SARA TRANS CORPORATION, MUMBAI V. ITO 19(3)(4), MUMBAI

ITA 3234/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3107 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 30-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 28-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAV
• Assessee Lawyers: BHAVIN PAREKH
• Section: 10AA; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SANJAY ARORA , A M AND SHRI PAWAN SINGH, J M ./ I.T.A. NO. 3234/MUM/2015 ( / ASSESSMENT YEAR: 2011 - 12 ) SARA TRANS EXPOR T CORPORATION J - 404, CONGRESS HOUSE, V. P. ROAD, OPERA HOUSE, MUMBAI - 400 004 / VS. ITO, WARD 16(3)(4), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 ./ ./ PAN/GIR NO. ABDFS 1919 C ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI BHAVIN PAREKH / RESPONDENT BY : SHRI VISHWAS JADHAV / DATE OF HEARING : 30.5.2016 / DATE OF PRONOUNCEMENT : 22 .9 .2016 / O R D E R PER S ANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 30 , MUMBAI (CIT(A) FOR SHORT) DATED 21.1.2015 , DISMISSING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCO ME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2011 - 12 VIDE ORDER DATED 12.3.2014 . 2. THE ASSESSEES APPEAL IS DELAYED BY ONE DAY. THE SAME STANDS EXPLAINED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, DURING HEARING, WHICH FIND AS REASONABLE. THE APPEAL WAS, ACCORDINGLY, ADMITTED AND PROCEEDED WITH. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 2 ITA NO. 3234/MUM/2015 (A.Y. 2011 - 12) SARA TRANS EXPORT CORPORATION VS. ITO 3. 1 THE SOLE ISSUE ARISING IN THE INSTANT APPEAL IS THE C O R RECT AMOUNT O F DEDUCTION EXIGIBLE TO THE ASSESSEE IN RESPECT OF ITS ELIGIBLE UNDERTAKING U/S. 10AA OF THE ACT, I.E., ESTABLISHED IN A SPECIAL ECONOMIC ZONE (SEZ). THE ASSESSEES SEZ U NIT ALSO ADMITTEDLY MAKING LOCAL SALES (AT RS.186.79 LACS) FOR THE CURRENT YEAR, THE QUESTION AROSE AS TO THE MANNER OF THE EXCLUSION OF THE PROFIT QUA THE SAID SALES IN - AS - MUCH AS THE BENEFIT U/S. 10AA IS ONLY IN RESPECT OF THE PROFIT DERIVED FROM THE EXPORT (OUTSIDE INDIA) OF ARTICLES OR THINGS OR SERVICE S . THE ACT ENVISAG ING SUCH A SITUATION, HAS PROVIDED FOR THE SAME PER SUB SECTION (7) OF SECTION 10AA, WHICH READS AS UNDER: SPECIAL PROVISIONS IN RESPECT OF NEWLY ESTABLISHED UNITS IN SPECIAL ECONOMIC ZONES. 10AA. (1) .. (2) (6) .. (7) FOR THE PURPOSES OF SUB - SECTION (1), THE PROFITS DERIVED FR OM THE EXPORT OF ARTICLES OR THINGS OR SERVICES (INCLUDING COMPUTER SOFTWARE) SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, BEING THE UNIT, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THING S OR SERVICES BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING: PROVIDED THAT THE PROVISIONS OF THIS SUB - SECTION AS AMENDED BY SECTION 6 OF THE FINANCE (NO. 2) ACT, 2009 (33 OF 2009) SHALL HAVE EFFECT FOR THE ASSESSMENT YEAR BEGINN ING ON THE 1ST DAY OF APRIL, 2006 AND SUBSEQUENT ASSESSMENT YEARS. THIS, THEN, EXPLAINS THE REVENUES CASE, WHICH HAS DETERMINED THE DEDUCTION U/S. 10AA BY APPLYING THE RATIO OF E XPORT T URNOVER TO THE T OTAL T URNOVER O F THE BUSINESS OF THE SAID UNDERT AKING (I.E., 0.85446) TO THE TOTAL PROFIT OF THE SAID BUSINESS (RS.160.75 LACS), ON BOTH OF WHICH, I.E., THE RAT IO AND THE TOTAL PROFIT, THERE IS AGAIN NO DISPUTE. THE ASSESSEES CASE IS THAT THE SAME CAN BE DIS PENSED WITH IN - AS - MUCH AS IT HAS PREPARED SEP ARATE PROFIT AND LOSS ACCOUNTS FOR THE LOCAL AND THE EXPORT TURNOVER. FURTHER, NO DEFE C T HAS BEEN POINTED OUT THEREIN BY THE REVENUE, SO THAT THE SAME SHOULD BE ACCEPTED AS SUCH. 3. 2 THE ISSUE IS OF THE PROPER MANNER OF DETERMINING THE PROFIT DERIVED BY T HE ASSESSEES SEZ UNIT FROM EXPORTS, TO WHICH ONLY THE DEDUCTION U/S.10AA EXTENDS. THE 3 ITA NO. 3234/MUM/2015 (A.Y. 2011 - 12) SARA TRANS EXPORT CORPORATION VS. ITO PROVISION CONTEMPLATING THAT THE EXPORT TURNOVER OF A SEZ U NDERTAKING MAY NOT AGREE WITH ITS TOTAL TURNOVER, HA S PRESCRIBED A PRO RATA FORMULA ON THE BASIS OF THE TURNO VER. THE SAID PRESCRIPTION, WHICH IS EVEN OTHERWISE REASONABLE, IS THUS THE MANDATE OF LAW , WHICH THEREFORE HAS TO BE HONORED. IT PROVIDES NO SAVING OR EXCLUSION THERETO. ON THE CONTRARY, IT IS RATHER THE ASSESSEE WHICH IS OBLIGED TO SHOW THAT THE SAME RES ULTS IN AN ABS URDITY TOWARD WHICH WE OBSERVE NO CONTENTION OR CLAIM , FOR THE SAME TO BE NOT OBSERVED. MERE HARDSHIP WHICH AGAIN HAS NOT BEEN SHOWN, I.E., EVEN IF SO, WOULD BE NO GROUND FOR NOT OBSERVING THE CLEAR PRESCRIPTION OF LAW. FINAL ACCOUNTS ARE PREPARED ONLY SOURCE AND, THUS, BUSINESS - WISE (S. 70), TO WHICH THE LAW PER S. 10AA(7) ACCORDS CREDENCE. THERE IS, IN OUR VIEW, NO SCOPE FOR ANY INGENIOUS METHOD FOR DETERMINING THE EXPORT PROFIT AS MAY BE DEVISED BY THE ASSESSEE, IN VIEW OF THE CLEAR AND UNAMBIGUOUS LANGUAGE OF THE PROVISION, WHICH IS IN SYNC WITH THE SCHEME OF THE ACT AS WELL AS THE ACCOUNTS ARE NORMALLY PREPARED. FURTHER, THERE IS NO CLAIM OF IT BEING ANOMALOUS OR RESULT ING IN ANY AB SURDI TY AND , RATHER, I S ONLY REASONABLE. TAX LAWS ARE TO BE STRICTLY CONSTRUED; THE STATUTE BEING THE E DICT OF THE L EGISLATURE, REPRESENTING IT S INTENT , AND TOWARD WHICH THE LD. CIT ( A ) HAS CIT ED SEVERAL DECISIONS, AND EVEN AS REITERATED RECENTLY ONCE AGAIN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN HUMAYUN SULEMAN MERCHANT VS. CCIT [2016] 73 TAXMANN.COM 2 (BOM). WE, ACCORDINGLY, UPHOLD THE CONCURRENT FINDINGS AND THE DECISIONS BY THE REVENUE AUTHORITIES. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 22 , 201 6 SD/ - SD/ - ( PAWAN SINGH ) (S ANJAY ARORA) / J UDI CIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 22 . 0 9 .201 6 . . ./ ROSHANI , SR. PS 4 ITA NO. 3234/MUM/2015 (A.Y. 2011 - 12) SARA TRANS EXPORT CORPORATION VS. ITO / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI