This appeal is filed by the Revenue against the order of CIT(A)-I, Jaipur dated 08.05.2013 wherein the Revenue has taken the following ground:
Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in allowing the deduction of Rs. 6,71,89,986/- u/s 10AA of the IT Act, 1961 as the condition laid down in the section 10AA of the IT Act, 1961 for claiming the deduction are not fulfilled.ITA No.663/JP/13 DCIT, Circle-2, Jaipur vs. M/ G oenka Jewellers, Jaipur 2
2. The relevant facts for the issue under consideration, are as follows:
2.1 During the assessment proceedings, it was observed by AO that assessee firm made re-export of imported goods amounting 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, 1961, in respect of one of the units of the assessee firm which was situated 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 providing 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 dated 24.05.2006 issued by the Ministry of Commerce & Industry, Government of India. ITA No.663/JP/13 DCIT, Circle-2, Jaipur vs. M/ G oenka Jewellers, Jaipur 3
2.3 As per AO, the assessee firm is not engaged in manufacturing or producing article or things or providing any services but merely engaged in trading activity which is not eligible for deduction u/s 10AA of the I.T. Act. In support, the AO has stated the following reasons in its order: (i) It is settled law that definition of an expression in one statue cannot automatically be applied to another statue. Therefore, the definition of services and SEZ Act or SEZ rules cannot supersede the substantive provisions of the Income Tax Act. Moreover, in this case the assessee has referred to sub clause (z) of section 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 is specially so when explanation was inserted to give trace of definition of manufacturing in SEZ Act, however I.T. Act 1961 deliberately not chosen to refer section ITA No.663/JP/13 DCIT, Circle-2, Jaipur vs. M/ G oenka Jewellers, Jaipur 4 2(2) of SEZ Act, 2005 for defining services. In view of the same, it is clear that IT Act, 1961 has clearly excluded definition of services given in SEZ Act from its preview.. Income Tax Act, 1961 has already referred to SEZ Act for definition of manufacturing & 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, otherwise the section should have been simply stipulated business activity instead of using manufacture/produce of article/thing or providing any services. (iii) The meaning of providing service does not include trading as per the Oxford English Dictionary or Collins English Dictionary 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 SEZs and permissible activities in SEZs which has a specific purpose. Moreover sec. 27 of SEZ and clearly stipulates that provisions of income Tax Act, 1961 shall ITA No.663/JP/13 DCIT, Circle-2, Jaipur vs. M/ G oenka Jewellers, Jaipur 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 10AA as claimed by the assessee.
2.4 Being aggrieved the assessee carried the matter in appeal before the ld. CIT(A) who has allowed the appeal of the assessee by following the Coordinate Bench decision in case of M/s Goenka Diamond & Jewellers in ITA No. 509/JP/11 dated 31.01.2012. The 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 the 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 identical issue came up for adjudication and decided in favour of the assessee with the specific observation that thus the word services as mentioned in section 10AA cannot be construed in consistently with the definition of services given in the SEZ Act. Under the SEZ Act, the trading 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. 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, Jaipur 6 Jewellers Lt. supra in favour of the assessee. Since the AO has not brought any evidence or argument or case law to controvert the finding of the Honble ITAT Jaipur Bench in the same facts it is held that the matter of claiming of exemption u/s 10AA is covered by this finding and the appellant is allowed to claim 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 before 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 appeal is same as has been decided by the Honble Bench in the case of DCIT vs. 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 judgements of other ITAT Benches in which after referring the said judgement 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, Jaipur 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. However, he could not controvert the fact that the identical issue has been decided earlier by the Coordinate Benches in the case of M/s Goenka Diamonds & 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 case 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 the SEZ. However, the modification was made on 2.05.2006 in which it was made clear that the deduction u/s 10AA will be available in reset of the trading in the nature of re-export of imported good. Thus the assessee were promised that they will be eligible for deduction u/s 10AA of the Act in respect of the profit earning on trading of re-export of imported goods. The revenue has not been able to show us that such instruction was not withdrawn or the Board ITA No.663/JP/13 DCIT, Circle-2, Jaipur vs. M/ G oenka Jewellers, Jaipur 8 has issued instruction that instruction dated 24.05.2006 from the Ministry of Commerce will not be applicable for the purpose of allowing exemption u/s 10AA of the Act. Hence the view of doctrine of promissory estopped, we hold that the assessee is entitled to deduction.We have also reproduced section 51 of the SEZ Act. As per this section it is mentioned that notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. . the provision of SEZ Act ill prevail. The Honble Apex Court in the case of Tax Recovery Officer vs. Custodian Appointed under the Special Court, 293 ITR 369 had an occasion to consider the meaning of language employed in section 13 of the Special Court Act. In section 13 of the Special Court Act, it was stated that provision of the Act shall have effect notwithstanding any thing inconsistent therewith contained in any other law for the time being in force. The Honble Apex Court held that there can be no manner of doubt that the provision of Special Court Act wherever they are applicable shall prevail over the provision of the Income tax Act,. The Honble Delhi High Court in the case of CIT Vs. Vasisth Chay Vaapar Ltd. 330 ITR 440 held that when there is a provision in another enactment which contains a non obstente clause than that would override the provisions of the Income Tax Act. Thus one will have to consider the implication of section 51 of the SEZ Act. It means that anything inconsistent to the provision of the SEZ Act will not be considered. Thus the word services as mentioned in Section 10AA cannot be construed in-consistently with the definition of services given in the SEZ Act. Under the SEZ Act, the trading 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. ITA No.663/JP/13 DCIT, Circle-2, Jaipur vs. M/ G oenka Jewellers, Jaipur 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 the facts and circumstances of the case in case of M/s Goenka Diamonds & Jewels Ltd. Further the ld. DR has not brought to our notice any contrary ruling of the Coordinate Bench or the Honble High Court and Supreme Court. Given the consistent decisions of the Coordinate Bench where the deduction has been allowed to the assesee u/s 10AA of the Act in respect of profit earned on trading of re-export of imported goods, respectfully following the said decisions, the assessee in the instant case shall be 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, Jaipur 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 vknsk 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) vknskkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar ITA No.663/JP/13 DCIT, Circle-2, Jaipur vs. M/ G oenka Jewellers, Jaipur 11
