M/s. Cliff Scaffoldings Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 4530/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7441 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Keywords: Depreciation; Carry forward of business losses; Bad and doubtful debts; Unabsorbed depreciation
• Section: 143(3); 10AA; 10

Judgement Text

1 ITA NO. 4530/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 4530/DEL/20 15 (A.Y 2011-12) CLIFF SCAFFOLDINGS PVT. LTD. 11, DEWAN HALL, BHAGIRATHI PLACE, CHANDNI CHOWK DELHI AACCC5956A (APPELLANT) VS ITO WARD-3(2) NEW DELHI (RESPONDENT) APPELLANT BY SH. SALIL AGGARWAL & SH. SHAILESH GUPTA, ADV RESPONDENT BY MS. SHEFALI SWAROOP, CIT DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 25/3/2015 PASSED BY CIT(A)-II, NEW DELHI FOR ASSESSMENT YEAR 2011-12. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS GROSSLY ERRED IN LAW AND ON FACTS BY SUSTAINING THE PARTIAL DENIA L OF EXEMPTION CLAIMED UNDER SECTION 10AA OF THE ACT AT RS. 30, 58, 708/- AS AGAINST A SUM OF RS. 1, 45, 49, 488/- AS CLAIMED BY THE ASSESSEE - APPELLAN T. 1.1. THAT IN DOING SO, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS OVERLOOKED THE DETAILED ORAL SUBMISSIONS MADE B Y THE ASSESSEE - APPELLANT ON WHIMSICAL GROUNDS AND HAS FURTHER ERRE D IN DIRECTING THE AFORESAID ISSUE TO THE FILE OF LEARNED AO AND IN DO ING SO, THE LEARNED CIT (A) HAS OVERLOOKED THE PROVISIONS OF STATUTE, WHEREIN, THE ISSUE AT HAND SHOULD HAVE BEEN DECIDED BY LEARNED CIT (A) ONLY AND THUS, THE SAID DIRECTION OF DATE OF HEARING 15.01.2019 DATE OF PRONOUNCEMENT 18.01.2019 2 ITA NO. 4530/DEL/2015 LEARNED CIT (A) IS MISCONCEIVED AND MISPLACED IN LA W. 1.2. THAT IN DOING SO, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE BASIC FACT THAT APPELL ANT COMPANY IS AN APPROVED SEZ UNIT DULY REGISTERED UNDER SPECIAL ECONOMIC ZON ES ACT, 2005, AND THUS, FOR ALL PURPOSES IS CONSTRUED AS A SEZ UNIT LOCATED IN A TERRITORY OUTSIDE INDIA AND AS SUCH, ALL SALES MADE TO OTHER UNITS WITHIN S EZ ZONE AND ALSO EXPORTS MADE THROUGH THIRD PARTIES ARE DEEMED TO BE CONSTRU ED AS EXPORT SALES, ELIGIBLE TO CLAIM EXEMPTION UNDER SECTION 10AA OF T HE ACT. 1.3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) FURTHER FAILED TO APPRECIATE THE BASIC FACT THAT PROVISIONS OF SEZ ACT, 2005 OVERRIDES THE PROVISIONS OF INCOME TAX ACT AND AS SUCH, SALES MADE TO UNITS LOCATED WITHIN SAME SEZ AND ALSO THROUGH THIRD PARTIES WERE ELIGIBLE TO CLAIM EXEMPTION UNDER SECTION 10AA OF THE ACT AND THUS, T HE DISALLOWANCE SO MADE AND SUSTAINED IS MISCONCEIVED AND MISPLACED IN LAW AND SHOULD BE DELETED, AS SUCH. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED IN LAW AND ON FACTS BY SUSTAINING A DISALLOWANCE OF A SUM OF RS. 1, 55, 00, 500/- ON ACCOUNT OF BAD DEBTS WRITTEN OFF, WHICH DI SALLOWANCE IS COMPLETELY MISCONCEIVED AND MISPLACED IN LAW AND ALSO CONTRARY TO MATERIAL AVAILABLE ON RECORD, THUS, THE SAME SHOULD HAVE BEEN ALLOWED AS SUCH. 2.1 THAT IN DOING SO, THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) HAS ARBITRARILY BRUSHED ASIDE THE SUBMISSIONS AND E VIDENCES FILED BY THE ASSESSEE - APPELLANT AND HAS FURTHER FAILED TO APPR ECIATE THE FACT THAT THE SAID BAD DEBTS HAVE ACTUALLY BEEN WRITTEN OFF IN BOOKS O F ACCOUNTS AND INCOME FOR THE SAME HAD ALSO BEEN ACCOUNTED FOR IN PREVIOUS YE ARS AND AS SUCH, THE CONDITIONS AS ENVISAGED UNDER SECTION 36(L)(VII) OF THE ACT WERE DULY COMPLIED BY THE ASSESSEE - APPELLANT AND THUS, THE SAID CLAI M OF BAD DEBT SHOULD HAVE BEEN ALLOWED TO THE ASSESSEE - APPELLANT. 2.2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN RELYING ON THE JUDGMEN T WHICH IS TOTALLY INAPPLICABLE TO THE FACTS OF THE CASE OF THE APPELL ANT COMPANY AND ALSO, THE DISALLOWANCE SO SUSTAINED BY LEARNED CIT (A) IS BAS ED ON COMPLETE MIS - APPLICATION OF THE PROVISIONS OF LAW AND IS BASED O N MERE SUSPICION AND SURMISES AND SHOULD BE DELETED AS SUCH. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITION IN THE HANDS OF ASSESSEE COMPANY, WITHOUT GIVING ANY FAIR AND PROPER OPPORTUNITY OF B EING HEARD TO THE APPELLANT COMPANY, THEREBY, VIOLATING THE PRINCIPLES OF NATUR AL JUSTICE . 3 ITA NO. 4530/DEL/2015 3. THE ASSESSEE COMPANY IS A 100% BOU, SITUATED IN SEZ AT NOIDA AND AVAILING ALL THE BENEFITS AVAILABLE TO THE ASSESSE E AS PER THE SEZ ACT, 2005. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF SCAFFOLDINGS AND THERE EXPORT DIRECTLY. BESIDES THIS AT THE CERTAIN POINT OF TIME THE ASSESSEE IS SELLING ITS MANUFACTURED PRODUCT WITHIN ZONES AS ZO NAL SALES. THE ASSESSEE COMMENCED ITS ACTIVITY AFTER 1 ST APRIL 2005, ACCORDINGLY HE IS ELIGIBLE TO AVAIL AL L THE BENEFITS U/S 10 AA OF THE INCOME TAX ACT 1961. THE ASSESSEE IS REGULAR IN FILLING HIS RETURN OF INCOME, EVEN FOR THE ASSESSME NT YEARS 2008-09, 2009-10, 2010-11 & 2011-12. THE ASSESSMENT OF THE ASSESSEE WAS MADE BY INCOME TAX DEPARTMENT U/S 143(3) OF THE INCOME TAX ACT AND WAS ALLOWED THE EXEMPTION U/S 10AA REGARDING THE EXPORT PROFITS. DURING ASSESSMENT YEA R IN QUESTION THE ASSESSEE HAS FILED HIS RETURN OF INCOME THROUGH E F ILLING AND HAS CLAIMED THE EXEMPTION OF PROFITS U/S 10AA. THE ASSESSING OFFICE R ADDED A SUM OF RS. 1,55,00,500/- CLAIMED AS BAD DEBTS BY THE ASSESSEE IN THE TOTAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS DOCUMENTS WERE PRODUCED B EFORE THE ASSESSING OFFICER BY THE ASSESSEE COMPANY TO JU STIFY THE CLAIM OF BAD DEBTS WHICH WAS CLAIMED IN PROFIT AND LOSS ACCOUNT. BUT T HE ASSESSING OFFICER DISALLOWED THE SAME AND MADE ADDITION OF RS. 1,55,0 0,500/- UNDER THE HEAD BAD DEBTS. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED AS REGARDS GROUND NOS. 1 TO 1.3 THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 & 2009-10 FOR ITA NOS. 5795 & 5796/DEL/2014 ORDER DATED 28/8/2017. AS REGARDS GROUND NOS. 2 TO 2.2, THE LD. AR SUBMITTED THAT THE BAD DEBTS HAS BEEN WRITTEN OFF I N THE PRESENT YEAR AND IN THE REMAND REPORT FOR ASSESSMENT YEAR 2010-11, THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. THE LD. AR RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF TRF LTD. VS. CIT ORDER DAT ED 9/2/2010 AND ALSO THE 4 ITA NO. 4530/DEL/2015 CIRCULAR NO. 12/2016 DATED 30/5/2016 ISSUED BY THE CBDT AND SUBMITTED THAT THE CIT(A) AS WELL AS THE ASSESSING OFFICER F AILED TO APPRECIATE THE FACT THAT THE SAID BAD DEBTS WERE ACTUALLY WRITTEN OFF I N THE BOOKS OF ACCOUNTS AND INCOME FOR THE SAME HAD BEEN ACCOUNTED FOR IN PREVI OUS YEARS AND AS SUCH THE CONDITIONS ENVISAGED U/S 36(1) (VII) OF THE ACT WE RE DULY COMPLIED BY THE ASSESSEE. THUS, THE LD. AR SUBMITTED THAT THE SAID CLAIM OF THE BAD DEBTS SHOULD HAVE BEEN ALLOWED. 6. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AS WELL AS ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. AS REGARDS GROUND NOS. 1 TO 1.3, THE SAME ARE COVERED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 AND 2009-10 BY THE TRIBUNALS DECISION. THE TRIBUNAL HELD AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ONLY ISSUE IN THE GROUND NOS. 1 TO 2.3 IS WHETH ER SECTION 51(1) OF SEZ ACT, 2005 HAS THE OVERRIDING EFFECT OVER THE INCOME TAX ACT. BEFORE WE DECIDE THE ISSUE THE DEFINITION U/S 2(M) OF EXPORT UNDER TH E SPECIAL ECONOMIC ZONES ACT, 2005 READ AS UNDER:- (M) EXPORT MEANS (I) TAKING GOODS, OR PROVIDING SERVICES, OUT OF IND IA, FROM A SPECIAL ECONOMY ZONE, BY LAND, SEA OR AIR OR BY ANY OTHER , WHETHER PHYSICAL OR OTHERWISE OR (II) SUPPLYING GOODS, OR PROVIDING SERVICES, FROM T HE DOMESTIC TARIFF AREA TO A UNIT OF DEVELOPER; OR (III) SUPPLYING IN THE SAME OR DIFFERENT SPECIAL EC ONOMIC ZONE. 7. ALSO SECTION 51(1) IN THE PROVISION OF SEZ ACT, 2005 IS DEFINED AS UNDER:- 5 ITA NO. 4530/DEL/2015 51(1) ACT TO HAVE OVERRIDING EFFECT.THE PROVISION S OF THIS ACT SHALL HAVE EFFECT NOTWITHSTANDING ANYTHING INCONSISTENT THEREWITH CON TAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR IN ANY INSTRUMENT HAVING EFF ECT BY VIRTUE OF ANY LAW OTHER THAN THIS ACT. 8. THOUGH THE CONTROVERSY HAS BEEN RESOLVED BY THE LD.CIT(A) HIMSELF BY HOLDING THAT SECTION 51(1) OF THE SEZ ACT, 2005 HAS THE OVERRIDING EFFECT AS IT HAS NON OBSTANTE CLAUSE AND RELEVANT FINDINGS FIND PLACE IN THE FINDINGS OF THE LD.CIT(A) REPRODUCED HEREINABOVE. IT WAS ALSO PLEA DED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CBDT HAS ISSUED CIRCULAR NO. 7 OF 2003 WITH CLARIFICATIONS WHICH CAME INTO FORCE AFTER AME NDMENTS IN SECTION 32(2) OF THE ACT BUT THE A.O HAS COMPLETELY IGNORED THE CLAR IFICATIONS AND THEREBY DENIED THE AVAILABILITY OF CARRY FORWARD OF UNABSO RBED DEPRECIATION OF RS. 1,94,082/-. IN FACT, THE CBDT CIRCULAR NO. 7 OF 20 03-EXPLANATORY NOTES ON PROVISION RELATING TO DIRECTOR TAXES 05.09.2003, VI DE PARA 20 PROVIDED FOR CARRY FORWARD OF BUSINESS LOSSES AND UNABSORBED DEP RECATION TO UNITS IN SPECIAL ECONOMIC ZONES AND 100% EXPORT ORIENTED UNI TS U/S10A AND 10B, WITH A VIEW TO RATIONALIZE THE EXISTING TAX INCENTI VES IN RESPECT OF SUCH UNITS UNDER SUB SECTION (6) IN SECTION 10A AND 10B, RETRO SPECTIVELY W.E.F. 1/4/2001 AND HAD BEEN MADE APPLICABLE TO BUSINESS LOSSES OR UNABSORBED DEPRECATION ARISING IN A.Y 2001-02 AND SUBSEQUENT YEARS I.E. UN ABSORBED DEPRECIATION FOR A.Y 2000-01 AND SUBSEQUENT YEARS I.E. UNABSORBED DE PRECIATION FOR ASSESSMENT YEAR 2000-01 SHALL NOT BE CARRIED FORWAR D AN SET OFF BUT UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEAR 2001-02 TO ASSESSMENT YEAR 2009-10 CAN BE CARRIED FORWARD AND SET OFF AS PER THE PROVISIONS OF I.T ACT (SECTION 7(D) & 8(A) OF CIRCULAR/FINANCE ACT, 2003- EXPLANATORY NOTES ON PROVISIONS RELATING TO DIRECTOR TAXES [CIRCULAR NO. 7/2003 DATED 5/9/2003]. 9. IT WAS ALSO POINTED OUT BY THE LEARNED COUNSEL F OR THE ASSESSEE. MR. SALIL AGARWAL, ADVOCATE THAT THE ISSUE IS COVERED BY THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF DCIT VS. GOENKA DIAMOND & JEWE LLERS LTD. REPORTED IN 6 ITA NO. 4530/DEL/2015 146 TTJ 68 (JAI) (2012) 19 TAXMANN.COM 91 (JP) AND THE RELEVANT FINDINGS IN PARAGRAPH 2.20 OF THE ORDER ARE REPRODUCED HEREIN B ELOW: WE HAVE ALSO REPRODUCED SECTION 51 OF THE SEZ ACT. AS PER THIS SECTION IT IS MENTIONED THAT NOTWITHSTANDING ANYTHING INCONSIS TENT THEREWITH CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FO RCE OR IN ANY INSTRUMENT HAVING EFFECT BY VIRTUE OF ANY INSTRUMEN T HAVING EFFECT BY VIRTUE OF ANY LAW OTHER THAN THIS ACT. THE PROVISION OF S EZ ACT WILL PREVAIL. THE HON'BLE APEX COURT IN THE CASE OF TAX RECOVERY OFFI CER VS. CUSTODIAN APPOINTED UNDER THE SPECIAL COURT TRIAL OF OFFENCES RELATING TO TRANSACTION IN SECURITIES ACT, 1992 [2007] 293 ITR 369/163 TAXMAN 441 HAD AN OCCASION TO CONSIDER THE MEANING OF LANGUAGE EMPLOYED IN SECTION 13 OF THE SPECIAL COURT ACT. IN SECTION 13 OF THE S ECTION COURT ACT, IT WAS STATE THAT PROVISION OF THE ACT SHALL HAVE EFFECT N OTWITHSTANDING ANYTHING INCONSISTENT THEREWITH CONTAINED IN ANY OTHER LAW F OR THE TIME BEING IN FORCE. THE HON'BLE APEX COURT HELD THAT THERE CAN B E NO MANNER OF DOUBT THAT THE PROVISION OF SPECIAL COURT ACT WHEREVER TH EY ARE APPLICABLE SHALL PREVAIL OVER THE PROVISION OF THE INCOME TAX ACT. T HE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VASISTH CHAY VAAPAR LT D. 330 ITR 440 HELD THAT WHEN THERE IS A PROVISION IN ANOTHER ENACTMENT WHICH CONTAINS A NON OBSTENTE CLAUSE THAN THAT WOULD OVERRIDE THE PROVIS IONS OF THE INCOME TA ACT. THUS ONE WILL HAVE TO CONSIDER THE IMPLICATION OF SECTION 51 OF THE SEZ ACT. IT MEANS THAT ANYTHING INCONSISTENT TO THE PRO VISION OF THE EZ ACT WILL NOT BE CONSIDERED. THUS THE WORD SERVICE AS MENTION ED IN SECTION 10AA CANNOT BE CONSTRUED IN-CONSISTENCY WITH THE DE FINITION OF SERVICES GIVEN IN THE SEZ ACT. UNDER THE SEZ ACT, THE TRADIN G IS INCLUDED IN THE SERVICES PROVIDED THE TRADING IS EXPORT OF IMPORTED GOODS. WE THEREFORE, FEEL THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 10AA OF THE ACT AND THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE EXEMPTION. 7 ITA NO. 4530/DEL/2015 10. THE SAID DECISION HAS BEEN FOLLOWED BY THE ITAT D BENCH MUMBAI IN THE CASE M/S DIAMOND R US VS. CIT(A) IN ITA NO . 2793/MUM/2012 DATED 30/10/2015 AND THE RELEVANT FINDINGS ARE REPRODUCED HEREIN BELOW:- 5. WE FIND THAT SIMILAR ISSUE CAME UP IN A.Y. 200 6-07 IN ASSESSEE'S OWN CASE WHEREIN FOLLOWING THE DECISION OF THE ITAT IN ITA NO. 509/JP/2011 IN THE CASE OF GOENKA DIAMOND & JEWELLERS LTD. THE ISS UE HAS BEEN DECIDED IN FAVOUR OF THE ASSSESSEE BY OBSERVING AS UNDER: - 'WE NOTED THAT LEARNED CIT(A) HAS TAKEN INTO CONSID ERING THE ASPECT AND OBSERVATION OF THE AO THAT DEDUCTION UNDER SECTION 10AA IS NOT ALLOWABLE FOR THE REASON THAT THE ASSESSEE HAS NOT CARRIED OU T ANY MANUFACTURING ACTIVITY BUT HAS DONE TRADING OF GOODS ONLY. FOR TH IS PURPOSE, LEARNED AO HAS PLACED RELIANCE ON THE ORDER OF HON'BLE DELHI H IGH COURT. LEARNED CIT(A) HAS TAKEN INTO CONSIDERATION THESE OBSERVATI ON OF THE AO AND THEREAFTER HE FOUND THAT THE GOVERNMENT OF INDIA HA S ISSUES A CIRCULAR NO.17 OF 29.5-2006, WHICH WAS ISSUED BY EXPORT PROM OTION COUNCIL FOR EOUS & SEZ UNIT (MINISTRY OF COMMERCE & INDUSTRY, I TA NO. 2793/MUM/2012 M/S. DIAMONDS 'R' US GOVERNMENT OF IN DIA). THE CONTENTS OF THE CIRCULAR HAVE ALSO BEEN INCORPORATE D IN THE FINDING OF THE LEARNED CIT(A), WHICH HAVE ALSO BEEN REPRODUCED SOM EWHERE ABOVE IN THIS ORDER. THEREFORE, WE ARE NOT REPEATING THE CONTENT S OF THAT CIRCULAR ISSUED BY THE MINISTRY OF COMMERCE & INDUSTRY, GOVERNMENT OF INDIA). UNDER SECTION 51(1) OF THE SEZ ACT, IT HAS BEEN CLEARLY P ROVIDED THAT THE PROVISION OF THIS ACT HAS OVERRIDING EFFECT IN CASE OF CONTRA DICTION BETWEEN THE SEZ ACT AND OTHER ACT. HENCE, BY VIRTUE OF SECTION 51 O F THE SEZ ACT, THE PROVISION OF SEZ ACT AND RULES WILL HAVE OVERRIDING EFFECT OVER THE PROVISION CONTAINED IN ANY OTHER ACT. LEARNED CIT(A) HAS TAKE N INTO CONSIDERATION THIS CIRCULAR ISSUED BY GOVERNMENT OF INDIA AND THE PROVISION OF SECTION 51 OF THE SEZ ACT AND FOUND THAT TRADING DONE BY THE A SSESSEE IS A SERVICE AND, THEREFORE, DEDUCTION UNDER SECTION 10AA IS ALL OWABLE. WE FURTHER NOTED THAT ON SIMILAR FACTS IN CASE OF GOENKA DIAMO NDS AND JEWELLERY 8 ITA NO. 4530/DEL/2015 LIMITED (SUPRA), THE JAIPUR BENCH OF THE TRIBUNAL H AS DISCUSSED THE ISSUE IN DETAIL. THE PROVISIONS OF SECTION 51 OF SEZ ACT WERE ALSO CONSIDERED. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F TAX RECOVERY OFFICER VS. CUSTODIAN APPOINTED UNDER THE SPECIAL COURT, RE PORTED IN THE CASE OF 211 CTR 369 (SC) AND THE DECISION OF THE HON'BLE DE LHI HIGH COURT IN THE CASE OF CIT VS. VASISTH CHAY VYAPAR LTD., REPORTED IN 238 CTR 142 (DELHI), WERE ALSO TAKEN INTO CONSIDERATION AND THEREAFTER I T WAS CONCLUDED THAT IN VIEW OF THE INSTRUCTION NO.1 OF 2006, DATED 24- 3-2 006 AS MODIFIED BY INSTRUCTION NO.4 OF 2006, DATED 24- 5-2006 ISSUED B Y THE MINISTRY OF COMMERCE & INDUSTRY, GOVERNMENT OF INDIA AND THE DE FINITION OF SERVICE GIVEN IN THE SEZ ACT, 2005, WHICH OVERRIDES THE WOR D 'SERVICE' ACCRUING IN SECTION 10AA BY VIRTUE OF SECTION 51 OF THE SEZ ACT . THE ASSESSEE ENGAGED IN TRADING IN NATURE OF RE-EXPORT OF IMPORT ED GOODS AND FOR THE SAME THE ASSESSEE WAS ENTITLED DEDUCTION UNDER SECT ION 10AA OF THE ACT. FACTS ARE SIMILAR BEFORE US, AS THE ASSESSEE IS ENG AGED IN TRADING OF RE- EXPORT OF IMPORTED GOODS AND, THEREFORE, THE ASSESS EE IS ENTITLED FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. ALL THE AR GUMENTS ADVANCED BY THE LEARNED DR BEFORE US HAVE ALSO BEEN TAKEN CARE OF BY THE TRIBUNAL WHILE DISCUSSING THE APPEAL IN THE CASE OF GOENKA D IAMONDS AND JEWELLERY LIMITED (SUPRA). IT IS FURTHER NOTED THAT THE MAIN PLANK OF ARGUMENT OF LEARNED DR IS THAT RULES PROVIDED UNDER THE SEZ ACT CANNOT PARTAKE THE CHARACTER OF THE SECTION OF THE INCOME TAX ACT. WE FIND THAT IN THE SEZ ACT UNDER SECTION 51, IT HAS BEEN CLEARLY P ROVIDED THAT THE PROVISION OF ITA NO. 2793/MUM/2012 M/S. DIAMONDS 'R ' US SEZ ACT WILL OVERRIDE THE PROVISION OF ANY OTHER ACT, MEANING TH EREBY THE PROVISION PROVIDED UNDER THE SEZ ACT HAS TO OVERRIDE ON THE P ROVISION OF SECTION 10AA OF THE INCOME TAX ACT. UNDER THE RULES, IT IS NOT PROVIDED BUT UNDER SECTION 51 OF THE SEZ ACT, IT IS PROVIDED, THEREFOR E, IN OUR VIEW, THE CONTENTION RAISED BY THE LEARNED DR IS NOT TENABLE. MOREOVER, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF GOENKA DIAMONDS AND JEWELLERY LIMITED (SUPRA). THER EFORE, RESPECTFULLY 9 ITA NO. 4530/DEL/2015 FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF GOENKA DIAMONDS AND JEWELLERY LIMITED (SUPRA) AND IN VIEW OF THE REASON ING GIVEN BY THE LEARNED CIT(A), WE CONFIRM HIS ORDER.' 6. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. THE FACT BEING SIMILAR, FOLLOWING THE SAME REASONS WE UPHOLD THE ORDER OF THE CIT(A) WHO HAS ALLOWED THE CLAIM OF ASSESSEE OF DEDUCTION UNDER SECTION 10AA OF THE ACT. 11. THE SAID DECISION HAS ALSO BEEN FOLLOWED BY THE ITAT C BENCH MUMBAI IN THE CASE OF M/S. OSIAN VS. ITO IN ITA NO. 1650/MUM/2015 DATED 31/1/2017 AND THE SAID ORDER HAS BEEN PLACED ON REC ORD. 12. IN THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT PROVISIONS OF THE SPECIAL ECONOMIC ZONES ACT, 2005 SHALL PREVA IL OVER THE PROVISIONS OF THE INCOME TAX ACT AND HONBLE DELHI HIGH COURT IN THE CASE OF CIT(A) VS. VAISTH CHAY VYAPAR LTD. (SUPRA) HAS HELD THAT THERE IS A PROVISON IN ANOTHER ENACTMENT WHICH CONTAINS NON OBSTANTE CLAUSE THEN T HAT WOULD OVERRIDE THE PROVISION OF THE INCOME TAX ACT. IN SUCH CIRCUMSTA NCES AND FACTS OF THE CASE SECTION 51(1) OF THE ACT AS A NON OBSTANTE CLAUSE A ND WITHIN THE DEFINITION U/S 2(M) OF THE SPECIAL ECONOMIC ZONES ACT, 2005 EXPORT S INCLUDES PROVIDING SERVICES OR SUPPLYING GOODS FROM ONE UNIT TO ANOTHE R IN THE SAME OR DIFFERENT SPECIAL ECONOMIC ZONES. ACCORDINGLY, THE VIEW TAKE N UP BY THE LD.CIT(A) AND THE A.O CANNOT HOLD GOOD AND IS DIRECTED TO BE REVE RSED. THUS, GROUNDS NO. 1 TO 2.3 OF THE ASSESSEE ARE ALLOWED. THUS, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE IN ASSESSEES OWN CASE AND THE FACTS OF THE PRESENT AS SESSMENT YEAR ARE IDENTICAL TO THAT OF EARLIER YEARS. THEREFORE, GROUND NO. 1 T O 1.3 ARE ALLOWED. 8. AS REGARDS GROUND NO.2 TO 2.2, THE BAD DEBTS WER E ACTUALLY WRITTEN OFF IN 10 ITA NO. 4530/DEL/2015 THE BOOKS OF ACCOUNTS THAT CAN BE SEEN FROM THE BOO KS OF ACCOUNT FOR ASSESSMENT YEAR 2010-11. THE SAID HAS BEEN ACCEPTE D BY THE REVENUE. THEREFORE, THE DECISION OF THE HONBLE APEX COURT I N CASE OF TRF LTD. (SUPRA) AS WELL AS THE CIRCULAR NO. 12/2016 DATED 30/5/2016 IS APPLICABLE IN THE PRESENT CASE. THE CIT(A) AS WELL AS THE ASSESSING OFFICER WERE NOT CORRECT IN MAKING ADDITION OF RS. 1,55,00,500/- UNDER THE HEAD BAD DE BTS WHICH WERE CLAIMED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. THERE FORE, GROUND NOS. 2 TO 2.2 ARE ALLOWED. 10. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH ANUARY, 2019 . SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 18/01/2019 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 11 ITA NO. 4530/DEL/2015 DATE OF DICTATION 16.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 8 .01.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 8 .01.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 8 .01.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 12 ITA NO. 4530/DEL/2015