ACT MENTIONS THAT NOTWITHSTANDING ANYTHING INCONSISTENT THEREWITH CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR IN ANY INSTRUMENT HAVING EFFECT BY ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 15 VIRTUE OF ANY LAW OTHER THAN THIS ACT, THE PROVISION OF SEZ ACT WILL PR EVAIL. THUS ONE WILL HAVE TO CONSIDER THE IMPLICATION OF SECTION 51 OF THE SEZ ACT. IT MEANS THAT ANYTHING INCONSISTENT TO THE PROVISION OF THE SEZ ACT WILL NOT BE CONSIDERED. THUS, THE WORD 'SERVICES' AS MENTIONED IN SECTION 10AA CANNOT BE CONSTRUED IN CO NSISTENTLY WITH THE DEFINITION OF SERVICES GIVEN IN THE SEZ ACT. UNDER THE SEZ ACT, THE TRADING IS INCLUDED IN THE SERVICES PROVIDED THE TRADING IN EXPORT OF IMPORTED GOODS. THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 10AA AND THEREFORE, THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN ALLOWING THE EXEMPTION. [PARA 2.20] THUS FROM THE ABOVE, IT IS CLEAR THAT THE TRADING ACTIVITY CARRIED OUT BY THE ASSESSEE IS ALSO ELIGIBLE FOR EXEMPTION UNDER SECTION 10AA OF THE ACT WITHIN THE MEANING OF THE PROVISIONS PROVIDED UNDER SECTION 2(Z) OF THE SEZ ACT READ WITH THE RULE 76 OF SPECIAL ECONOMIC ZONE RULES 2006 AS DISCUSSED ABOVE. 8.10 NOW COMING TO THE ASPECT WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION WITH RESPECT TO THE INCOME GENERATED BY IT O N ACCOUNT OF CURRENCY FLUCTUATION, INTEREST INCOME, IN THIS REGARD WE NOTE THAT THESE INCOMES ARE ARISING IN THE COURSE OF THE BUSINESS (IMPORT AND EXPORT) CARRIED ON BY THE ASSESSEE IN ITS SEZ UNIT. AS SUCH THESE INCOMES ARE INTRINSICALLY LINKED WITH THE OPERATION OF THE ASSESSEE. ACCORDINGLY WE HOLD THAT SUCH INCOME IS ELIGIBLE FOR DEDUCTION/EXEMPTION UNDER SECTION 10AA OF THE ACT. 8.11 WE ALSO NOTE THAT T HE ASSESSEE HAS CORRECTLY CALCULATED THE AMOUNT OF DEDUCTION IN PROPORTION TO THE EXPORT SALES VIZ A VIZ DOMESTIC SALES OF THE SEZ UNIT AS PROVIDED UNDER SUBSECTION 7 OF SECTION 10AA OF THE ACT. THUS THE AO ERRONEOUSLY HAS REDUCED THE AMOUNT OF DOMESTIC TURNOVER FROM THE TOTAL TURNOVER OF THE ASSESSEE SEZ UNIT WHICH RESULTED LOSS TO THE ASSESSEE. IN VIEW OF THE ABOVE, W E DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LEARNED CIT (A). ACCORDINGLY, WE UPHOLD THE SAME. HENCE THE GROUND OF APPEAL OF THE R EVENUE IS DISMISSED. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 16 9. THE 2 ND ISSUE RAISED BY THE REVENUE IS THAT THE LEARNED CIT - A ERRE D IN DIRECTING THE AO TO WORK OUT THE DISALLOWANCE OF THE HEDGING LOSS OF RS. 4,81,48,554/ - ONLY. 10.1 THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED A LOSS OF RS. 42,46,77,910/ - IN ITS PROFIT AND LOSS ACCOUNT ON ACCOUNT OF SETTLEMENT OF COMMOD ITY HEDGING. THE ASSESSEE DURING THE YEAR FURNISHED THE DETAILS OF THE LOSS AS UNDER: NO. NAME OF THE ASSOCIATED ENTERPRISE HEADING LOSS REMARK 1. CHEMOIL MIDDLE EAT DMCC 33342255 - 2. CHEMOIL EUROPE BV 6499 522 THE ASSESSEE HAS NOT MADE ANY SALE AND PURCHASE SDURING THE PERIOD UNDER CONSIDERATION WITH A.E. 3. CHEMOIL INTERNATIONAL PTE LTD. 343187101 - 10. 2 THE AO FROM THE ABOVE DETAILS NOTICE D THAT THE HEDGING LOSS OF RS. 64,99,522 / - WAS NOT ARISING TO SAFEGUARD ANY SALE AND PURCHASE TRANSACTION. ACCORDINGLY HE WAS OF THE VIEW THAT SUCH LOSS IS NOT ELIGIBLE TO BE TREATED AS BUSINESS LOSS IN PURSUANCE TO THE CLAUSE (A) OF SUBSECTION (5) TO SECTION 43 OF THE ACT. 10.3 THE AO SIMILAR LY FURTHER OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF LOSS FOR THE BALANCE AMOUNT OF RS. 4,16,49,032/ - (42,46,77,910 38,30,28,878). ACCORDINGLY THE AO IN THE ABSENCE OF DOCUMENTARY EVIDENCE HAS TREATED SUCH LOSS A S A SPECULATIVE LOSS AND ACCORDINGLY DISALLOWED THE IMPUGNED LOSS AGAINST THE BUSINESS INCOME. HENCE THE AO DISALLOWED THE LOSS OF RS. 4,81,48,554/ - (41649032+6499522) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 17 AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A). 11. THE ASSESSEE BEFORE THE LEARNED CIT (A) REGARDING THE LOSS OF RS. 64,99,522/ - SUBMITTED THAT THE IMPUGNED LOSS WAS AGAINST THE SALE PURCHASE OF THE COMMODITIES WITH THE AE CHEMOIL EUROPE B.V. AS SUCH THE NATURE OF SUCH LOSS IS IDENTICAL TO THE LOSS I NCURRED TO PROVIDE THE SECURITY AGAINST THE PRICE FLUCTUATION FOR THE SALE PURCHASE TRANSACTIONS WITH THE OTHER RELATED PARTY NAMELY CHEMOIL MIDDLE EAST AND CHEMOIL INTERNATIONAL. 11.1 THE ASSESSEE REGARDING THE LOSS OF RS. 4,16,49,032/ - SUBMITTED THAT S UCH LOSS HAS BEEN DISALLOWED WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSEE. AS SUCH THIS LOSS WAS ON ACCOUNT OF HEDGING WITH RESPECT TO THE TRANSACTIONS OF SALE PURCHASE WITH NON - RELATED PARTY NAMELY MF GLOBAL SINGAPORE PTE. LIMITED WHICH WAS OF THE SI MILAR NATURE AS DISCUSSED ABOVE. 11.2 HOWEVER THE LEARNE D CIT (A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS EITHER BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS OR BEFORE HIM SUGGESTING THAT THE IMPUGNED LOSS WAS AGAINST PROVIDING THE SECURITY FOR THE SALE PURCHASE TRANSACTIONS. ACCORDINGLY THE LEARNE D CIT (A) CONFIRMED THE ORDER OF THE AO. 11.3 HOWEVER THE LEARNED CIT (A) OBSERVED THAT THE INCOME OF THE SEZ UNIT SHALL STAND INCREASED ON ACCOUNT OF THE DISALLOWANCE OF THE IMPUGNED LOSSES. ACCORDIN GLY H E HELD THAT THE ASSESSEE SHALL BE ELIGIBLE FOR DEDUCTION ON THE ENHANCED INCOME. 12. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE R EVENUE AND THE ASSESSE E ARE IN APPEAL BEFORE US. THE R EVENUE IS IN APPEAL AGAINST THE DIRECTION PROVIDED BY THE LEARNE D CIT (A) FOR ALLOWING THE DEDUCTION UNDER SECTION 10AA OF THE ACT ON THE ENHANCED AMOUNT OF INCOME OF SEZ UNIT WHEREAS THE ASSESSEE IS IN ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 18 APPEAL BEFORE US AGAINST THE FINDING OF THE LEARNED CIT (A) WHERE THE DISALLOWANCE OF THE LOSS WAS CONFIRM ED. 13. THE GROUND RAISED BY THE ASSESSEE IN ITS CO READS AS UNDER: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION FOR.HEDGING LOSS OF RS.4,81,48,554 M ADE BY THE LEARNED ASSESSING OFFICER ON THE ERRONEOUS ASSUMPTION THAT THE LOSS HAD RESULTED FROM CURRENCY SWAP TRANSACTIONS NOT COVERED BY THE EXCEPTION UNDER CLAUSE (D) OF THE PROVISO TO SECTION 43(5), IN TOTAL DISREGARD OF THE FACT THAT THE LOSS HAD RESULTED FROM TRANSACTIONS PERTAINING TO COMMODITIES INTENDED TO HEDGE THE APPELLANT'S EXPOSER TO LOSS THAT MAY RESULT FROM THE PECULIAR NATURE OF ITS BUSINESS AS EXPLAINED IN NOTE NO. 14 IN SCHEDULE 20 OF ITS AUDITED ACCOUNTS (EVEN AS THE LEARNED CIT(A) H AD GRANTED RELIEF BY HOLDING THAT THE IMPUGNED DISALLOWANCE HAD RESULTED INTO CORRESPONDING INCREASE IN THE QUANTUM OF DEDUCTION U/S. 10AA TO WHICH THE APPELLANT WAS ENTITLED). 14 . BOTH THE LEARNED DR AND THE AR BEFORE US RELIED ON THE ORDER OF THE AUTHOR ITIES BELOW AS FAVORABLE TO THEM. 15 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE IMPUGNED AMOUNT OF LOSS OF RS. 4,81,48,554/ - WAS DISALLOWED BY THE AO WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LEARNED CIT - A IN THE ABSENCE OF THE DOCUMENTARY EVIDENCE. ACCORDINGLY THE AUTHO RITIES BELOW TREATED SUCH LOSS A S A SPECULATIVE IN NATURE. WE ALSO NOTE THAT THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO NOT PRODUCED ANY DOCUMENTARY EVIDENCE AT THE TIME OF HEARING BEFORE US SUGGESTING THAT THE IMPUGNED LOSSES WERE NOT SPECULATIVE IN NATURE. THUS IN THE ABSENCE OF ANY INFORMATION/DOCUMENTARY EVIDENCE WE HOLD THAT SUCH LOSSES ARE SPECULATIVE IN NATURE AND THEREFORE THE SAME CANNOT BE SET - OFF AGAINST THE NON - SP ECULATIVE INCOME. 15 .1 HOWEVER, WE ARE CONSCIOUS TO THE FACT THAT THE INCOME O F THE ASSESSEE FROM THE SEZ UNIT SHALL STAND INCREASED ON ACCOUNT OF THE DISALLOWANCE OF THE IMPUGNED LOSS AND THE ASSESSEE SHALL BE ELIGIBLE FOR DEDUCTION ON SUCH ENHANCED ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 19 INC OME. THUS THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED AND THE GROUND OF APPEAL OF THE ASSESSEE IS ALSO DISMISSED. 16 . THE LAST ISSUE RAISED BY THE REVENUE IS THAT THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 60,00,560/ - UNDER SECTION 36(1)(III) OF THE ACT. 17 . THE AO DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE HAS DIVERTED ITS BORROWED FUND FOR THE INVESTMENT IN THE MUTUAL FUND AND T HE INCOME FROM WHICH WAS EXEMPTED FROM TAX. ACCORDINGLY THE AO PROPOS ED TO DISALLOW THE AMOUNT OF INTEREST EXPENSES ON ACCOUNT OF DIVER SION OF FUND FOR THE INVESTMENT IN THE MUTUAL FUND. HOWEVER THE ASSESSEE DID NOT MAKE ANY REPLY. THUS THE AO IN THE ABSENCE OF ANY INFORMATION FROM THE ASSESSEE MADE THE DISALLOWANCE OF THE PROPORTIONATE INTEREST EXPENSES BY OBSERVING AS UNDER: AS SUCH, PROPORTIONATE INTEREST RELATING TO THE INVESTMENT IN MUTUAL FUN D REQUIRES TO BE DISALLOWED AS SUCH EXPENSES ARE NOT ALLOWABLE US. 36(10(III) OF THE ACT. IN VIEW OF THE PROPORTIONATE INTEREST RELATABLE TO INVESTMENT MADE IN MUTUAL FUND OUT OF THE BORROWED FUND OF RS.20,00,18,696/ - IS DISALLOWED CONSIDERING THE BORROWIN G PERIOD OF THREE MONTHS AS THE ASSESSEE HAS REDEEMED THE INVESTMENT DURING THE PERIOD OF THREE TO FOUR MONTHS, THE SUCH INTEREST WORKS OUT TO RS.60,00,560/ - [20001896 X 12 X 3/100 X 12]. A GGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT (A). 18 . THE ASSESSEE BEFORE LEARNED CIT (A) SUBMITTED THAT IT HAS DULY REPLIED THE SHOW CAUSE ISSUED BY THE AO VIDE LETTER DATED 06.02.2014 BY EXPLAIN ING THAT T HE INVESTMENTS MADE BY IT IN THE UNIT OF MUTUAL FUND WERE DIVIDEND RE - INVESTMENT SCHEME. ACCORDINGL Y IT HAS NOT RECEIVED ANY INCOME FROM SUCH INVESTMENT. IN SUPPORT OF ITS CLAIM THE ASSESSEE ALSO FILED COPY OF LEDGER, STATEMENT ISSUED BY DIFFERENT MUTUAL FUND. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 20 18 . 1 THE ASSESSEE HAS ALSO CLAIMED THAT THE INVEST MENT IN MUTUAL FUND WAS MADE OUT OF ITS INTEREST FREE FUND AVAILABLE WITH IT. AS SUCH I T HAS INVESTED SUCH SURPLUS FUND FOR VERY SHORT PERIOD. 18.2 THE SECURED AND UNSECURE LOAN WERE TAKEN IN THE FORM OF PACKING CREDIT AND BUYER CREDIT WHICH WERE USED FOR IMPORT AND EXPORT OF OIL. THIS FACT CAN BE VERIFIED FROM THE AUDITED FINANCIAL STATEMENT IN VIEW OF THE ABOVE, THE ASSESSEE BEFORE THE LEARNED CIT (A) CLAIMED THAT THE AO WITHOUT CONSIDERING ITS REPL Y ASSUMED THAT T HE BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF INVESTMENT IN MUTUAL FUND. 19 . THE LEARNED CIT - A AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND FINDING OF THE AO OBSERVED THAT THE ASSESSEE HAS INVESTED ITS INTEREST FREE SURPLUS TEMPORARILY IN MUTUAL FUND AND IN TURN EARNED VERY NOMINAL AMOUNT OF DIVIDEND. AS SUCH NO INTER EST EXPENSES INCURRED FOR THE PURPOSE OF EARNING DIVIDEND INCOME. THE LEARNED CIT (A) ALSO OBSERVED THAT THE BORROWED FUND WERE TAKEN AS PACKING CREDIT AND BUYER CREDIT FOR THE PURPOSE OF IMPORT AS EVIDENT FROM THE FINANCIAL STATEMENT OF THE ASSESSEE. THUS THE LD. CIT - A DELETED THE ADDITION MADE BY THE AO. HENCE THE GROUND OF APPEAL OF THE ASSESSEE WAS ALLOWED. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT - A, THE REVENUE IS IN APPEAL BEFORE US. 20 . BOTH THE LEARNED DR AND THE AR BEFORE US RELIED ON THE ORDER OF THE AUTHORITIES BELOW AS FAVORABLE TO THEM. 21. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND CONSIDERED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ALLEGATION OF THE AO WAS THAT THE ASSESSEE HAS DIVERTED ITS BORROWED FUND IN TO THE INVESTMENTS OF MUTUAL ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 21 FUND AND THE DIVIDEND INCOME FROM THE MUTUAL FUND IS EXEMPTED UNDER THE ACT . ACCORDINGLY, HE WAS OF THE VIEW THAT THE AMOUNT OF INTEREST EXPENSES CLAIMED BY THE ASSESSEE CORRESPONDING TO THE INVESTMENT MADE IN THE MUTUAL FUND CANNOT BE ALLOWED AS DEDUCTION UNDER THE PROVISIONS OF SECTION 36 1 (III) OF THE ACT. ACCORDINGLY, THE AO MADE THE DISALLOWANCE OF THE INTEREST EXPENSES IN PROPORTION TO THE INVESTMENT MADE I N THE MUTUAL FUNDS. HOWEVER, THE LEARNED CIT (A) WAS PLEASED TO DELETE THE ADDITION MADE BY THE AO BY OBSERVING THAT THERE WAS SUFFICIENT O W N ED FUND WAS AVAILABLE WITH THE ASSESSEE FOR SUCH IMPUGNED INVESTMENT. 21.2 ON PERUSAL OF THE FINANCIAL STATEMENT OF THE ASSESSEE, WE NOTE THAT THE OWN FUND AVAILABLE TO THE ASSESSEE AS ON 31 MARCH 2010 WAS RS. 34,23,14,273/ - ONLY WHEREAS THE PEAK AMOUNT OF INVESTMENT IN MUTUAL FUND ON TEMPORARY BASIS WAS OF RS. 20,00,18,696 / - ONL Y AS EVIDENT FROM THE ORDER OF THE AO. THUS IT IS CLEAR THAT THE OWN FUND OF THE ASSESSEE AS ON 31 ST 2010 WAS IN EXCESS OF THE AMOUNT OF INVESTMENT IN THE MUTUAL FUN D. THUS, IN SUCH A SITUATION AN INFERENCE CAN BE DRAWN THAT THE OWN FUND AVAILABLE WITH THE ASSESSEE WAS UTILIZED IN THE INVEST MENT OF SUCH MUTUAL FUNDS AS DISCUSSED ABOVE. THEREFORE, THERE CANNOT BE ANY DISALLOWANCE OF INTEREST EXPENSES AS THE AMOUNT OF BORROWED FUND WAS NOT DIVERTED IN SUCH INVESTMENT. IN HOLDING SO WE FIND SUPPORT AND GUIDANC E FROM THE JUDGEMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD REPORTED IN 366 ITR 505 (BOM). THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: - WHERE ASSESSEE'S CAPITAL, PROFIT RESERVES, SURPLUS AND CURRENT ACCOUNT DEPOSITS WERE HIGHER THAN THE INVESTMENT IN TAX - FREE SECURITIES, IT WOULD HAVE TO BE PRESUMED THAT INVESTMENT MADE BY THE ASSESSEE WOULD BE OUT OF THE INTEREST - FREE FUNDS AVAILABLE WITH ASSESSEE AND NO DISALLOWANCE WAS WARRANTED U/S 14A. 21.3 SIMILARLY, WE ALSO FIND SUPPORT FROM THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF UTI BANK LTD. REPORTED IN 32 TAXMANN.COM 370 WHERE THE HEADNOTE READS AS UNDER : ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 22 IF THERE ARE SUFFICIENT INTEREST FREE FUNDS TO MEET TAX FREE INVESTMENTS , THEY ARE PRESUMED TO BE MADE FROM INTEREST FREE FUNDS AND NOT LOANED FUNDS AND NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A . 21 . 4 INDEED, THE ABOVE ORDERS WERE RENDERED IN THE CONTEXT OF THE PROVISIONS OF SECTION 14A OF THE ACT BUT THE PRINCIPLES LAID DOWN THEREIN CAN BE APPLIED ON THE CASE OF HAND. THUS IN VIEW OF THE ABOVE PROPOSITION, WE HOLD THAT NO DISALLOWANCE OF INTEREST EXPEN SE CLAIMED BY THE ASSESSEE CAN BE MADE ON ACCOUNT OF INVESTMENT IN THE MUTUAL FUNDS. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT - A. HENCE, THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 22. COMING TO THE CO BEARING NO. 1 12/AHD/2016 FILED BY THE ASSESSEE T HE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS IN ITS CROSS OBJECTION 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION FOR.H EDGING LOSS OF RS.4,81,48,554 MADE BY THE LEARNED ASSESSING OFFICER ON THE ERRONEOUS ASSUMPTION THAT THE LOSS HAD RESULTED FROM CURRENCY SWAP TRANSACTIONS NOT COVERED BY THE EXCEPTION UNDER CLAUSE (D) OF THE PROVISO TO SECTION 43(5), IN TOTAL DISREGARD OF THE FACT THAT THE LOSS HAD RESULTED FROM TRANSACTIONS PERTAINING TO COMMODITIES INTENDED TO HEDGE THE APPELLANT'S EXPOSER TO LOSS THAT MAY RESULT FROM THE PECULIAR NATURE OF ITS BUSINESS AS EXPLAINED IN NOTE NO. 14 IN SCHEDULE 20 OF I TS AUDITED ACCOUNTS (EVEN AS THE LEARNED CIT(A) HAD GRANTED RELIEF BY HOLDING THAT THE IMPUGNED DISALLOWANCE HAD RESULTED INTO CORRESPONDING INCREASE IN THE QUANTUM OF DEDUCTION U/S. 10AA TO WHICH THE APPELLANT WAS ENTITLED). 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 5 OF ITS APPEAL CHALLENGING LEVY OF INTEREST AMOUNTING TO RS. 5,68,180 U/S. 234A AFTER STATING THAT THE LEVY WAS CONSEQUENTIAL AND MANDATORY. HE OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT EVEN AS THE LEVY MAY BE MANDATORY, IT COULD NOT BE UNIVERSAL AND THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE RATIO OF THE DECISION OF THE GUJARAT HIGH COURT IN BHARAT MACHINERY AND HARDWARE MART'S CASE (136 ITR 875) AND OF THE DECISION OF THE ITAT, DELHI IN HARYANA WAREHOUSING CORPORATION V. DCIT [252 ITR (AT.) 34] WAS ATTRACTED AND IT WAS NOT OPEN TO THE LEARNED ASSESSING OFFICER TO MAKE THE IMPUGNED LEVY AND THAT THE APPELLANT HAD CHALLENGE D THE VERY LEVY OF INTEREST BEFORE HIM. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 6 OF ITS APPEAL CHALLENGING LEVY OF INTEREST AMOUNTING TO RS.1,82,36,710 U/S. 234B AF TER STATING THAT THE LEVY WAS CONSEQUENTIAL AND MANDATORY. HE OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT EVEN AS THE LEVY MAY BE ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 23 MANDATORY, IT COULD NOT BE UNIVERSAL AND THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE RATIO OF T HE DECISION OF THE GUJARAT HIGH COURT IN BHARAT MACHINERY AND HARDWARE MART'S CASE (136 ITR 875) AND OF THE DECISION OF THE ITAT, DELHI IN HARYANA WAREHOUSING CORPORATION V. DCIT [252 ITR (AT.) 34] WAS ATTRACTED AND IT WAS NOT OPEN TO THE LEARNED ASSESSING OFFICER TO MAKE THE IMPUGNED LEVY AND THAT THE APPELLANT HAD CHALLENGED THE VERY LEVY OF INTEREST BEFORE HIM. 5. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 7 OF ITS APPEA L CHALLENGING LEVY OF INTEREST AMOUNTING TO RS.11,28,484 U/S. 234C AFTER STATING THAT THE LEVY WAS CONSEQUENTIAL AND MANDATORY. HE OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT EVEN AS THE LEVY MAY BE MANDATORY, IT COULD NOT BE UNIVERSAL AND THAT IN THE PECU LIAR FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE RATIO OF THE DECISION OF THE GUJARAT HIGH COURT IN BHARAT MACHINERY AND HARDWARE MART'S CASE (136 ITR 875) AND OF THE DECISION OF THE ITAT, DELHI IN HARYANA WAREHOUSING CORPORATION V. DCIT [252 ITR (AT.) 34] WAS ATTRACTED AND IT WAS NOT OPEN TO THE LEARNED ASSESSING OFFICER TO MAKE THE IMPUGNED LEVY AND THAT THE APPELLANT HAD CHALLENGED THE VERY LEVY OF INTEREST BEFORE HIM. 6. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THE LEA RNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 8 OF ITS APPEAL BEFORE HIM CHALLENGING THE INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C), ON THE GROUND THAT NO APPEAL LIES AGAINST MERE INITIATION OF PENALTY PROCEEDINGS. HE OUGHT TO HAVE APPRECIAT ED, INTER ALIA, THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THERE BEING ABSOLUTELY NO WARRANT/JUSTIFICATION FOR INITIATING THE PENALTY PROCEEDINGS, THEY DESERVED TO BE DROPPED, THEREBY SAVING BOTH THE APPELLANT AND THE DEPARTMENT FROM LONG DRAWN UNNECESSARY LITIGATION. 7. THE RESPONDENT CRAVES LEAVE TO ADD, AMEND AND/OR ALTER THE GROUND OR GROUNDS OF CROSS - OBJECTIONS EITHER BEFORE OR AT THE TIME OF HEARING. 23. AT THE OUTSET WE NOTE THAT THE ISSUE RAISED BY THE ASSESSEE IN ITS CO HAS ALREADY BEEN ADJUDICATED ALONG WITH THE APPEAL BEARING NO. 1555/AHD/2016 FILED BY US IN FAVOUR OF THE RE VENUE VIDE P ARAGRAPH NO. 15 OF THIS ORDER. RESPECTFULLY FOLLOWING THE SAME, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LEARNE D C IT ( A ) . HENCE THE GROUND OF APPEAL OF THE ASSESSEE I N THE CO IS DISMISSED. 23.1 THE OTHER GROUNDS RAISED BY THE ASSESSEE IN THE CO ARE CONSEQUENTIAL AND PREMATURE TO DECIDE. THEREFORE WE DISMISS THE SAME AS INFRUCTUOUS. 24. COMING TO ITA NO. 1102/AHD/2017 A ND APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2011 - 12 T HE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 24 (A) THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.38,37,88,124/ - MADE U/S.10AA OF THE I.T.ACT. (B) THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.79,19,633/ - MADE U/S 36(1)(III) OF THE I.T. ACT ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIM ON ACCOUNT OF INTEREST EXPENDITURE. 25. AT THE OUTSET WE NOTE THAT THE ASSESSMENT ORDER PASSED BY THE A O FOR THE YEAR UNDER CONSIDERATION HAS BEEN HELD BY US INVALID VIDE PARAGRAPH NUMBE RS 29 & 30 OF THIS ORDER. ACCORDINGLY, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE APPEAL OF THE R EVENUE. 26. COMING TO THE CO BEARING NO. 25/AHD/2018 (IN ITA NO.1102/AHD/2017) FILED BY THE ASSESSEE THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS CO: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE ORDER PASSED BY THE ASSESSING OFFICER IS VOID IN SO FAR AS IT IS PASSED BEYON D THE STIPULATED TIME LIMIT U/S 153 OF THE ACT. 1.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED ASSESSING OFFICER HAS ERRED IN ISSUING DRAFT ASSESSMENT ORDER UNDER SECTION 144C(3) ON 25 TH MARCH, 2015 EVEN THOUGH THE S AME WAS NOT WARRANTED AND FINALLY PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 144C(3) ON 27 TH APRIL, 2015, WHICH IS BARRED BY LIMITATION. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD. CIT(A) HAS ERRED IN N OT ALLOWING DEDUCTION U/S 10AA ON OTHER INCOME OF RS.60,38,553/ - , STAMP DUTY OF RS.45,07,350/ - AND OTHER EXPENSES RS10,28,692/ - WHEN SUCH EXPENSES ARE RELATED TO SEZ UNIT AND ELIGIBLE FOR DEDUCTION U/S 10AA. 2.1 IN LAW AND IN THE FACTS AND CIRCUMSTANC ES OF THE APPELLANTS CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING DEDUCTION U/S 10AA AT RS. 37,84,48,502/ - WHEN APPELLANT HAS RIGHTLY CLAIMED DEDUCTION U/S 10AA AT RS.38,37,88124. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF T HE APPELLANTS CASE, THE LEARNED CIT (APPEALS) OUGHT TO HAVE DELETED ADDITION OF MARK - TO - MARKET LOSS OF RS.8,18,76,938 FOR COMMODITY HEDGING DERIVATIVE TRANSACTIONS ON MERITS BY TREATING SUCH LOSS AS BUSINESS LOSS. 4. THE RESPONDENT CRAVES LEAVE TO ADD, AMEND AND/OR ALTER THE GROUND OR GROUNDS OF CROSS - OBJECTIONS EITHER BEFORE OR AT THE TIME OF HEARING. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 25 T HE ASSESSEE IN THE 1 ST GROUND OF THE CO HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER PASSED BY THE AO ON THE REASONING THAT IT WAS PASSED BEYOND THE TIME PRESCRIBED UNDER SECTION 153 OF THE ACT. 27 . THE LEARNED AR BEFORE US SUBMITTED THAT THE AO HAS MADE THE REFERENCE TO THE TPO FOR TH E INTERNATIONAL TRANSACTIONS ENTERED BY THE ASSESSEE. HOWEVER THE TPO HAS NOT MADE ANY ADJUSTMENT ON ACCOUNT OF SUCH INTERNATIONAL TRANSACTIONS IN HIS ORDER DATED 3 1 JULY 2014. ACCORDINGLY, THE LEARNED AR CLAIMED THAT THE ASSESSEE IS NOT THE ELIGIBLE ASSES SEE AS DEFINED UNDER CLAUSE (B) TO SECTION 144C( 1 ) OF THE ACT. 27.1 HOWEVER, THE AR FURTHER CLAIMED THAT THE TIME LIMIT FOR PASSING THE ASSESSMENT ORDER UNDER SECTION 143 ( 3 ) OF THE ACT WAS OF 31 ST MARCH 201 5 WHEREAS THE AO HAS FRAM ED ASSESSMENT UNDER SEC TION 143( 3 ) READ WITH SECTION 14 4C (3) OF THE ACT DATED 27 APRIL 2015 BEYOND THE TIME PRESCRIBED UNDER THE ACT . ACCORDINGLY, THE LEARNED AR CLAIMED THAT THE ORDER PASSED BY THE AO IS BEYOND THE PRESCRIBED TIME. THEREFORE, THE SAME CANNOT BE HELD SUSTAINABLE AND LIABLE TO BE QUASHED. 28 . ON THE OTHER HAND, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 29. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILA BLE ON RECORD. ADMITTEDLY, THE TIME LIMIT FOR PASSING THE ORDER UNDER SECTION 143(3) R.W.S. 144C OF THE ACT WAS A VAILABLE ONLY UPO 31 - 3 - 2015 . BUT THE AO MADE THE ASSESSMENT ORDER DATED 27 - 4 - 2015 DESPITE THE FACT THE TPO HAS PASSED THE ORDER DATED 31 JULY 2 014. IN HOLDING SO WE FIND SUPPORT AND GUIDANCE FROM THE JUDGEMENT OF H ONOURABLE DELHI HIGH COURT IN THE CASE OF HONDA CARS INDIA LTD VERSUS DCIT REPORTED IN 67 TAXMANN.COM 29 WHEREIN IT WAS HELD AS UNDER: ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 26 8. A READING OF SECTION 144C(1) OF THE ACT SHOWS THAT THE ASSESSING OFFICER, IN THE FIRST INSTANCE, IS TO FORWARD A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT TO THE 'ELIGIBLE ASSESSEE', IF HE PROPOSES TO MAKE ANY VARIATION IN THE INCOME OR LOSS RETURN WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSE E. THE DRAFT ASSESSMENT ORDER IS TO BE FORWARDED TO AN 'ELIGIBLE ASSESSEE' WHICH MEANS THAT FOR THE SECTION TO APPLY A PERSON HAS TO BE AN 'ELIGIBLE ASSESSEE'. 9. SECTION 144C(15)(B) OF THE ACT DEFINES AN 'ELIGIBLE ASSESSEE' TO MEAN (I) ANY PERSON IN WHOSE CASE THE VARIATION REFERRED TO IN SUB - SECTION (1) ARISES AS A CONSEQUENCE OF THE ORDER OF THE TRANSFER PRICING OFFICER PASSED UNDER SECTION 92CA(3); AND (II) ANY FOREIGN COMPANY. 10. THE SUPREME COURT IN P. KASILINGAM V. P.S.G. COLLEGE OF TECHNOLOGY 1995 (SUPPL) 2 SCC 348 HAS HELD THAT THE USE OF WORD 'MEANS' INDICATES THAT THE DEFINITION IS A HARD AND FAST DEFINITION AND NO OTHER MEANING CAN BE ASSIGNED TO THE EXPRESSION THAN IS PUT DOWN IN THE DEFINITION. 11. IN SECTION 144C(15)(B) OF THE ACT, THE TERM ' ELIGIBLE ASSESSEE' IS FOLLOWED BY AN EXPRESSION 'MEANS' ONLY AND THERE ARE TWO CATEGORIES REFERRED THEREIN (I) ANY PERSON IN WHOSE CASE THE VARIATION ARISES AS A CONSEQUENCE OF AN ORDER OF THE TRANSFER PRICING OFFICER AND (II) ANY FOREIGN COMPANY. THE USE OF THE WORD 'MEANS' INDICATES THAT THE DEFINITION 'ELIGIBLE ASSESSEE' FOR THE PURPOSES OF SECTION 144(C)(15)(B) IS A HARD AND FAST DEFINITION AND CAN ONLY BE APPLICABLE IN THE ABOVE TWO CATEGORIES. 12. FIRST OF ALL, THE PETITIONER IS ADMITTEDLY NOT A FOREI GN COMPANY. SECONDLY, THE TRANSFER PRICING OFFICER HAS NOT PROPOSED ANY VARIATION TO THE RETURN FILED BY THE PETITIONER. THE CONSEQUENCE OF THIS IS THAT THE ASSESSING OFFICER CANNOT PROPOSE AN ORDER OF ASSESSMENT THAT IS AT VARIANCE IN THE INCOME OR LOSS R ETURN. THE TRANSFER PRICING OFFICER HAS ACCEPTED THE RETURN FILED BY THE PETITIONER. IN VIEW OF THE WHICH, NEITHER OF THE TWO CONDITIONS ARE SATISFIED IN THE CASE OF THE PETITIONER AND THUS THE PETITIONER FOR THE PURPOSES OF SECTION 144C(15)(B) IS NOT AN ' ELIGIBLE ASSESSEE'. SINCE THE PETITIONER IS NOT AN ELIGIBLE ASSESSEE IN TERMS OF SECTION 144C(15)(B), NO DRAFT ORDER CAN BE PASSED IN THE CASE OF THE PETITIONER UNDER SECTION 144C(1). 13. SIMILAR IS THE VIEW TAKEN BY THE HIGH COURT OF GUJARAT IN PANKAJ EXT RUSION LTD. V. ASSTT. CIT [2011] 198 TAXMAN 6/10 TAXMANN.COM 17, WHICH HAS HELD AS UNDER: '7. PLAIN READING OF CLAUSE ( B ) OF SUB - SECTION (15) OF SECTION 144C WOULD SHOW THAT AN ASSESSEE CAN BE STATED TO BE AN ELIGIBLE ASSESSEE AS REFERRED TO IN SUB - SECTION (1) OF SECTION 144C IN WHOSE CASE VARIATION REFERRED TO IN THE SAID SUB - SECTION ARISES AS A CONSEQUENCE OF ORDER OF TRA NSFER PRICING OFFICER PASSED UNDER SUB - SECTION (3) OF SECTION 92CA. WE HAVE BEEN TAKEN THROUGH THE ORDER PASSED BY THE ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 27 ASSISTANT COMMISSIONER OF INCOME - TAX DATED 29 - 9 - 2010, WHEREIN IT IS HELD AS UNDER: '3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFA CTURE OF ALUMINIUM PROFILES. THE DETAILS OF INTERNATIONAL TRANSACTIONS IN TERMS OF SECTION 92B OF THE ACT BETWEEN THE ASSESSEE AND ITS ASSOCIATE ENTERPRISE ARE GIVEN IN FORM 3CE8. RELEVANT DETAILS REGARDING INTERNATIONAL TRANSACTIONS WERE PRODUCED BY THE A SSESSEE AND ARE KEPT ON RECORD. AFTER DISCUSSION AND BASED ON RECORDS PRODUCED, NO ADJUSTMENT IS BEING MADE TO THE ARM'S LENGTH PRICE OF THE TRANSACTIONS.' (EMPHASIS SUPPLIED) 8. FROM THE ABOVE, IT IS CLEAR THAT FOR ASSESSMENT YEAR RELEVANT FOR OUR PURPOSE , ON ACCOUNT OF PROCEDURE UNDERTAKEN IN SECTION 92CA OF THE ACT, THERE WAS NO VARIATION IN THE INCOME BY VIRTUE OF ORDER OF TRANSFER PRICING OFFICER. THAT BEING THE POSITION, THE PETITIONER CANNOT BE STATED TO BE AN ELIGIBLE ASSESSEE AS DEFINED IN CLAUSE ( B) OF SUB - SECTION (15) OF SECTION 144C OF THE ACT. PROCEDURE FOR ISSUANCE OF DRAFT ORDER CALLING FOR HIS OBJECTION AND TAKING FURTHER STEPS AS LAID DOWN UNDER SECTION 144C THEREFORE, WOULD NOT APPLY.' 14. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE PETITION ER, NOT BEING AN 'ELIGIBLE ASSESSEE' IN TERMS OF SECTION 144C(15)(B) OF THE ACT, THE ASSESSING OFFICER WAS NOT COMPETENT TO PASS THE DRAFT ASSESSMENT ORDER UNDER SECTION 144C (1) OF THE ACT. THE DRAFT ASSESSMENT ORDER DATED 31.03.2015 IS ACCORDINGLY QUASHE D. 15. SINCE WE HAVE QUASHED THE DRAFT ASSESSMENT ORDER, THE QUESTION THAT THE ASSESSMENT HAS NOW BECOME TIME BARRED IS LEFT OPEN AND IT IS OPEN TO THE PARTIES TO TAKE RECOURSE OF SUCH REMEDY, AS MAY BE AVAILABLE TO THEM IN LAW. IN VIEW OF THE ABOVE WE HOLD THAT, THE ASSESS MENT ORDER FRAMED BY THE AO IS NOT SUSTAINABLE. ACCORDINGLY WE HOLD THAT, THE ASSESSMENT FRAMED UNDER SECTION 143 3 READ WITH SECTION 144C OF THE ACT IS ABOUT BY LIMITATION AND THE SAME IS NOT SUSTAINABLE IN THE EYES OF LAW. ACCORDINGL Y WE QUASH THE SAME. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 30 . AS WE HAVE ADDRESSED THE TECHNICAL ISSUE RAISED BY THE ASSESSEE BY HOLDING THE ASSE SSMENT FRAMED UNDER SECTION 144C READ WITH SECTION 143( 3 ) OF THE ACT AS UNSUSTAINABLE, THEREFORE THE ISSUE RAISED BY THE REVENUE AND THE ASSESSEE ON MERIT DO NOT REQUIRE ANY SEPARATE ADJUDICATION. AS SUCH, ALL OTHER ISSUE RAISED BY THE REVENUE AND THE ASSESSEE BECOME INFRUCTUOUS. HENCE WE DISMISS THE SAME. ITA NO.1555/AHD/2016 CO NO.112/AHD/2016 & OTHERS ASSTT. YEAR 2010 - 11 28 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE CO OF THE ASSESSEE IS PARTLY ALLOWED. 31. IN THE COMBINED RESULT S , THE APPEALS OF THE REVENUE BEARING NO.1555/AHD/2016 IS DISMISSED AND CO FILED BY THE ASSESSEE IS DISMISSED WHEREAS IT(TP)A NO.1102/A HD/2017 IS DISMISSED AND CO FILED BY THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE COURT ON 07 /01 / 2020 AT AHMEDABAD. - SD - - SD - (MAHAVIR PRASAD ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 07 /01/2020 MANISH