ITO 3(2)(3), MUMBAI V. KANANI INDUSTRIES LTD, MUMBAI

ITA 7180/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8058 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 02-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: DEEPAK MEHTA
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE S/SHRI RAJENDRA, A.M. AND SANJAY GARG,J.M. ./ ././ ./ ITA NO. 7180/MUM/2014 / ASSESSMENT YEAR: 2011-12 ITO-3(2)(3) AAYAKAR BHAVAN, ROOM NO.673 M.K. ROAD, MUMBAI-400 004. VS. M/S. KANANI INDUSTRIES LTD. G-6, PRASAD CHAMBERS TATA ROAD NO.2, OPERA HOUSE MUMBAI-400 004. PAN: AAACI 1339 R ( / // / APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI RAJESH KUMAR YADAV ASSESSEE BY: SHRI DEEPAK MEHTA / // / DATE OF HEARING: 02.02.2017 !'#$ / DATE OF PRONOUNCEMENT: 09.03.2017 , ,, , 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , ,, , -PER RAJENDRA,AM: CHALLENGING THE ORDER DATED 10/10/2014 OF THE CIT(A )-4,MUMBAI THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAG ED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF DIAMOND STUDDED JEWELLERY,FILED ITS RETUR N OF INCOME ON 27/09/2011,DISCLOSING INCOME OF RS.NIL.THE AO COMPLETED THE ASSESSMENT U/ S.143 (3)OF THE ACT,ASSESSING ITS INCOME AS SHOWN IN THE RETURN,UNDER THE NORMAL PROV ISIONS.HOWEVER,BOOK PROFIT FOR THE PURPOSE OF LEVY OF INCOME TAX U/S.115 JB WAS DETERM INED AT 16.22 CRORE.WHILE COMPUTING THE INCOME UNDER THE MAT PROVISIONS,THE AO DID NOT EXCL UDE PROFIT OF THE ASSESSEES SEZ UNIT HOLDING THAT THE MANDATE OF SECTION 115 JB (6) OF T HE ACT WAS VERY CLEAR. HE HELD THAT AMENDMENT MADE TO CLAUSE (F) OF THE EXPLANATION-1 T O THE SECTION 115 JB (2) PROHIBITED THE BENEFITS AVAILABLE UNDER THE SAID SECTION.ACCORDING LY,HE DID NOT REDUCE THE PROFITS OF SEZ UNIT WHILE COMPUTING THE BOOK PROFIT. HE REFERRED T O CIRCULAR NUMBER 3/2008, DATED 12/03/ 2008 ISSUED BY THE CBDT. 2. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM, IT WAS ARGUED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD NOT CARRIED OUT ANY OTHER BUSINESS EXCEPT MANUFACTURING AND EXPORT OF JEWELLERY IN ITS SEZ UNIT, THAT THE AO HAD ALLOWED EXEMPTION U/S.10 AA OF THE ACT IN THE EARLIER YEARS, THAT FROM THE PLAIN READING OF SUB-S ECTION 6 TO SECTION 115 JB IT WOULD BE CLEAR THAT PROVISIONS OF THE SAID SUB-SECTION WERE NOT AP PLICABLE TO THE INCOME DERIVED FROM SEZ UNIT, THAT THE INCOME OF SEZ WAS TO BE EXCLUDED WHI LE DETERMINING THE TEXT LIABILITY U/S.115 7180/M/14-KANANI(11-12) 2 JB OF THE ACT. IT RELIED UPON THE CASES OF GENESYS INTERNATIONAL CORPORATION LTD. (28 TAXMANN. COM 134)AND NISSAN RENAULT TECHNOLOGY BUSINESS CENT RE INDIA LTD. (ITA/108/MADRAS/2012- AY. 2008-09, DATED 03/07/2013).AFTER CONSIDERING TH E AVAILABLE MATERIAL, THE FAA HELD THAT IN THE EARLIER YEAR THE IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, THAT HE HAD PASSED A DETAILED ORDER IN THAT YEAR. REFERRING TO THE CAS ES RELIED UPON BY THE ASSESSEE, HE ALLOWED THE APPEAL FILED BY IT. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE (DR)STATE D THAT MATTER COULD BE DECIDED ON MERITS.THE AUTHORISED REPRESENTATIVE (AR) SUPPORTED THE ORDER OF THE FAA AND RELIED UPON THE SAME CASES WHICH WERE REFERRED TO BY THE FAA. 5. WE FIND THAT IN BOTH THE CASES RELIED UPON BY THE A SSESSEE, IT HAS BEEN HELD THAT TILL THE AY. 2011-12,WHILE COMPUTING THE BOOK PROFIT, INCOME FRO M THE SEZ UNITS HAVE TO BE EXCLUDED. EVEN THE CIRCULAR ISSUED BY THE CBDT IS VERY CLEAR IN THAT REGARD. THE ASSESSMENT YEAR INVOLVED IS AY.2011-12.THEREFORE, WE HOLD THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.CONFIRMING THE SAME, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH MARCH, 2017. 09 2017 SD/- SD/- ( /SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; % /DATED : 09 .03.2017 . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.