DCIT, Jaipur V. GOENKA JEWELLERS, Jaipur

ITA 663/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5613 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 16-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Assessee Lawyers: G G MUNDRA
• Section: 10AA; 27

Judgement Text

ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 663/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 THE DCIT, CIRCLE-2, JAIPUR CUKE VS. M/S GOENKA JEWELLERS, 401, PANCHRATNA , MSB KA RAST, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ AABFG 8810D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.11.2015 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 06/01/2016 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-I, JAIPUR DATED 08.05.2013 WHEREIN THE REVENUE HAS TAK EN THE FOLLOWING GROUND: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE D EDUCTION OF RS. 6,71,89,986/- U/S 10AA OF THE IT ACT, 1961 AS THE C ONDITION LAID DOWN IN THE SECTION 10AA OF THE IT ACT, 1961 FOR CL AIMING THE DEDUCTION ARE NOT FULFILLED. ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 2 2. THE RELEVANT FACTS FOR THE ISSUE UNDER CONSIDE RATION, ARE AS FOLLOWS: 2.1 DURING THE ASSESSMENT PROCEEDINGS, IT WAS OBSER VED BY AO THAT ASSESSEE FIRM MADE RE-EXPORT OF IMPORTED GOODS AMOU NTING TO RS. 65,35,59,139/- AND DECLARED NET PROFIT OF RS. 7,32 ,19,235/- WHICH HAVE BEEN CLAIMED AS DEDUCTION U/S 10AA OF THE IT AT, 1 961, IN RESPECT OF ONE OF THE UNITS OF THE ASSESSEE FIRM WHICH WAS SI TUATED IN SEZ SURAT (GUJARAT). 2.2 AS PER AO, THE ASSESSEE HAS CLAIMED DEDUCTION U /S 10AA ON PURELY TRADING ACTIVITY I.E. IMPORT OF DIAMONDS AND RE-EXPORT OF THE SAME WITHOUT ANY MANUFACTURING OR PROCESSING OR PROVIDIN G ANY SERVICES. THE ASSESSEE DURING ASSESSMENT PROCEEDINGS SUBMITTED THAT DEDUCTION U/S 10AA HAS BEEN CLAIMED FOR PROVIDING SERVICES WHICH INCLUDES TRADING I.E. IMPORT FOR THE PURPOSE OF RE-EXPORT WITHIN THE MEANING OF RULE 76 OF THE SEZ RULES READ WITH INSTRUCTION NO.4 OF 2006 D ATED 24.05.2006 ISSUED BY THE MINISTRY OF COMMERCE & INDUSTRY, GOV ERNMENT OF INDIA. ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 3 2.3 AS PER AO, THE ASSESSEE FIRM IS NOT ENGAGED IN MANUFACTURING OR PRODUCING ARTICLE OR THINGS OR PROVIDING ANY SERVIC ES BUT MERELY ENGAGED IN TRADING ACTIVITY WHICH IS NOT ELIGIBLE FOR DEDUC TION U/S 10AA OF THE I.T. ACT. IN SUPPORT, THE AO HAS STATED THE FOLLOWI NG REASONS IN ITS ORDER: (I) IT IS SETTLED LAW THAT DEFINITION OF AN EXPRESS ION IN ONE STATUE CANNOT AUTOMATICALLY BE APPLIED TO ANOTHER STATUE. THEREFORE, THE DEFINITION OF SERVICES AND SEZ ACT OR SEZ RULES CAN NOT SUPERSEDE THE SUBSTANTIVE PROVISIONS OF THE INCOME TAX ACT. MORE OVER, IN THIS CASE THE ASSESSEE HAS REFERRED TO SUB CLAUSE (Z) OF SECT ION 2 OF SEZ ACT, 2005 FOR THE DEFINITION OF SERVICES, WHEREIN TRADING IS INCLUDED IN SERVICES. NOW THE QUESTION ARISES THAT WHETHER THE DEFINITION OF SERVICES CAN BE IMPORTED FROM SEZ ACT, 2005. IT IS CLEAR THAT FOR DEFINITION OF MANUFACTURING SECTION 10AA OF I.T. ACT HAS REFERRED TO SUB SECTION 2(R) OF SEZ ACT BUT FOR THE DEFINITION OF SERVICES, I. T ACT 1961 HAS DELIBERATELY NOT REFERRED TO SEZ ACT, 2005. THIS I S SPECIALLY SO WHEN EXPLANATION WAS INSERTED TO GIVE TRACE OF DEFINITI ON OF MANUFACTURING IN SEZ ACT, HOWEVER I.T. ACT 1961 DELIBERATELY NOT CHO SEN TO REFER SECTION ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 4 2(2) OF SEZ ACT, 2005 FOR DEFINING SERVICES. IN V IEW OF THE SAME, IT IS CLEAR THAT IT ACT, 1961 HAS CLEARLY EXCLUDED DEFINI TION OF SERVICES GIVEN IN SEZ ACT FROM ITS PREVIEW.. INCOME TAX ACT, 196 1 HAS ALREADY REFERRED TO SEZ ACT FOR DEFINITION OF MANUFACTURIN G & THEREFORE SECTION 29) OF SEZ CT 2005 HAS BEEN REPRODUCED IN APPENDIX OF UIT ACT. HOWEVER, SAME IS NOT THE CASE WITH SECTION 2(Z0 OF SEZ ACT, 2005. (II) DEFINITION FOR PROVIDING ANY SERVICE DOES NOT INCLUDE TRADING FOR THE PURPOSE OF SEC. 10AA(1) OF THE I.T. ACT, OTHERW ISE THE SECTION SHOULD HAVE BEEN SIMPLY STIPULATED BUSINESS ACTIVITY INST EAD OF USING MANUFACTURE/PRODUCE OF ARTICLE/THING OR PROVIDING ANY SERVICES. (III) THE MEANING OF PROVIDING SERVICE DOES NOT IN CLUDE TRADING AS PER THE OXFORD ENGLISH DICTIONARY OR COLLINS ENGLISH DI CTIONARY OR ANY OTHER DICTIONARY. THE MEANING OF PROVIDING SERVICES BEING TAKEN AS PER RULES 76 OF SEZ RULES AND INSTRUCTION NO.4 OF 2006 OF MINISTRY OF COMMERCE & INDUSTRY ARE RELATED TO OPERATION OF SE ZS AND PERMISSIBLE ACTIVITIES IN SEZS WHICH HAS A SPECIFIC PURPOSE. M OREOVER SEC. 27 OF SEZ AND CLEARLY STIPULATES THAT PROVISIONS OF INCOM E TAX ACT, 1961 SHALL ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 5 APPLY TO THE DEVELOPERS/ ENTREPRENEUR FOR CARRYING ON THE AUTHORIZED OPERATIONS IN A SEZ AND THE SAME IS NOT TRUE VICE-A VERSA. THE AO THEREFORE, DISALLOWED THE DEDUCTION U/S 10A A AS CLAIMED BY THE ASSESSEE. 2.4 BEING AGGRIEVED THE ASSESSEE CARRIED THE MATT ER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS ALLOWED THE APPEAL OF THE ASSESS EE BY FOLLOWING THE COORDINATE BENCH DECISION IN CASE OF M/S GOENKA D IAMOND & JEWELLERS IN ITA NO. 509/JP/11 DATED 31.01.2012. T HE RELEVANT FINDINGS OF THE LD. CIT(A) ARE CONTAINED IN PARA 4.4 OF HIS ORDER WHICH READS AS UNDER: I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND T HE SUBMISSIONS OF THE AR AND THE ORDER OF THE HONBLE ITAT, IN THE CASE OF M/S GOENKA DIAMOND & JEWELLERS LTD. FOR .A. Y. 2008-09. ITA NO.509/JP/2011 DATED 31.01.2012 WHEREIN THE IDE NTICAL ISSUE CAME UP FOR ADJUDICATION AND DECIDED IN FAVOUR OF T HE ASSESSEE WITH THE SPECIFIC OBSERVATION THAT THUS THE WORD SERVICES AS MENTIONED IN SECTION 10AA CANNOT BE CONSTRUED IN C ONSISTENTLY WITH THE DEFINITION OF SERVICES GIVEN IN THE SEZ AC T. UNDER THE SEZ ACT, THE TRADING IS INCLUDED IN THE SERVICES PROV IDED THE TRADING IS EXPORT OF IMPORTED GOODS. WE THEREFORE, FEEL THA T THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 10AA OF THE ACT AND THERE FORE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE EXEMPTION . THUS IT IS SEEN THAT THE MATTER IS COVERED BY THE FINDING OF THE HONBLEITAT JAIPUR BENCH IN THE CASE OF M/S GOENKA DIAMOND & ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 6 JEWELLERS LT. SUPRA IN FAVOUR OF THE ASSESSEE. SINC E THE AO HAS NOT BROUGHT ANY EVIDENCE OR ARGUMENT OR CASE LAW TO CO NTROVERT THE FINDING OF THE HONBLE ITAT JAIPUR BENCH IN THE SAM E FACTS IT IS HELD THAT THE MATTER OF CLAIMING OF EXEMPTION U/S 1 0AA IS COVERED BY THIS FINDING AND THE APPELLANT IS ALLOWED TO CLA IM EXEMPTION OF RS.6,71,89,986/- U/S 10AA. 2.6 DURING THE COURSE OF HEARING THE LD. AR RELIES ON THE ORDER OF THE CIT(A) AND REITERATED THE SUBMISSION MADE BEFOR E THE LD. CIT(A), A COPY OF WHICH HAS BEEN PLACED ON RECORD. THE LD. AR FURTHER SUBMITTED THAT THE FACT OF THE CASE AND ISSUE INVOLVED IN APP EAL IS SAME AS HAS BEEN DECIDED BY THE HONBLE BENCH IN THE CASE OF DCIT V S. GOENKA DIAMOND AND JEWELS LTD. JAIPUR A.Y.2008-09 (ITA NO. 509/JP/2011 ORDER DATED 31.1.2012) . FURTHER THE LD. AR SUBMITTED THAT THERE ARE JUDGE MENTS OF OTHER ITAT BENCHES IN WHICH AFTER REFERRING THE SAID JUD GEMENT OF DCIT V. GOENKA DIAMONDS & JEWELS LTD. )ITA NO.509/JP/2011 ORDER DATED 31/1/2012), THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE. (I) GITANJALI EXPORTS CORPORATION LTD. MUMBAI IN ITA NO. 6947-48/MUM/2011ORDER DATED 8.5.2013 FOR A.Y. 2006 -07 & 2007-08 . ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 7 (II) ITO V. MIDAS DFS PVT. LTD KOLKOTA BENCH (ITA 30/KOL/2012 FOR AY. 2008-09. I 2.7 THE LD. DR SUPPORTED THE ORDER OF THE AO. HOWE VER, HE COULD NOT CONTROVERT THE FACT THAT THE IDENTICAL ISSUE HA S BEEN DECIDED EARLIER BY THE COORDINATE BENCHES IN THE CASE OF M/S GOENKA DI AMONDS & JEWELS LTD. 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE COORDINATE BENCH IN CASE OF M/S GOENKA DIMONDS AND JEWELS LTD. VIDE ITS ORDER DATED 31/1/ 2012 HAS DECIDED THE IDENTICAL ISSUE WITH THE SAME FACT PATTERN AS THE C ASE BEFORE US. THE RELEVANT FINDING OF THE COORDINATE BENCHES ARE AT PARA 2.19 AND 2.20 OF ITS ORDER WHICH READS AS UNDER: THOUGH VIDE INSTRUCTION NO.1/2006 DATED 24.03.2006 IT WAS CLARIFIED THAT TRADING UNITS CAN BE SET UP IN TH E SEZ. HOWEVER, THE MODIFICATION WAS MADE ON 2.05.2006 IN WHICH IT WAS MADE CLEAR THAT THE DEDUCTION U/S 10AA WILL BE AVAILABL E IN RESET OF THE TRADING IN THE NATURE OF RE-EXPORT OF IMPORTED GOO D. THUS THE ASSESSEE WERE PROMISED THAT THEY WILL BE ELIGIBLE FOR DEDUCTION U/S 10AA OF THE ACT IN RESPECT OF THE PROFIT EARNI NG ON TRADING OF RE-EXPORT OF IMPORTED GOODS. THE REVENUE HAS NOT BEEN ABLE TO SHOW US THAT SUCH INSTRUCTION WAS NOT WITHDRAWN O R THE BOARD ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 8 HAS ISSUED INSTRUCTION THAT INSTRUCTION DATED 24.05 .2006 FROM THE MINISTRY OF COMMERCE WILL NOT BE APPLICABLE FOR T HE PURPOSE OF ALLOWING EXEMPTION U/S 10AA OF THE ACT. HENCE THE V IEW OF DOCTRINE OF PROMISSORY ESTOPPED, WE HOLD THAT THE A SSESSEE IS ENTITLED TO DEDUCTION. WE HAVE ALSO REPRODUCED SECTION 51 OF THE SEZ AC T. AS PER THIS SECTION IT IS MENTIONED THAT NOTWITHSTANDING ANYTH ING INCONSISTENT THEREWITH CONTAINED IN ANY OTHER LAW FOR THE TIME B EING IN FORCE OR IN ANY INSTRUMENT HAVING EFFECT BY VIRTUE OF A NY LAW OTHER THAN THIS ACT. . THE PROVISION OF SEZ ACT ILL PREVAIL. THE HONBLE APEX COURT IN THE CASE OF TAX RECOVERY OFFICER VS. CUS TODIAN APPOINTED UNDER THE SPECIAL COURT, 293 ITR 369 HAD AN OCCASION TO CONSIDER THE MEANING OF LANGUAGE EMPLOYED IN SE CTION 13 OF THE SPECIAL COURT ACT. IN SECTION 13 OF THE SPECI AL COURT ACT, IT WAS STATED THAT PROVISION OF THE ACT SHALL HAVE E FFECT NOTWITHSTANDING ANY THING INCONSISTENT THEREWITH C ONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE. THE HO NBLE APEX COURT HELD THAT THERE CAN BE NO MANNER OF DOUBT TH AT THE PROVISION OF SPECIAL COURT ACT WHEREVER THEY ARE AP PLICABLE SHALL PREVAIL OVER THE PROVISION OF THE INCOME TAX ACT,. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VASISTH CH AY VAAPAR LTD. 330 ITR 440 HELD THAT WHEN THERE IS A PROVISI ON IN ANOTHER ENACTMENT WHICH CONTAINS A NON OBSTENTE CLAUSE THA N THAT WOULD OVERRIDE THE PROVISIONS OF THE INCOME TAX ACT. THU S ONE WILL HAVE TO CONSIDER THE IMPLICATION OF SECTION 51 OF THE SE Z ACT. IT MEANS THAT ANYTHING INCONSISTENT TO THE PROVISION OF T HE SEZ ACT WILL NOT BE CONSIDERED. THUS THE WORD SERVICES AS MENT IONED IN SECTION 10AA CANNOT BE CONSTRUED IN-CONSISTENTLY W ITH THE DEFINITION OF SERVICES GIVEN IN THE SEZ ACT. UNDER THE SEZ ACT, THE TRADING IS INCLUDED IN THE SERVICES PROVIDED T HE TRADING IS EXPORT OF IMPORTED GOODS. WE THEREFORE, FEEL THA T THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 10AA OF THE ACT AND THERE FORE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE EXEMPTION. ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 9 2.9 IT IS ALSO NOTED THAT THE SAID DECISION OF THE COORDINATE BENCH HAS SUBSEQUENTLY BEEN FOLLOWED BY THE COORDINATE BENCHES IN CASE OF GEETANJALI EXPORT CORPORATION LTD. ITA NO. 6947 48 MUMBAI/20 DATED 08.05.2013 AND MIDAS DFS (P) LTD. ITA NO. 30/KOL/2012 DATED 03.11.2013. IT IS NOT IN DISPUTE THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL WITH T HE FACTS AND CIRCUMSTANCES OF THE CASE IN CASE OF M/S GOENKA DIA MONDS & JEWELS LTD. FURTHER THE LD. DR HAS NOT BROUGHT TO O UR NOTICE ANY CONTRARY RULING OF THE COORDINATE BENCH OR THE HON BLE HIGH COURT AND SUPREME COURT. GIVEN THE CONSISTENT DECIS IONS OF THE COORDINATE BENCH WHERE THE DEDUCTION HAS BEEN ALLOW ED TO THE ASSESEE U/S 10AA OF THE ACT IN RESPECT OF PROFIT EA RNED ON TRADING OF RE-EXPORT OF IMPORTED GOODS, RESPECTFULLY FOLLO WING THE SAID DECISIONS, THE ASSESSEE IN THE INSTANT CASE SHALL B E ELIGIBLE FOR DEDUCTION U/S 10AA OF THE ACT. HENCE, THE GROUND OF THE REVENUE IS DISMISSED. ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 10 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 /01/2016. SD/- SD/ VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 06/01 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR 2. THE RESPONDENT- M/S GOENKA JEWELLERS, JAIPUR. 3. THE CIT(A).I, JAIPUR 4. THE CIT-I JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO.663/JP/13) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO.663/JP/13 DCIT, CIRCLE-2, JAIPUR VS. M/ G OENKA JEWELLERS, JA IPUR 11