Income Tax Appellate Tribunal - Ahmedabad
Sahjanand Laser Technology ... vs The Asstt. Cit, Circle-4(1)(1), ... on 24 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH
Before: DR. BRR Kumar, Vice President
And Shri T. R. Senthil Kumar, Judicial Member
ITA No: 840 & 959/Ahd/2023
Assessment Year: 2017-18
Sahajanand Las er Asst. Commissioner
Technology Limited Vs of Income Tax,
30, GIDC Electronics Circle-4(1)(1),
Estate, Sector-26, Ahmedabad
Gandhi Nagar,
Gujarat-382028
PAN: AAGCS1983B
The DCIT, Vs Sahajanand Laser
Gandi Nagar Circle, Technology Ltd
Gandhi Nagar 30,GIDC Electronics
Estate, Sector-26,
Gandhi Nagar,
Gujarat-382028
PAN: AAGCS1983B
(Appellant) (Respondent)
ITA No: 841 & 842/Ahd/2023
Assessment Years: 2018-19
Sahajanand Las er Asst. Commissioner
Technology Limited Vs of Income Tax,
30, GIDC Electronics Circle-4(1)(1),
Estate, Sector-26, Ahmedabad
Gandhi Nagar,
Gujarat-382028
PAN: AAGCS1983B
(Appellant) (Respondent)
Assessee Represented: Ms. Arti N Shah, A.R.
Revenue Represented: Shri Prath vi Raj Meena, CIT-DR
Date of hearing : 12-02-2026
Date of pronouncement : 24-04-2026
I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 2
Sahajanand Laser Technology Ltd. vs.ACIT
आदे श/ORDER
PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
These appeals are filed by the Assessee and Revenue as against separate appellate orders dated 21-08-2023, 21-08-2023 and 29-09-2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as "CIT(A)"), arising out of the assessment orders passed under section 143(3) and penalty levied u/s.270A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the Assessment Years 2017-18 and 2018-19 respectively. As the facts and issues involved in these appeals are common, for the sake of convenience both the matters were heard together and are being disposed of vide this consolidated order. We shall first take up the appeal in ITA No.840/Ahd/2023 for Asst. Year 2017-18.
2. Brief facts of the case is that the assessee is a company and filed its return of income for the Asst. year 2017-18 on 30.11.2017 and declared loss at Rs. (-)5,17,22,470/-. The case was selected for scrutiny under CASS and assessment order u/s. 143(3) of the Act was passed on 20.12.2019 determining the income of the assessee at Rs.6,82,26,068/- by making following disallowances:
a. Deduction u/s.10A/10AA of the Act Rs.6,20,88,783 b. Late payment of ESI & PF Rs. 3,32,755 c. Sundry balance written off u/s.36[2] Rs. 24,40,000 d. Bad Dets written off u/s.36[2] Rs. 1,52,89,000 e. Remission liability u/s.41[1] Rs. 3,84,10,000 f. Fixed assets written off amounting to Rs. 13,88,000/= I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 3 Sahajanand Laser Technology Ltd. vs.ACIT
3. Aggrieved against the assessment order the assessee filed an appeal before CIT[A] who partly allowed the appeal and partly confirmed the additions by observing as follows:
a. Claim of Deduction u/s.10AA of the Act Rs.6,20,88,783/= "... 6.5. I have gone through the facts of the case and submission filed by the appellant. During appellate proceedings, the appellant company submitted that it is engaged in the business of manufacturing of laser system for material processing and others. The appellant company stated that it commenced production in the year 2013-14 and a claim of deduction of Rs.6 20,88,783/- were made under section 10AA of the Act during the year under consideration. One of the dispute arose in the assessment order was date of commencement of production. The appellant during assessment proceedings submitted Form 56F, wherein the date of commencement of production was 27.07.2016, however, the appellant company, during assessment proceedings, claimed that the year of commencement of production is FY 2013-14, Further, during appellate proceedings, the appellant company stated that the date of commencement of production is 27.07.2016 and submitted the letter issued from the office of the Development Commissioner, Kandla Special Economic Zone, Ahmedabad vide letter No. KASEZ/DCO/GIDC-EP/I//001/2013-14/312 dated 01.08.2016 in this regard.
6.6 Further dispute is also arose from the Form 56F wherein 'Export proceeds received in convertible foreign exchange of the undertaking is mentioned ZERO. The assessee company failed to produce evidence that sale of goods are in form of EPCG Sales, EOU Sales and Zone to Zone sales, to the purchasers in India are further exported to foreign countries during assessment proceedings. The AO on this basis rejected the claim of deduction under section 10AA of the Act. Apropos to this, the appellant submitted that the appellant is rightly claimed the deduction u/s 10AA of the Act in Form 56F. The claim is calculation in accordance with section 10AA(1) of the Act being 100% of the claim derived from export.
I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 4 Sahajanand Laser Technology Ltd. vs.ACIT 6.7 Upon going through the assessment order and the submission made by the appellant, it is concluded that mere statement of the appellant company is not sufficient to substantiate the claim of the appellant company that it is eligible to claim deduction u/s 10AA of the Act. It is also the onus of the appellant company that necessary documents/evidences in respect of exports are also required to be submitted in order to substantiate its claim. The appellant company failed to produce any evidence/document during appellate proceedings except Form 56F.
6.8 The appellant further stated that the AO didn't consider the sales within India in form of EPCG sales, EOU sales and Zone to Zone sales within the definition of export under section 10AA of the Act. The appellant company relied upon the decision of Hon'ble Tribunal in ITA No. 3342/Ahd/2010 dated 22.03.2016 and Hon'ble Gujarat High Court in Tax Appeal No. 1025 of 2017 in its own case. The decision rendered by Hon'ble Courts is related to deduction claimed under section 10A of the Act in respect of plant situated at SEZ in Surat.
The facts of present case are different and AO has dealt the claim of assessee under section 10A as well as under 10AA of the Act. Therefore, reliance of appellant w.r.t. order of Hon'ble High Court in its case pertaining to claim u/s10A cannot be applied in instant facts.
6.9 I have gone through the facts brought out by AO in assessment order, details submitted by the appellant during appeal proceedings and case laws relied upon. The question in dispute is whether the appellant company exported the goods out of India within the definition of 'export' as envisaged under section 10AA of the Act and therefore had received convertible foreign exchange. As per provision of section 10AA of the Act. ...
The assessee was required to prove the sales are made within the meaning of "export in relation to the Special Economic zones" which unambiguously says that the exports must be out of India from a Special Economic Zone by any mode, whether physical or otherwise. Considering this definition of "export in relation to the Special Economic zones the sale made in form of I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 5 Sahajanand Laser Technology Ltd. vs.ACIT EPCG sale, EOU sales and Zone to Zone sales within India are not eligible for deduction under section 10AA of the Act.
6.11 During assessment proceedings, the assessee company submitted Form 56F dated 30.11.2017 in respect of 'Report under section 10A of the Income-tax Act, 1961'. AO has reproduced the copy of Form 56F submitted by appellant during assessment proceedings.
In this regard, it is pertinent to quote the recent judgment of Hon'ble ITAT Mumbai in case of Raj International Ltd. Vs DCIT Circle 4(3)(1).
.........
It is amply clear from above report that appellant has not earned convertible foreign exchange during the year nor it received any extension for time limit. Auditor has further qualified his comments in column 18 of the report.
"Receivable is not made available to us during the course of Audit and hence not reported here sales from SEZ against EPCG License is considered as export and sales proceeds received against EPCG License is in INR is also considered here."
6.12 This definition of term 'export in relation to Special Economic Zones' in section 10AA of the Act specified that export must out of India by any way and, therefore, restrict the eligibility of claiming deduction under section 10AA of the Act on the sales made in form of EPCG sales, EOU sales and Zone to Zone sales within India. In this regard reliance is placed upon the decision of Hon'ble Andhra Pradesh High Court in the case of Swayam Consultancy (P) Ltd. V/s. Income tax Officer, 20 Taxmann.com 803 (2012) .........
6.14. Reliance is also placed upon the decision of Hon'ble Kerala High Court in the case of CIT, Cochin Vs. Electronic Controls & Discharge Systems (P) Ltd. 13 Taxmann.com193 (2011). ............
6.15 Considering the discussion made above and respectfully following the decision of Hon'ble Courts (supra) the AO rightly treated the exports made in India as deemed export and I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 6 Sahajanand Laser Technology Ltd. vs.ACIT rejected the claim of deduction of the appellant under section 10AA of the Act. The appellant failed to substantiate that exports were made otherwise rather than EPCG sales, EOU sales and Zone to Zone Sales, which are not actual exports, out of India and therefore didn't receive foreign convertible exchange during the year under consideration. The rejection of claim of deduction under section 10AA of the Act made by the AO is upheld. This ground of appeal is dismissed."
b. Late payment of ESI & PF Rs. 3,32,755 "... 7.3. I have gone through the facts of the case and the details submitted by the appellant during appellate proceedings. The assessee argued that the contributions were paid before filing of return of income. The assessee also emphasized that PF site was not working properly due to certain changed introduced, additional five days grace period was given to the employers and were allowed to deposit the contribution upto 20th January 2017. The assessee submitted the copy of circular issued by Employment Provident Fund Organisation dated 12.01.2017. The AO in the assessment order recorded the fact that Employee's contribution for the month of December, 2016 amounting to the tune of Rs.2,99,703/- was paid on 23.01.2017, which is otherwise beyond the date of additional grace period allowed by EPFO.
7.5 Considering the position of law as explained by Hon'ble Courts in various cases and respectfully following the decision of the Hon'ble Apex Court in the case of Checkmate Services P. Ltd. (Supra), it is held that the AO is rightly disallowed the employee's contribution towards PF & ESI of Rs.3,32,755/- u/s 36(1) (va) of the Act."
c. Sundry balance written off u/s.36[2] Rs. 24,40,000 "... 8.5 The appellant failed to provide details/documents in order to substantiate that the appellant had participated in the said tender and the amount which was forfeited was actually paid to the Gujarat Energy Development Agency. The appellant also failed to submit the details of scheme of Ministry of New and Renewable Energy under which the appellant was supposed to receive subsidy and the reason for not receiving the remaining subsidy amount of Rs.17,40,083/-. The appellant also failed to I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 7 Sahajanand Laser Technology Ltd. vs.ACIT submit that the subsidy was actually transferred to consumers which were receivables from Ministry of New and Renewable Energy.
8.6 Apropos to the sundry balance written off of Rs. 5.39,983/-, the appellant submitted that amount of Rs.539.983/- consists of material payments written off in respect of which bills were raised earlier and shown as outstanding creditors. The appellant submitted the copy of ledger account of sundry balance written off for FY 2016-17. However, the appellant failed to provide the party wise ledger account and relevant supporting documents to substantiate the genuineness of the claim.
8.7 In such a scenario, the AO had rightly disallowed the sundry balance written off aggregating to Rs 24,40,000/- under section 36(1)(ii) r.w.s. 36(2) of the Act and added back to the total income of the appellant company. This ground of appeal is also dismissed."
d. Bad Dets written off u/s.36[2] Rs. 1,52,89,000 "... 9.3. I have gone through the facts of the case and submission made by the appellant. The grounds of disallowing of bad debts are stated by the AO that the appellant company is written off loans and advances and not debtors of goods. However, the AO had not produced any averments in this regard. Further, as per provisions of section 36(1)(vii) the bad debt shall be allowed if it is written off as irrecoverable in the accounts of the assessee in the previous year. Moreover, the decision in the case of TRF Ltd by the Hon'ble Supreme court had settled the issue forever. There is no scope for dispute about the claim of the appellant that the same is written off in the books of accounts. There is no necessity to take efforts to recover the amount. All the conditions for allowability for bad debts are fulfilled. Therefore, this ground of appeal is allowed."
e. Remission liability u/s.41[1] Rs. 3,84,10,000 11.1 ....the addition of Rs.3,84,10,000/- under section 41(1) of the Act. Brief facts of this ground is that the appellant had a German subsidiary namely Sahajanand Laser Technology GmbH. The appellant company invested Rs.364.47 lakhs in the said subsidiary. The appellant company acquired patents right from its German subsidiary for an amount of Rs.384.10 lakhs. The said amount was set off against the investment I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 8 Sahajanand Laser Technology Ltd. vs.ACIT made in German subsidiary and profit of Rs.19.43 lakhs were shown in Exceptional Items. The AO concluded that the appellant company set off payable or liability of business nature against investment of capital nature. As the payable for acquisition for patents to the subsidiary company is no more payable, therefore, need to be considered as cessation of liability within the meaning of section 41(1) of the Act."
f. Fixed assets written off amounting to Rs. 13,88,000/= "... Disallowance of fixed assets written off amounting to Rs.13,88,000 treating the same as capital expenditure instead of revenue expenditure. The AO mentioned in the assessment order that the appellant submitted the working the fixed assets written off without any documentary evidences. The AO further mentioned that any expenditure related to fixed assets, being capital in nature is treated as capital expenditure. Instead, the assessee has claimed the loss on sale of fixed assets treating it as the revenue expenditure and debited in the profit and loss account. These are Capital Expenses and therefore not allowable as Revenue Expenses. Secondly, these are the depreciable assets. Therefore, the same require to be deducted from the Block of Plant & Machinery. The AO further referred to section 37 of the Act. The AO concluded that writing off of capital expenses cannot be claimed as revenue expense and disallowed the amount of Rs.13,88,000/- under section 37(1) of the Act and added to the total income of the appellant company.
10.3. I have gone through the facts of the case and submission made by the appellant. Income tax act follows the concept of block of assets. If there is any asset remaining in the block and any particular asset is written off from the block then there will be no implication in income tax act, the assessee will be eligible to claim depreciation on the total amount of block of asset. Profit/loss on sale of fixed assets is taxable under the head capital gain. If such asset is depreciated asset then profit or loss on such asset would be taxable as short term capital gain/loss at the time of such block of assets became Nil or WDV goes to zero or negative only. Loss on sale of fixed assets is a capital loss and accordingly not allowed as deduction. Conjoint reading of Section 43(6)(c)(i) and Section 37 tells that sale price of fixed asset has to be reduced from WDV & cannot be claimed as an expenditure. Accordingly, this ground of appeal is dismissed." I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 9 Sahajanand Laser Technology Ltd. vs.ACIT
4. Aggrieved against the appellate order, the assesse is in appeal before us in ITA No.840/Ahd/2023 for A.Y. 2017-18 raising the following Grounds of Appeal:
1. The Learned C.I.T.(A) has erred in law and on facts of the case by disallowing the claim of Rs 6,20,88,783 claimed as deduction under section 10AA of the Act.
2. The Learned C.I.T.(A) has erred in law and on facts of the case by not allowing the deduction of employees' provident fund and ESI under section 43B of the Act and disallowed an amount of Rs.3,32,755/-.
3. The Learned C.LT.(A) has erred in law and on facts of the case by disallowing sundry balance written off amounting to Rs.24,40,000/- under section 36(1)(vii) r.w.s. 36(2) of the Act.
4. The Learned C.I.T.(A) has erred in law and on facts of the case by disallowing the fixed assets written off amounting to Rs.
13,88,000/- treating the same as capital expenditure instead of revenue expenditure.
5. Your Appellant reserves the right to add, alter, amend and/or withdraw any of the above Grounds of Appeal.
5. Ld Counsel Ms. Arti N Shah appearing for the assessee submitted before us two Paper Books one with documents and material evidences and other with case laws compilations. Regarding Ground No.1 the claim of Rs.6,20,88,783/= claimed as deduction under section 10AA of the Act, Ld counsel submitted that the assessee company set-up new unit in Gandhi Nagar - SEZ and first year of claim of deduction u/s.10AA of the Act. However, for the Asst. Year 2007-08 in assessee's own case, the claim of deduction u/s.10A was allowed by the Hon'ble High Court in TA No.1025 of 2017. Ld. Counsel further relied upon assessee's own case for the Asst. Years 2012-13 and 2013-14 in ITA Nos. 15 & I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 10 Sahajanand Laser Technology Ltd. vs.ACIT 16/Ahd/2020 dated 01-01-2026 and various other case laws namely ACIT -Vs- Vishnu Export reported in 149 Taxmann.com 65 [Ahd-Trib.]; Granite Mart Ltd. -Vs- ITO reported in 121 Taxmann.com 168 [Kar HC] and and M/s. Preludesys India Ltd. Vs- ACIT reported in 127 Taxmann.com 809 (MDS HC) and therefore requested to allow the claim of deduction u/s.10AA of the Act.
6. Per contra, Ld. CIT-DR appearing for the Revenue supported the order passed by the lower authorities and requested confirm the disallowance.
7. We have given our thoughtful consideration and perused the materials available on record including the Paper Books and case laws relied. The assessee company in its Audit Report and in Form 56F wherein "Export proceeds received in convertible foreign exchange of the undertaking" is mentioned ZERO. Further the assessee failed to produce evidence that sale of goods are in form of EPCG Sales, EOU Sales and Zone to Zone sales, to the purchasers in India are further exported to foreign countries. Therefore, the Ld AO rejected the claim of deduction u/s.10AA of the Act. However, during appellate proceedings, the assessee company stated that the date of commencement of production is 27.07.2016 and submitted the letter issued from the office of the Development Commissioner, Kandla SEZ, Ahmedabad vide letter dated 01.08.2016 in this regard. Thus, mere statement of the assessee company is not sufficient to substantiate the claim that it is eligible to claim deduction u/s.10AA of the Act. It is also the onus of the assessee I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 11 Sahajanand Laser Technology Ltd. vs.ACIT company that necessary documents/evidences in respect of exports are also required to be submitted in order to substantiate its claim. Thus, the assessee company failed to produce any evidences/ documents before the lower Authorities except Form 56F. Further it is crystal clear from Audit Report that assessee company has not earned convertible foreign exchange during the year nor it received any extension for time limit. Auditor has in his 'remarks' in column 18 of the report submitted as follows:
"Receivable is not made available to us during the course of Audit and hence not reported here sales from SEZ against EPCG License is considered as export and sales proceeds received against EPCG License is in INR is also considered here."
7.1. The assessee could not place on record any new or additional evidence distinguishing the above report of the Statutory Auditor as incorrect. Thus, the judgement of the Gujarat High Court relied upon in its own case in Tax Appeal No. 1025 of 2017 and Tribunal's decision in ITA No.3342/Ahd/2010 dated 22.03.2016 are clearly not applicable to the facts of the present case, since the decision rendered by Hon'ble High Court is related to deduction claimed under section 10A of the Act in respect of plant situated at SEZ in Surat. Whereas the facts of present case are different and Ld AO has dealt the claim of assessee both u/s.10A as well as u/s. 10AA of the Act. Therefore, reliance made by the assessee cannot be applied in the instant facts.
7.2. The next moot question in dispute is whether the assessee company exported the goods out of India within the definition of 'export' as envisaged under section 10AA of the Act and thereby I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 12 Sahajanand Laser Technology Ltd. vs.ACIT received convertible foreign exchange. The assessee was required to prove the sales are made within the meaning of "export in relation to the Special Economic zones" which unambiguously says that the exports must be out of India from a Special Economic Zone by any mode, whether physical or otherwise. Whereas the assessee company failed to produce evidences that sale of goods are in the form of EPCG Sales, EOU Sales and Zone to Zone sales, to the purchasers in India which are further exported to foreign countries. This issue was considered recently by the Co-ordinate Bench of this Tribunal in assessee's own case relating to the Asst. Years 2012-13 and 2013-14 in ITA Nos. 15 & 16/Ahd/2020 dated 01-01-2026 and held as follows:
"... 4.10. The other grievance of the assessee is that deduction u/s.10AA of the Act should be allowed on EPCG sales, zone-to- zone sales and EOU sales as well. The contention of the assessee is that the provision of SEZ Act shall have overriding effect notwithstanding anything inconsistent with any other law. The Ld. AR submitted that as per definition of export given in Section 2(m) of SEZ Act, export means not only taking goods or providing services outside of India but also includes providing it to domestic tariff area or to another unit in SEZ. The Ld. AR contended that considering the inclusive definition of export under SEZ Act, the assessee was eligible for deduction u/s.10AA of the Act in respect of EPCG sales, Zone-to-Zone sales and EOU sales as well.
4.11. On the contrary, the Ld. CIT-DR has relied upon the definition of export as given in Section 10AA of the Act and supported the order of the AO.
4.12. We have considered the rival contentions. As per Section 2(m) of SEZ Act, the export is defined as under:
(m)"export" means -
(i) taking goods, or providing services, out of India, from I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 13 Sahajanand Laser Technology Ltd. vs.ACIT a Special Economic Zone, by land, sea or air or by any other mode, whether physical or otherwise; or
(ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer; or
(iii) supplying goods, or providing services, from one Unit to another Unit or Developer, in the same or different Special Economic Zone;
4.13. The contention of the assessee is that this definition has an overriding effect over the definition of "export" as given in the Income Tax Act. The provision of Section 51 of the SEZ Act stipulates the overriding effect as under:
51. (1) The provisions of this Act shall have effect 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.
4.14. The provision of Section 27 of the SEZ Act stipulates that the provision of Income Tax Act shall apply with certain modifications in relation to developers and entrepreneurs. The said Section is reproduced below:
27. The provisions of the Income-tax Act, 1961, as in force for the time being, shall apply to, or in relation to, the Developer or entrepreneur for carrying on the authorised operations in a Special Economic Zone or Unit subject to the modifications specified in the Second Schedule.
4.15. The modifications to the Income Tax Act were specified in Second Schedule of SEZ Act, whereby the provision of Section10A(7B) of the Act as well as the provision of Section 10AA of the Act was introduced in the Income Tax Act. It is, thus, evident that the provision of Section 10AA of the Act was brought on the statute in accordance with the modification as stipulated in Section 27 of SEZ Act, 2005. The word 'export' is defined Explanation (1) to Section 10AA of the Act as under:
(ii) "export in relation to the Special Economic Zones" means taking goods or providing services out of India from a Special Economic I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 14 Sahajanand Laser Technology Ltd. vs.ACIT Zone by land, sea, air, or by any other mode, whether physical or otherwise;
4.16. As per definition of export given in Section 10AA of the Act the export in relation to SEZ means taking goods or providing services out of India from SEZ by land, sea, air or by any other mode whether physical or otherwise. It is, thus, evident that only sub-clause (i) of Section 2(m) of SEZ Act defining export is included in the definition of export as provided in Section 10AA of the Income Tax Act. Considering the fact that Section 10AA of the Act was introduced under the provision of Section 27 of SEZ Act, only the restrictive definition of "export" as given in Explanation-1 to Section 10AA of the Act has to be taken into consideration while working out the deduction u/s.10AA of the Act.
4.17. In view of this position of law, the contention of the assessee that the goods supplied or services rendered to domestic tariffs area or to another unit in SEZ is also covered in the definition of "export" for the purposes of working out the deduction u/s.10AA of the Act, is not found correct and is, therefore, rejected."
7.3. The Ld AR neither placed on record the above decision of this Tribunal is subjected to further appeal before the High Court of Gujarat nor produced any stay order from higher judicial forum. In the absence of the same, we have no hesitation following the above decision of the Co-ordinate Bench in assessee's own case and held that the deduction u/s.10AA of the Act is not eligible on the goods supplied or services rendered to domestic tariffs area or to another unit in SEZ.
7.4. Other case law relied by the assessee namely Vishnu Export [cited supra] is a case wherein goods sold by that assessee to parties were exported by merchant exporters and foreign exchange was received by such exporters, therefore that assessee I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 15 Sahajanand Laser Technology Ltd. vs.ACIT was given the benefit of deduction u/s.10AA of the Act. Whereas in the present case, the assessee could not prove any foreign exchange received by it on the EPCG Sales, EOU Sales and Zone to Zone sales therefore not entitled for deduction u/s.10AA of the Act. Similarly the Karnataka High Court judgement in the case of Granite Mart Ltd [cited supra] is claim of deduction u/s.10B on the deemed export made through third party export houses and inter- unit transfers, who has furnished Form 56G per Rule 16E was granted the benefit of deduction u/s.10B of the Act. Similarly in the case of Preludesys India Ltd, Madras High Court considered that the assessee therein exported the goods outside India and realized the foreign exchange with the Software Technology Park [STP] unit and thereby granted deduction u/s.10A of the Act. Whereas in the assessee case it is crystal clear from Audit Report that assessee company has not earned convertible foreign exchange during the year nor it received any extension for time limit as reported in Form 56F by the Auditor, thus the assessee is not eligible for deduction u/s.10AA of the Act. Therefore, the Ground No.1 raised by the assessee is devoid of merits and liable to be dismissed.
8. Regarding Ground No.2 addition of Rs.3,32,775/- late payment of PF and ESI. The Ld. A.O. held that employees Provident Fund of Rs.2,99,703/- relating to December 2016 which was due to be paid on 15-01-2017 but paid by the assessee on 23-01-2017. Similarly for ESI payment of Rs.33,052/- for the month of January 2017 which is due to be paid on 20-02-2017 whereas paid by the assessee on 24-02-2017. Ld. Counsel relied upon Circular No. WSU/9(1)/2013 dated 12-01-2017 issued by Employees Provident I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 16 Sahajanand Laser Technology Ltd. vs.ACIT Fund Organization, wherein concession of grace period of 5 days is allowed to the employer to deposit the contribution and other dues for the month of December 2016 by 20-01-2017.
8.1. We have considered the submissions of the assessee pursuant to the grace period of 5 days given by EPFO. However, in this case the assessee paid the dues on 23-01-2017 which is beyond the grace period of 20-01-2017 given by EPFO, therefore not entitled for the benefit of above circular. Thus, the addition made by the Ld AO does not require any interference and ground no. 2 raised by the assessee is hereby dismissed.
9. Regarding Ground No.3 disallowance of sundry balance written off of Rs.24,40,000/- which consisting of [a] Security deposit to Gujarat Energy Development Agency: Rs.1,60,000/-; [b] Ministry of New and Renewable Energy subsidy receivable: Rs.17,40,083/- and [c] Material payments written off (Outstanding Creditors):
Rs.5,39,983/-.
9.1. Ld AR submitted that the amount written off of Gujarat Energy Development Agency to the tune of Rs.1,60,000/- was security deposit given as Tender deposit in order to participate in the Tender. However, the same was forfeited and therefore written off during this year. The assessee merely submitted the ledger account of sundry balance written off and failed to provide details/ documents in order to substantiate that the assessee had participated in the said Tender and the amount which was forfeited was actually paid to the Gujarat Energy Development Agency.
I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 17 Sahajanand Laser Technology Ltd. vs.ACIT 9.2. With regard to subsidy of Rs.17,40,083/= receivable from Ministry of New and Renewable Energy, the assessee submitted that the company was into the sale of solar water heaters on which MNRE subsidy was receivable to the extent of 30%. During the year, the Assessee company billed the total amount of cost of water heater to the customers and claimed the amount of 30% from MNRE as subsidy receivable. The amount of Rs.17,40,083/= is the amount remaining unpaid by the MNRE which is not recoverable and therefore written off. The assessee company also failed to submit the details of scheme of Ministry of New and Renewable Energy under which the assessee was supposed to receive subsidy and the reason for not receiving the remaining subsidy amount of Rs.17,40,083/-. Thus the assessee company failed to submit that the subsidy was actually transferred to consumers which were receivable from Ministry of New and Renewable Energy.
9.3. Regarding the sundry balance written off of Rs.5,39,983/-, the assessee submitted this amount consists of material payments written off in respect of which bills were raised earlier and shown as outstanding creditors and the copy of ledger account of sundry balance written off for the FY 2016-17. However, the appellant failed to provide the party wise ledger account and relevant supporting documents to substantiate the genuineness of the claim. Therefore, the Ld AO rightly disallowed the sundry balance written off aggregating to Rs 24,40,000/- under section 36(1)(ii) r.w.s. 36(2) of the Act and added back to the total income of the assessee company which was confirmed by the Ld CIT[A]. I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 18 Sahajanand Laser Technology Ltd. vs.ACIT Therefore, the Ground No.3 raised by the assessee is devoid of merits and liable to be dismissed.
10. Ground No. 4 disallowance of fixed assets written off of Rs.13,88,000/-. This ground is NOT pressed by the assessee. Recording the same, Ground No. 4 is dismissed.
11. In the result, the appeal filed by the assessee in ITA No. 840/Ahd/2023 is hereby dismissed.
12. Revenue is in appeal before us in ITA No. 959/Ahd/2023 for the A.Y. 2017-18 raising the following Grounds of Appeal:
(a) The Ld.CIT (A) has erred in law and on facts in deleting the addition of Rs.1,52,89,000/- made on account of Bad debts written off u/s. 36(1)(vii) r.w.s 36(2) of the IT Act.
(b) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.3,84,10,000/- made on account of amount payable for patents treated as cessation of trading liability by invoking provision of section 41(1) of IT Act.
(c) The appellant craves leave to add, alter and/or to amend all or any of the ground before the final hearing of the appeal.
13. Regarding Ground No.1 namely deleting the addition of Rs.1,52,89,000/- made on account of Bad debts written off u/s. 36(1)(vii) r.w.s 36(2) of the IT Act. The Ld AO disallowed the claim of bad debts on the ground that the assessee company has written off loans and advances and not debtors of goods. However, the Ld AO had not recorded any averments in this regard. Further, as per provisions of section 36(1)(vii) of the Act, bad debt shall be allowed if it is written-off as irrecoverable in the accounts of the assessee in the I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 19 Sahajanand Laser Technology Ltd. vs.ACIT previous year. The Hon'ble Supreme Court judgement in the case of TRF Ltd had settled the issue forever. Thus, all the conditions for allowability for bad debts are fulfilled in this case and there is no merits in the ground raised by the Revenue and Ground No.1 is liable to be dismissed.
14. Regarding Ground No.2 namely deleting the addition of Rs.1,52,89,000/- made on account of Bad debts written off u/s. 36(1)(vii) r.w.s 36(2) of the IT Act. The Ld AO mentioned in the assessment order that the assessee had written off Rs.152.89 lakhs as bad debts. The AO further stated that a list containing only name of certain entities/persons and amount of bad debts was submitted without any supporting documents. The grounds of disallowing of bad debts are stated by the AO that the assessee company is written off loans and advances and not debtors of goods. The AO referred the case of Dhall Enterprises and Engineers (P) Ltd of Gujarat High court. The AO has further referred various decisions of ITAT Delhi, Hon'ble Supreme Court, Madras High Court and ITAT Mumbai. The AO further referred to the provisions of section 36(2) of the Act and concluded that the conditions for section 36(2) does not get fulfilled u/s.36(1)(vii) of the Act and therefore, the amounts cannot be considered as an allowable bad debt. Whereas the Ld CIT[A] held that as per provisions of section 36(1)(vii) of the Act bad debt shall be allowed if it is written off as irrecoverable in the accounts of the assessee in the previous year as held by the Hon'ble Supreme Court in the case of TRF Ltd which is settled the issue forever and deleted the addition. We do not find any infirmity in the order passed by Ld CIT[A] who has followed I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 20 Sahajanand Laser Technology Ltd. vs.ACIT Apex Court judgement and there is no merits in the ground raised by the Revenue and Ground No.2 is hereby dismissed.
15. Regarding Ground No.3 namely deleting the addition of Rs.3,84,10,000/- made on account of amount payable for Patents treated as cessation of trading liability by invoking provision of section 41(1) of IT Act. The assessee had a German subsidiary namely Sahajanand Laser Technology GmbH and the assessee company invested Rs.364.47 lakhs in the said subsidiary. The assessee company acquired patents right from its German subsidiary for an amount of Rs.384.10 lakhs. The said amount was setoff against the investment made in German subsidiary and profit of Rs.19.43 lakhs were shown in Exceptional Items. The AO concluded that the assessee set off payable or liability of business nature against investment of capital nature. As the payable for Acquisition for Patents to the subsidiary company is no more payable, therefore, need to be considered as cessation of liability within the meaning of section 41(1) of the Act.
15.1. On appeal Ld CIT[A] held that the Patents developed by the German subsidiary was purchased by the assessee company at a cost of Rs.384.10 lakhs. The assessee company required to make the payment of Rs.384.10 lakhs towards Patent Fess and the assessee was to receive an amount of Rs.364.67 Lakhs invested in its Subsidy, therefore the assessee company squared off these entries in the books of accounts and the remaining profit of Rs.19.43 lakhs shown under exceptional item. Therefore Ld CIT[A] held the assessee company had acquired capital asset in the form I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 21 Sahajanand Laser Technology Ltd. vs.ACIT of Patents in the place of its investment made in German subsidiary and there is no cessation of any trading liability, which can be disallowed u/s.41[1] of the Act and the AO is misconstrued the above facts and made addition u/s. 41(1) of the Act. We do not find any infirmity in the order passed by Ld CIT[A], since there is no cessation of trading liability, the question of invoking section 41(1) does not arise and the Ld. CIT(A) is correct in deleting the above addition. Thus there is no merits in the ground raised by the Revenue and Ground No.4 is hereby dismissed.
16. In the result, the appeal filed by the Revenue in ITA No. 959/Ahd/2023 is hereby dismissed.
ITA No.841 & 842/Ahd/ 2023 relating to A.Y. 2018-19
17. The assessee company filed its return of income for the Asst. year 2018-19 on 29.10.2018 declaring nil income and book profit amounting to Rs.4,81,75,222/=. As per Audit Report and in Form 56F for claiming deduction u/s.10AA of the Act, the assessee claimed export turnover realized in foreign currency as 'Zero'. Hence a show cause notice dated 09-03-2021 and draft assessment order issued as to why not disallow the claim of deduction u/s.10AA of the Act. In reply the assessee filed a Revised Form 56F on 15-03-2021 and submitted that the delay in getting details of foreign exchange was due Covid-19 pendamic situation and claimed except the payment of Rs.13,70,000/= was not realized within six months of the export of goods. The above explanation was not accepted by the Ld AO and denied the claim of deduction u/s.10AA of the Act of Rs.4,83,31,169/= and added as the income I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 22 Sahajanand Laser Technology Ltd. vs.ACIT and also initiated penalty proceedings under section 270A of the Act for under reporting of income.
18. Aggrieved against the assessment order the assessee filed an appeal before CIT[A] who confirmed the addition made by the AO by observing as follows:
"... 6.3. I have gone through the facts of the case and submission filed by the appellant. During appellate proceedings, the appellant company submitted that it is engaged in the business of manufacturing of laser system for material processing and others. The dispute arose from the Form 56F wherein Export proceeds received in convertible foreign exchange of the undertaking' is mentioned ZERO Accordingly. the AO issued show cause on the ground that no separate books of accounts were furnished and while filing audit report in Form 56F to avail deduction has reported that full consideration in convertible foreign exchange in connection to exports made by undertaking was not brought to India within a period of six months from the end of the previous year. The AO also emphasized that the appellant had not submitted any supporting documents/evidence to substantiate that the convertible foreign exchange was brought to India within a period of six months.
6.4 Apropos to this, the appellant submitted that because of time constraint for filing Form 56F and ROI the details of foreign exchange could not be verified from both ends. The appellant further submitted that the auditor subsequently verified the required attributes as stipulated in Form 56F and filed revised audit report dated 15.03.2021.
6.5 On careful examination, it is considered that the contention of the appellant is not tenable. The appellant filed its return of income on 29.10.2018 along with Form 56F. The appellant claimed in column 14 of Form 56F that 'Export proceeds received in convertible foreign exchange of the undertaking in respect of articles or things is Zero". The appellant filed revised Form 56F subsequently on 15.03.2021 after a time gap of 867 days. The deduction claimed under section 10AA was disallowed in assessment order passed under section 143(3) on 25.08.2021 on account of full consideration in convertible foreign exchange I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 23 Sahajanand Laser Technology Ltd. vs.ACIT for export made by the undertaking had to be brought into India within a period of six months from the end of the previous year. Sub-section (8) of section 10AA provides that the provisions of sub-section (5) of section 10A shall apply in relation to the deduction specified in section 10AA(1) of the Act. The said section 10A(5) of the Act, which has been made applicable to section 10AA also, deals with the requirement of furnishing a report of the accountant (Audit Report) in the prescribed format, certifying that deduction has been correctly claimed in accordance with the provisions of the section. The said section 10A(5) further lays down that the audit report is required to be filed along with the return of income.
6.6 It is pertinent to note that the provisions of section 10A(5) are very clearly and unambiguously worded so as to provide that the deduction shall not be admissible unless the assessee furnishes the report of the accountant in the prescribed form along with the return of income, before the specified date referred to in section 44AB, certifying that the deduction has been correctly claimed in accordance with the provision of the section. The language so employed in section 10A(5) of the Act does not leave any doubt that the requirement to furnish the audit report along with the return of income is a mandatory conditions for the admissibility of deduction.
6.7 In a recent decision dated 11.07.2022 in the case of Pr.CIT Vs. Wipro Ltd [2022] 140 com 223 (SC), the, Hon'ble Supreme Court held that while interpreting the provisions of section 10B(8) requiring a declaration to be filed before the due date for furnishing the return of income, that the twin conditions of furnishing the declaration to the AO and furnishing of the same before the due date for filing the return of income u/s.139(1) are mandatory and they cannot be treated as directory. The relevant portion of the said decision of the Hon'ble Supreme Court is extracted as under:
9. In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139(1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under Section 139(1) and cannot transform it into a return under I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 24 Sahajanand Laser Technology Ltd. vs.ACIT Section 139(3), in order to avail the benefit of carrying forward or set-
off of any loss under Section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under Section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or set off of any loss. Filing a revised return under Section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return of income filed under section 139(1) of the IT Act. Therefore, claiming benefit under section 108 (8) and furnishing the declaration as required under section 10B (8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 108 (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in nature.
6.8 Further, Hon'ble Supreme Court held (supra) that it cannot be disputed that in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee. The Hon'ble Supreme Court held that the assessee had a substantive statutory right under section 10B(8) to opt out of Section 108 which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under section 10B(8) as being mandatory has no substance and that the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement. The relevant portion of the said decision of the Hon'ble Supreme Court is extracted as under:
10. Even the submission on behalf of the assessee that it was not necessary to exercise the option under section 10B(8) of the IT Act and even without filing the revised return of income, the assessee could have submitted the declaration in writing to the assessing officer during the assessment proceedings has no substance and the same cannot be accepted. Even the submission made on behalf of the assessee that filing of the declaration subsequently and may be during the I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 25 Sahajanand Laser Technology Ltd. vs.ACIT assessment proceedings would have made no difference also has no substance. The significance of filing a declaration under section 10B (8) can be said to be co-terminus with filing of a return under section 139(1), as a check has been put in place by virtue of section 10B (5) to verify the correctness of claim of deduction at the time of filing the return. If an assessee claims an exemption under the Act by virtue of Section 10B, then the correctness of claim has already been verified under section 10B (5) Therefore, if the claim is withdrawn post the date of filing of return, the accountant's report under section 108 (5) would become falsified and would stand to be nullified
11. Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries Pvt. Ltd. (supra), relied upon by the learned counsel appearing on behalf of the assessee is concerned, Section 108 (8) is an exemption provision which cannot be compared with claiming an additional depreciation under section 32(1) (ii-a) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions.
Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with "incomes which do not form a part of total income", cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with "deductions to be made in computing total income"
Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under Section 108 (8) of the IT Act.
12. Even the submission on behalf of the assessee that the assessee had a substantive statutory right under Section 108 (8) to opt out of Section 108 which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under Section 108 (8) as being mandatory also has no substance. As observed hereinabove, the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement.
14. In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under Section 108(8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 26 Sahajanand Laser Technology Ltd. vs.ACIT but is directory. The same is erroneous and contrary to the unambiguous language contained in Section 108 (8) of the IT Act. We hold that for claiming the benefit under Section 108 (8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with Accordingly, the question of law is answered in favour of the Revenue and against the assessee. The orders passed by the High Court as well as ITAT taking a contrary view are hereby set aside and it is held that the assessee shall not be entitled to the benefit under Section 108 (8) of the IT Act on noncompliance of the twin conditions as provided under Section 108 (8) of the IT Act, as observed hereinabove. The present Appeal is accordingly Allowed. However, in the facts and circumstances of the case, there shall be no order as to costs."
6.9 As per sub-section (5) of section 10A in relation to the deduction specified in section 10AA(1) of the Act, the assessee is required to furnish the report of the accountant in the prescribed form along with the return of income, before the specified date referred to in section 44AB, certifying that the deduction has been correctly claimed in accordance with the provision of the section. The extended due date for filing audit report under section 44AB for AY 2018-19 was 31.10.2018. The appellant filed its original Form 56F on 29.10.2018, which was subsequently revised on 15.03.2021. There is no provision under the Act to revise Form 56F for claiming deduction under section 10AA of the Act. If there was any omission in Form 56F, the same would be revised before the due date for filing audit report under section 44AB for relevant assessment year. Further, it is to be noted that six months had lapse from the end of the previous year on 30.09.2018, the audit report was prepared on 29.10.2018, thus, the details in relation to receipt of convertible foreign exchange for exports are already available with the appellant and auditor has furnished report based on such details. 6.10 Further, the AO has also given finding that appellant has not submitted any other supporting documents to claim that convertible foreign exchange was received within the period of six month of extended time limit. Since, appellant has claimed that Form 56F has been revised but supporting documents to substantiate its claim was neither produced before AO nor submitted during appellate proceedings. Therefore, in absence of supporting documents, it cannot be conclusively held that I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 27 Sahajanand Laser Technology Ltd. vs.ACIT convertible foreign exchange was received within the period of six month of extended time limit.
6.11 The contention of the appellant that there is no requirement to remit the convertible foreign exchange within six months to avail deduction u/s 10AA of the Act. The appellant relied upon the proposed amendment in section 10AA of the Act vide Finance Bill, 2023, wherein it was proposed to prescribe a time limit of six months to remit the receipts of foreign exchange in order to claim deduction u/s 10AA of the Act. Even, the said amendment has been proposed vide Finance Bill, 2023, it is already declared in section 10AA(8) that the amount of deduction under this section shall be allowed from the total income of the assessee computed in accordance with the provisions of sub-section (5) and (6) of section 10AA of the Act. Thus, the amendment proposed vide Finance Bill, 2023 in section 10AA is only clarificatory in nature to leave no doubt that to avail deduction u/s 10AA of the Act that the convertible foreign exchange must be remitted within six months from the end of the previous year.
.........
6.13 Hence, by respectfully following the decision of Hon'ble Apex Court (supra) and considering the facts and circumstances of this case it is held that the requirement to furnish the audit report in Form 56F along with the return of income is a mandatory requirement and not a directory requirement. The appellant furnished the audit report in Form 56F along with the return of income, which is an undisputed fact. The information sought in Form 56F was available with the appellant while preparing report under section 10AA of the Act under Rule 16D of Income Tax Rules, 1962. Thus, the plea of the appellant that due to time constraint for filing Form 56F and Return of income the details of foreign exchange could not be verified is not acceptable. As held in the decision of Hon'ble Apex Court (supra) the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with. Therefore, the revised report under section 10AA of the Act filed on 15.03.2021 in Form 56F is also not valid. Further, the fact that supporting document to substantiate that the convertible foreign exchange was brought into India within a period of six months was neither I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 28 Sahajanand Laser Technology Ltd. vs.ACIT produced before the AO nor before the undersigned. Hence, the disallowance made by the AO is upheld and the ground raised by the appellant is dismissed."
19. Aggrieved against the appellate order, the assesse is in appeal before us in ITA No.841/Ahd/2023 for A.Y. 2018-19 raising the following Grounds of Appeal:
1. The Learned C.I.T.(A) has grossly erred in law and on facts of the case by disallowing the claim of the Appellant for deduction u/s.10AA of the Act for a sum of Rs.4,83,31,169/- as claimed by it in its return of income.
2. The Learned C.I.T.(A) failed to appreciate the revision in form 56F filed by the Appellant and thereby rejecting the claim u/s.10AA of the Act.
3. The Learned C.I.T.(A) has grossly in law and on facts of the case in rejecting the claim w/s.10AA by stating that the consideration in respect of exports in convertible foreign exchange has to be brought in India within six months from the end of the financial year or within such extended time as the competent authority may grant.
4. The Learned C.I.T.(A) has erred in charging interest u/s.234A for Rs.78,579/-, u/s.234B for Rs.28,35,293/- and u/s.234C for Rs.1,83,981/-.
20. We have given our thoughtful consideration and perused the materials available on record including the Paper Books and case laws relied. The assessee company in its original Audit Report and in Form 56F wherein "Export proceeds received in convertible foreign exchange of the undertaking" is mentioned ZERO. Whereas in the Revised Form 56F filed on 15-03-2021, pursuant to the SCN issued by the AO, the assessee submitted that the delay in getting details of foreign exchange was due Covid-19 pendamic situation and submitted that except the payment of Rs.13,70,000/= was not I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 29 Sahajanand Laser Technology Ltd. vs.ACIT realized within six months of the export of goods and remaining payment was received within six months period and claimed deduction u/s.10AA of the Act, which is placed in page nos. 130 to 132 of the Paper Book. The lower Authorities failed to consider the Covid-19 Pendamic period and simply rejected the claim of the assessee on various other technical grounds. Further the Auditor certified except the payment of Rs13,70,000/= all other payments were received in foreign exchange mode within six months period. This submission of the assessee was not verified by the Lower Authorities, which in our considered view is against the Principle of Natural Justice, specially, immediate after the Covid-19 Pandemic period. Therefore, the orders passed by the lower Authorities are hereby setaside with a direction to the Jurisdictional Assessing Officer to give one more opportunity of hearing to the assessee company, to explain its claim of deduction u/s.10AA of the Act and receipt of payments through foreign exchange mode within six months period as claimed in revised Form 56F. Needless to say that the assessee company should make use of this final opportunity and produce all necessary details before the JAO to pass fresh assessment order on merits of the case. Thus the Ground Nos.1 to 3 are hereby allowed for statistical purpose and Ground No.4 is consequential and does not require separate adjudication.
21. In the result the appeal filed by the assessee in ITA No.841/Ahd/2023 is Allowed for Statistical purpose. I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 30 Sahajanand Laser Technology Ltd. vs.ACIT
22. ITA No. 842/Ahd/2023 for A.Y. 2018-19 is against the Penalty levied u/s. 270A of the Act and the assessee has raised the following Grounds of Appeal:
1. The Learned C.I.T.(A) has erred in law and on facts of the case in invoking the provisions of section 270A qua the disallowance of claim of the Appellant u/s.10AA of the Act for a sum of Rs.4,83,31,169/-. It is submitted that the full disclosures were made in respect of the claim and only on the legal ground, the same has been rejected in quantum proceedings. Under the circumstances, provisions of section 270A cannot be invoked in the facts of the case, and hence, the penalty levied by the learned C.I.T. (Appeals) for a sum of Rs.3,19,59,470/- is wrongly levied and same be directed to be deleted.
1.2. The Learned C.I.T.(A) has erred in law and on facts of the case by in charging the Appellant with underreporting of income as a consequence of misreporting of income when the Appellant had fully disclosed all particulars of its claim u/s.10AA and duly substantiated the same before him. Under the circumstances, the learned C.I.T. (Appeals) should not have initiated penalty u/s.270A of the Act. It is submitted that it be so held now.
2. Without prejudice to above, the learned C.I.T.(Appeals) grossly erred in levying penalty at 200% of the amount of tax sought to be evaded on the ground that underreported income is in consequence of misreporting of income. Your Appellant submits that, if at all, it is considered to be an underreported income, the same is not because of misreporting of income, and hence, at the most, only 50% of tax sought to be evaded, can be levied as penalty. It is submitted that it be so held now.
3. Your Appellant reserves the right to add, alter, amend and/or withdraw any of the above Grounds of Appeal.
23. Since quantum appeal in ITA No.841/Ahd/2023 is already setaside to the file of JAO, the present penalty order has legs to stand and therefore the appeal filed by the assessee in ITA No.842/Ahd/2023 is allowed with direction to the JAO to proceed with the penalty proceedings subject to the outcome of the quantum assessment for the Asst. year 2018-19.
I.T.A Nos. 840 to 842 & 959/Ahd/2023 A.Ys. 2017-18 & 2018-19 31 Sahajanand Laser Technology Ltd. vs.ACIT
24. In the result the appeal filed by the assessee in ITA No.842/Ahd/2023 is Allowed for Statistical purpose.
Order pronounced in the open court on 24-04-2026 Sd/- Sd/-
(DR. BRR KUMAR) (T.R. SENTHIL KUMAR)
VICE PRESIDENT JUDICIAL MEMBER
Ahmedabad : True Copy
Dated 24/04/2026
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण,
अहमदाबाद