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

TAXAP/659/2011

AI Insights

The case revolves around the eligibility of the assessee, Manoj B Mansukhani, for a deduction under Section 10A of the Income Tax Act, 1961, which pertains to profits from exports by units in Special Economic Zones (SEZ). The Assessing Officer initially denied the deduction, asserting that there was no export of goods, a prerequisite for the deduction. However, the Tribunal found that the assessee's unit, located in an SEZ, did engage in the export of processed goods, thus qualifying for the deduction. The High Court, referencing a similar case, upheld the Tribunal's decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 738637 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 26-07-2012
• Assessment Year: misc
• Other Referred Cases: TA NO. 941 of 2010
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: MAUNA BHATT
• Keywords: Assessment year 2005-2006; Deduction; Export; Income Tax; Special economic zone
• Section: 260A; 10A

Judgement Text

"TAXAP/659/2011 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 659 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF INCOME TAX CENTRAL-II - Appellant(s) Versus MANOJ B MANSUKHANI – Opponent(s) ========================================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 26/07/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) This appeal preferred by the Revenue under section 260A of TAXAP/659/2011 2/5 JUDGMENT the Income Tax Act, 1961 seeks to challenge the common order dated 23.2.2010 of the Income Tax Appellate Tribunal Bench Rajkot passed in four different appeals, in so far as the said common order relates to ITA No. 674 of 2006 in respect of Assessment Year 2005- 2006. 2. The following question is raised by the appellant as substantial question of law. 'Whether the Appellate Tribunal is right in law and on facts in holding that the assessee is entitled for deduction of Rs. 12,58,711/- u/s 10A of the Act ignoring that the assessee does not satisfy the conditions prescribed for allowance of deduction under the said section?” 3. We heard learned advocate Ms. Mauna Bhatt for the appellant. 3.1 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 TAXAP/659/2011 3/5 JUDGMENT of the Act. 3.2 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. 3.3 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 JUDGMENT 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.....” 3.4 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. 4. 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. 5. 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. 6. 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. TAXAP/659/2011 5/5 JUDGMENT 7. Accordingly, the present appeal is dismissed. [V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi "