Income Tax Appellate Tribunal - Kolkata
Midas Dfs Pvt. Ltd., Kolkata vs Department Of Income Tax on 5 August, 2005
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA BENCH "B" KOLKATA
Before Shri, R.S. Syal, Accountant Member and
Shri George Mathan, Judicial Member
ITA No.30/Kol/2012
Assessment Year:2008-09
Income Tax Officer, V/s. M/s Midas DFS Pvt. Ltd.,
W ard-1(3), Room No.k 103241, Foreshore Road,
11A, 4 t h Floor, Shibpur, Howrah - 711102
Aayakar Bhawan, P-7, [P AN No. AAPCM 0353G]
Chowringhee Sqare,
Kolkata - 700 069
अपीलाथ /Appellant .. यथ /Respondent
अपीलाथ क ओर से /By Appellant Shri Apurba Kr. Das, SR-DR
यथ क ओर से/By Respondent Shri Subhash Agarwal, AR
सुनवाई क तार ख/Date of Hearing 11-11-2013
घोषणा क तार ख/Date of Pronouncement 13-11-2013
आदे श /O R D E R
PER R.S. Syal, Accountant Member:-
This appeal by the Revenue arises out of the order passed by Commissioner of Income-tax (Appeals) (CIT(A) for short) on 17-10-2011 in relation to the assessment year (AY) 2008-09.
2. The only ground is against the allowing of the benefit under section 10AA of the Income-tax Act, 1961(hereinafter referred to as 'the Act;). Briefly stated the facts of the case are that the assessee is engaged in the business of import and export of tobacco products and trading of all types of FMCG ITA No.30Kol2012 A.Y 2008-09 ITO Wd-1(3), Kol v. M/s. Midas DFS Pvt. Ltd. Page 2 products, alcoholic and non-alcoholic beverages. Exemption u/s 10AA was claimed in respect of the profit from the eligible business of trading. On being called upon to explain the justification for the exemption, the assessee stated that Letter of permission / approval was issued by the Development Commissioner of Falta Special Economic Zone (SEZ for short) on 25-04-2005 allowing trading of specified "liquor, cigarettes, FMCG product" to the erstwhile partnership firm, which was succeeded by the present assessee, a private limited company. This letter of approval was further amended vide letter dated 05-08-2005 permitting trading activity of `all items except prohibited items'. The Assessing Officer noticed that the letter of the Development Commissioner allowing transfer of the original LOA from the erstwhile firm to the present corporate assessee was given for setting up of a trading unit at Falta SEZ for liquor, cigarattes, FMCG product. Since the assessee was not engaged in any manufacturing activity in the SEZ, the AO opined that the benefit of section 10AA of the Act was not permissible. The assessee contended that there can be no bar on undertaking trading activity in view of the provisions of section 10AA of the Act permitting providing of `any services' and the definition of services as per the SEZ Act also encompassing `trading'. Not convinced, the AO held that the definition of term, "service" in the SEZ Act was not relevant for the purposes of the Act..He also noticed that section 10AA (4)(iii) of the Act provides that the exemption will be available to the assessee only if it is not formed by the transfer to a new business machinery or plant previously used for any purpose. He observed that the assessee was a newly incorporated company which took over all the assets and liabilities of the erstwhile partnership firm and in this process there was violation of the provisions of Section 10AA(4) (iii) of the Act inasmuch as it was using the same space which was allowed to the partnership firm. He, therefore denied the benefit of Section 10AA of the Act. The Ld. CIT(A) got convinced with the assessee's submissions and restored the benefit of Section 10AA of the Act. The Revenue is in appeal against the granting of relief under the said Section.
ITA No.30Kol2012 A.Y 2008-09 ITO Wd-1(3), Kol v. M/s. Midas DFS Pvt. Ltd. Page 3
3. We have heard the rival submissions and perused the relevant material on record. The first objection of the Assessing Officer was that the benefit of Section 10AA of the Act is lost when the assessee is engaged solely in `trading' activities. It has been noticed above that Section 10AA (1) allows benefits, inter alia, for the provisions of any `services' by an eligible enterprise. Obviously, the erstwhile partnership firm i.e., M/s. Midas International was permitted to do `trading' by the Competent authority. The firm got converted into assessee-company and continued the same business with prior permission from the Competent authority under the SEZ Act. The definition of `services' under the SEZ Act includes `trading' activity. In that view of the matter, it becomes manifest that the trading activity has been permitted by the Competent authority under the SEZ Act. As such, there can be no question of denial of exemption u/s. 10AA of the Act. The Ld. Counsel for the assessee has placed on record a copy of an order passed by the Jaipur Bench in DCIT v. Goenka Diamond & Jewellers Ltd. IT appeal No. 509 (JP) of 2011 2012-(050)-SOT - 0307 - TJAI in which it has been held that trading of the eligible goods entitles the assessee to the benefit of section 10AA of the Act. Similarly, the copy of another order passed by Mumbai Bench in M/s Gitanjali Exports Corportion Limited v. ADCIT in ITA No.6947 & 6948/Mum/2011 dated 08-05-2013 has also been placed on record in which the view expressed by the Jaipur Bench has been reiterated. No contrary precedent has been brought to our notice by the Ld. DR. In view of the two Tribunals orders available on the point allowing exemption u/s. 10AA of the Act in respect of `trading' activities, we are of the considered opinion that no exception can be taken to the view expressed by the Ld. CIT(A) in granting the exemption.
4. The second objection of the Assessing Officer was against the non- fulfillment of requisite condition as per Section 10AA(4)(iii) of the Act which provides that the undertaking should not be formed by transfer of machinery or plant to a new business which was previously used for any purpose.
ITA No.30Kol2012 A.Y 2008-09 ITO Wd-1(3), Kol v. M/s. Midas DFS Pvt. Ltd. Page 4
Suffice to say, that the assesssee-company is successor of the partnership firm which was originally approved by the competent authority under the SEZ Act to do this business. The said firm claimed exemption u/s. 10AA of the Act for two years before the partnership firm got converted into assessee- company. It has been brought to our notice that the assessment of the firm was completed u/s. 143(3) of the Act in which benefit of exemption under this provisions was allowed. The granting of such exemption in earlier years implies that the AO got satisfied with the requisite conditions as per section 10AA(4). Since the assessee-company is nothing but the conversion of the erstwhile firm, we fail to appreciate as to how it can be said at this stage that the condition required under clause (iii) is not satisfied. That apart, since the assessee is a trading company not having any machinery or plant, there cannot be any question of violation of this provisions. The reference by the Assessing Officer to certain piece of land for denial of exemption is not appropriate inasmuch as the business was carried on this leaseed land which is not a fixed asset of the assessee-company in its own right. In view of the foregoing discussion, we are of the considered opinion that the ld. CIT(A) was justified in allowing exemption u/s.10AA of the Act.
5. In the result, Revenue's appeal is dismissed.
Order pronounced in Open Court on the date mentioned hereinabove at caption page.
Sd/- Sd/-
(George Mathan) (R.S. Sayal)
(Judicial Member) (Accountant Member)
Kolkata,
*Dkp
!दनांकः- 13/11/2013 कोलकाता ।
आदे श क ितिल+प अ,े+षत / Copy of Order Forwarded to:-
1. अपीलाथ / Appellant
2. यथ / Respondent
3. संबिं धत आयकर आयु0 / Concerned CIT
4. आयकर आयु0- अपील / CIT (A)
ITA No.30Kol2012 A.Y 2008-09
ITO Wd-1(3), Kol v. M/s. Midas DFS Pvt. Ltd. Page 5
5. +वभागीय ितिनिध, आयकर अपीलीय अिधकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड8 फाइल / Guard file.
By order/आदे श से,
/True copy
उप/सहायक पंजीकार
आयकर अपीलीय अिधकरण,
कोलकाता ।
Strengthen preparation & delivery of orders in the ITAT
1) date of taking dictation 11/11
2) direct dictation by Member straight on No. computer/laptop/dragon dictate
3) date of typing & draft order placed before Member 11/11 4) date of correction 12/11
5) date of further correction --
6) date of initial sign by Members 12/11 7) order uploaded on 1311
8) original dictation pad-part has been enclosed in the file Yes
9) final order and 2nd copy send to Bench Clerk on 13/11
10) Order send to Head Clark *