Income Tax Appellate Tribunal - Delhi
Rajatdeep Overseas Pvt. Ltd., New Delhi vs Assessee on 29 March, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F" NEW DELHI
BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA
ITA No. 3235/Del/2012
A.Yr. 2008-09
Income-tax Officer, Vs. M/s Rajat Deep Overseas (P) Ltd.,
Ward 15(2), New Delhi. 179-A, LIG Flats, Rajouri Garden,
New Delhi.
PAN: AABCR 4099 N
AND
ITA No. 2309/Del/2012
A.Yr. 2008-09
M/s Rajat Deep Overseas (P) Ltd., Vs. Income-tax Officer,
179-A, LIG Flats, Rajouri Garden, Ward 15(2), New Delhi.
New Delhi.
( Appellant ) ( Respondent )
Department by : Sh. Vivek Kumar Sr. DR
Assessee by : Shri Ved Jain FCA &
Smt. Rano Jain CA
ORDER
PER R.P. TOLANI, J.M::
These are two cross appeals, filed by the revenue as well as the assessee, arising from CIT(A) order dated 29th March, 2012 relating to A.Y. 2008-09. Both the appeals are heard together and disposed of by a common order for the sake of convenience.
22. Respective grounds, effectively raised, are as under:
Assessee's appeal :-
Ld. CIT(A) erred in law and on facts in upholding the reduction in assesses claim u/s sec. 80IC on following issues: i. 10% of total turnover attributing it to market value of brand of the assessee., despite no such expenditure was incurred by it. ii. Upholding AO's action in holding that provisions of sec. 115JB is applicable to assesses case.
Revenue appeal:-
Ld. CIT(A) erred in law and on facts in upholding the reduction in assesses claim u/s sec. 80IC on following issues:
(i) Restricting apportionment of profits in respect of Brand valuation to 10%.
(ii) Deleting reduction of claim u/s 80IC by Rs. 29,75,890/- worked out by AO as attributable to directors due to high net profit of 33%.
(iii) Assessee carried out only assembling of imported parts at Haridwar. CIT(A) failed to appreciate that profits reported by assessee were generated by joint activities of head office and branches. Hence the eligible profits have been rightly apportioned by AO between head office and branches.
2.1. A perusal of the grounds reveal that the main and common issue involved in both the appeals pertains to claim of deduction under Section 80-IC beside assesee's ground about application of 115JB.
3. Brief facts are the assessee is an industrial undertaking situated at Haridwar (Uttrakhand) and is claimed to be an eligible unit u/s 80-IC of the 3 Act. It is engaged in the manufacture of auto parts like power locks, car locks and other similar parts used in the automobile industry. Its manufacturing operations commenced in preceding assessment year i.e. 2007-08 resulting in income of Rs.78.34 lacs on sales of Rs.2.72 crores on which deduction u/s 80IC was allowed by AO at Rs.78.34 u/s 80-IC by assessment u/s 143(3) dated. on 17-12-04.
3.1. During the year under consideration, assessee's turnover and book results improved resulting into income of Rs.3.69 Crores on the sales of Rs.10.55 croes, on which deduction u/s 80IC is claimed. The AO, though held that the assessee is eligible for deduction under Section 80-IC, however, the amount of deduction u/s 80IC was reduced holding that the profitability of the company was very high as comparable to market and a substantial part of it was attributable to the following factors:-
i) Brand value
ii) Experience and knowledge of the directors
iii) Activities at the Branches
3.2. Based on these observations, AO held that Rs.2,11,03,237/- being 20% of the sale of Rs.10,55,16,186/- as the element of profit attributable to the market value of these factors i.e. brand value which is not eligible for deduction u/s 80-IC.
3.3. Ld. AO further held that the profit of Rs.52,75,809/- (being 5% of sale value of Rs.10,55,16,186/-) is attributable to the experience and knowledge of the directors, to whom Rs. 23.00 lacs were paid by assessee which was also not eligible for deduction under Section 80-IC.
43.4. It was further held that out of the balance profits i.e.Rs.1,07,68,503/-, 12% thereof was the profit eligible for deduction under Section 80-IC as against Rs.3,48,05,903/- claimed by assessee. Besides further holding that assessee is liable to pay MAT under Section 115JB and is not covered by exemption provided under sub-section (6) of Section 115JB.
3.5. Aggrieved assessee preferred appeal before ld. CIT(A) who held that the AO is not correct in estimating 20% of the turnover as the profit on account of brand and reduced the same to 10% of the sale. The CIT(A) further held that the AO was not justified in reducing the deduction u/s 80IC on account of experience and knowledge of directors which increased the income of the undertaking, and deleted the reduction of claim on this count. It was also held that the AO was not correct in restricting the balance deduction to 12% of the total profit on account of the expenses of branches. 3.6. Ld. CIT(A), however, confirmed the order of the AO holding that assessee to be liable to MAT under Section 115JB of the Act and is not exempt under clause (6) of Section 115JB.
3.7. Aggrieved both, the parties are before us; assessee against the partial disallowance of 10% of the turnover as profit on account of the market value of the brand; upholding the liability u/s 115JB and the revenue in respect of the relief granted by the learned CIT(A).
4. Ld. Counsel for the assessee Shri Ved Jain contends that ground. 1 of departmental appeal and ground 5 of assessee's appeal pertain to the first issue i.e. the determination of the profits eligible for deduction under section 80-IC. It has not been disputed that assessee is having an industrial undertaking at Haridwar which is eligible for deduction under section 80-IC. The entire sales of Rs.10,55,16,186/- has been made from Haridwar unit and 5 assessee does not have any other unit or any other sales, purchases or income. The sale and purchases are fully vouched, there is no whisper of any allegation that sales have been over-invoiced or the purchases are under- stated by assessee. Books of accounts have been fully accepted. Thus there is neither any dispute about the veracity of accounts and their audit nor the computation of net profit of Rs.3,48,47,549/-.
4.1. Ld. AO has observed that assesses profits in preceding year are 29% and in current year 33%. Thus there is marginal increase in the profits as compared to earlier year. Despite these observations AO n page 1, para 2 has further held as under:-
"The net profit of the assessee works out to be 33% of the turnover which is very much higher as compared to the Industry average which is 3-5% of the turnover."
4.2. It amounts to observation based on surmises and conjectures. This fact is neither based on comparative instances nor any factual data, it is a generalized observation and unfounded allegation. It is vehemently argued that the observation is factually incorrect as no cogent basis whatsoever is placed on record to support it.
4.3. In appeal ld CIT(A) reduced it to 10% by following observations:
"AO has held that the appellant company had been showing high profit from the very first day and has attributed the high percentage of profit to the brand value established by the company before it started its manufacturing operation. The AO ha held that any extra profit realized by the assessee as a result of brand cannot be attributed to the business of the industrial undertaking and thus cannot be held to be eligible for deduction u/s 80IC of the Act. Since profit attributable to the 6 brand value cannot be said to be derived by the industrial undertaking and hence eligible for deduction u/s 80IC, the contention of the AO in this regard is correct. As it has already been discussed above, only that profit which is derived by the industrial undertaking is eligible for deduction u/s 80IC. The AO has estimated the brand value to be 20% of the sale value of the products and has accordingly held that 20% of the sale value is attributable to the brand and not to the eligible industrial undertaking. The AO has computed the brand value on the basis of the total turnover of the appellant company. Computing the brand value on the basis of turnover is correct as the value of brand would have an impact on the total sales i.e. the turnover of the company. The estimation made by the AO however seems to be on the higher side as the sales turnover during the period ending 31-03-2006 was Rs. 1.21 crore as against Rs. 10.55 crore in the relevant period i.e. 10% of the present turnover approximately. Keeping in view, the growth of the company in the two years after start of manufacturing process and the profit attributable to the reduced cost of the goods as result of manufacturing, a against goods purchased by the appellant company from the market, the brand value of the goods is valued at 10% of the total turnover which in the current year was Rs. 10,55,16,186/-. Thus, out of the total profit the eligible profit for the purpose of section 80IC would be reduced by 10% Rs. 10,55,16,186 i.e. Rs. 1,05,51,618/-."
4.4. It is pleaded that ld. CIT(A) failed to appreciate that there is no reference to any expense on brand building incurred by the undertaking out of books or utilization of any brand owned by some other entity. Copy of registration certificate of brand in assesses name was already filed. Thus the brand is also a commercial asset of the eligible undertaking and is part of its income generating apparatus and is an integral part of the eligible profits for deduction u/s 80IC. The claim has been allowed on same lines in preceding year by an assessment u/s 143(3) after due verification. When assessee has 7 demonstrated that the sale proceeds pertain to eligible unit, brand is owned by it and there is no allegation that any out of books expenditure has been incurred by unit for brand expenditure; there is no justification at all to reduce the claim u/s 80IC, ignoring these glaring facts. 4.5. Ld. counsel further contends that the prime condition of allowing deduction u/s 80-IC is to the effect that eligible unit should be engaged in manufacturing or production of the article or thing. There is no condition about the ownership of brand in allowing deduction u/s 80IC. The calculation of ratio of 20% by the AO and 10% by CIT(A) is purely a guess work which is evident from the fact that the 20% of the sale comes to 61% of the net profit. It is an admitted fact that assessee has not paid any expenditure paid as royalty or brand value to anyone. The goods manufactured and sold pertain to the impugned Haridwar unit which is corroborated by the Excise and VAT returns which are placed on PB pages 62 to 68. It is settled law that the eligible income is to be ascertained on the ordinary principle of commercial accounting. There is no provision in sec. 80IC to reduce the profit of any industrial undertaking attributable to any estimated or hypothetical brand value. The provision stipulates deduction of profits of industrial undertaking and do not refer to any reduction whatsoever on assumptions.
4.6. The assessee is subject to excise laws under which assesses product prices are approved after due inspection/ verification and in case of exigencies even referred to the cost audit, The major purchases of the assessee are by way of import of raw material which are subject to verification at the time of import. Hence the turnover shown in the balance sheet is correct, fully vouched and no error or discrepancy whatsoever has been pointed out.
84.7. It is pleaded that the reference made by ld CIT(A) to the judgment of the Authority for Advance Ruling in the case of Shams Tabrez Vanti [2005] 273 ITR 0299 for upholding the disallowance of 10% of the turnover as income not arising from industrial undertaking is not proper. In this case the issue pertained to the interest income on the fixed deposit and the Authority for Advance Ruling has held that "source of income is independent of the export and hence cannot be considered to be an eligible income." 4.8. Similarly the reference by CIT(A) to the judgment of the Supreme Court in the case of Liberty India vs. CIT [2009] 317 ITR 0218 is also not correct. It was a case of a Duty Drawback/DEPB and not of deduction i/s 80IC, there it was held that Duty Drawback and DEPB are independent source of income and cannot be included while determining the eligible income for deduction.
4.9. In the present case there is no dispute about the income earned being only from manufacture or production of article or thing. The only source of income as is evident from the profit and loss account is sales of Rs.10,55,16,186 from Haridwar unit only, where the manufacturing activities are being carried on and there is no other source of income like interest or DEPB or Duty Drawback or interest on FDR. On the contrary, both the lower authorities by apportioning a part of it towards market value of brand are going against the judgment of Hon'ble Supreme Court itself rendered in Liberty India (Supra). The entire sales being out of the manufacturing of product, there cannot be any bifurcation of sales that a percentage is on account of manufacturing and the other to brand value. The entire sales being from manufacturing no notional or hypothetical splitting is possible as endeavored by both the authorities below by arbitrarily assigning part of sales as estimated value of brand. More so when there is nothing on 9 record to support the notion that assessee is using any technology owned by somebody else.
4.10. Reliance is placed by ld. Counsel on following judgments:-
(i) Ram Panjwani and Co vs IAC 39 ITD 21 (Delhi) -
15. As regards the issue of bifurcation of income for the purposes of section 80HH, we find considerable merit in the submissions of the learned counsel for the assessee. The decision of the Supreme Court in the case of Anglo-French Textile Co. Ltd. was in an altogether different context. In that case the question was of bifurcation of income attributable to the taxable territories (British India) and attributable to the non-taxable territories. In that case bifurcation had to be made and was justified. The language of section 80HH, however, is different. While applying the provisions of the said section one has to see whether there was an industrial undertaking and what were the profits and gains derived from such an industrial undertaking. There is no manner of doubt that the assessee was running two industrial undertakings at Jammu and Yamuna Nagar. The assessee was manufacturing sleepers out of the forest trees. The income was derived from these industrial undertakings. It could not be said that the profit was derived partly from manufacturing activities and partly from trading activities. According to us the activity of getting a forest on lease, of felling the trees, of manufacturing the sleepers, of transporting them to the branches and of selling them was one integrated activity which could not be bifurcated or partitioned.
Once the source was identified, namely, that the income had been derived from the industrial undertaking, no further enquiries could be made by the Revenue authorities. Shri Sapra's reliance on the decision of Karnataka High Court in Sterling Foods case is well- founded. It is significant to note that where the legislature itself wanted bifurcation it had made provision for the same in the relevant section. Section 80HHC of the Act is a case in point. That section makes a clear distinction between the export sales and other sales because such a distinction was inherent in the situation and was called for. There is no such distinction contemplated under section 10 80HH. Manufacture or production of an article or thing is a condition precedent for an undertaking to become an industrial undertaking. That, however, does not mean that the profits derived from manufacture alone can be taken into consideration for working out the deduction under section 80HH. Once a particular undertaking is held to be an industrial undertaking then there is no alternative, but to go to the profits and gains derived from such an industrial undertaking for working out the relief under section 80HH. The use of the word "manufacture" is in a different context which should not be lost sight of. There is no justification for stretching it further and to hold that only manufacturing profits in the backward area would be considered for the purposes of section 80HH and not the trading profits. In a case where an assessee was manufacturing sleepers and was also purchasing sleepers for trading purposes it could perhaps be said that the assessee was having two separate activities and perhaps the income derived from the sale of sleepers which were purchased by the assessee it could be said that relief under section 80HH was not admissible. That is, however, not the case with the assessee. The assessee was not purchasing any sleepers from outside parties in its branches at Yamuna nagar and Jammu. The activity of manufacture and sale of the sleepers by the assessee has been held by us to be an integrated activity which could not be bifurcated or divided. It is also a salutary and well-settled principle of law that while construing the exemption provision a liberal approach should be adopted. As regards the Jammu branch there was no justification for reducing the profits by Rs. 9,99,133 as the sales were also taking place at Jammu which is a backward area. So even as per the learned CIT's own reasoning, such deduction from the profits was unjustified. Having regard to the entire facts and circumstances of the case including the one that assessment year 1985-86 was not the initial year. We hold that the learned CIT was in error in deducting amounts of Rs. 6,51,026 and Rs. 9,99,133 from the Yamuna Nagar branch and Jammu branch respectively for working out relief under section 80HH.
(ii) Commissioner of Income Tax Versus M/s Godawari Power & Ispat Ltd. (Chhattisgarh High Court) 11 'Whether on the facts and in the circumstances of the case, the "market value", as specified in Section [80-IA (8)] of the Act would be the same as the "sale price" of the State Electricity Board when the assessee did not incur any transmission loss or administrative or any other charges which the State Electricity Board has to incur for the same?'
31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel- Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market.
32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer.
33. It is admitted by the Department that in Chhattisgarh the power was supplied to the industrial consumers at the rate of Rs. 3.20/- per unit for the AY 2004-05 and Rs. 3.75/- per unit for the AYs 2005-06 and 2006-07. It was this rate that was to be considered while computing the market value of the power.
34. The CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders.
35. In view of above, the question is decided against the Department and in favour of the Assessee. The tax appeals have no merit. They are dismissed.
(iii) Commissioner of Income-tax -III Versus Velankani Information Systems (P.) Ltd., (ITA Nos. 374 & 375 of 2011 and 273 to 276 of 2012 dated - April 2, 2013 (Karnataka) 12 But if the assessee is in the business of taking land, putting up commercial buildings thereon and letting out such buildings with all furniture as his profession or business, then notwithstanding the fact that he has constructed a building and he has also provided other facilities and even if there are two separate rental deeds, it does not fall within the heading of income from house property. Therefore, firstly what is the intention behind the lease and secondly what are the facilities given along with the buildings and documents executed in respect of each of them is to be seen. Thirdly it is to be found out whether it is inseparable or not. If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying at complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of profits and gains of business or profession. In fact, any other interpretation would defeat the very object of introduction of Section 80-IA as well as the scheme which is framed by the Government for development of industrial parks in the country. In that view of the matter, the finding recorded by the Appellate Authority as well as the Tribunal is in accordance with law and does not suffer from any legal infirmity which calls for interference. Accordingly, the substantial questions 1 and 2 are answered in favour of the assessee and against the revenue.
5. Ld. DR supported the order of AO.
6. We have heard the rival contentions and perused the material available on record. We find merit in the contentions of ld counsel that assesses books have been accepted, brand is owned by it which is integral part of the assets of the eligible unit. The sales have not been disturbed; profits of the eligible unit have gone up to 33% from preceding year's 29% due to its product superiority. The basis given by authorities below for reduction of claim is vague and factually incorrect based on an assumption that brand does not belong to the assessee. Without any material or basis, it is assumed that it may belong to some other concern connected to its directors. The fact of the matter is that the brand is owned by assessee and 13 the products manufactured at Haridwar unit are the only products. There exists no other entity which is identified as owner of the brand by AO thus the allegation is factually incorrect.
6.1. The provision of sec 80IC have been introduced by legislature to promote the industrial activity and their profitability. Merely because the industrial undertaking earned higher profits does not call for an inference that claim of deduction is to be wily nily reduced on presumptions. In consideration of entirety of facts and circumstances we see no justification in CIT(A)s order retaining the reduction of 10% from the deduction, same is deleted. Revenues ground is dismissed and that of assessee is upheld on this issue.
7. Apropos second issue raised by revenue facts are, disallowance of Rs.29,75,809/- made by the AO, computed @ 5% of the turnover as the value of the directors' experience and knowledge.
8. Ld. DR supports the order of AO.
9. Ld. Counsel for the assessee contends that the Directors are employees of the company and they have been suitably compensated. It is settled law that revenue cannot sit in the armchair of businessman and decide which business expenditure should be incurred in which manner. The AO cannot sit on assesses business acumen and judgment to decide that which percentage of the turnover should be paid to the directors for their experience and knowledge.
9.1. Ld. CIT(A) on page 20 of his order has elaborately dealt with the facts and contentions and objectively held that the payment of Rs.23 Lacs to director is adequate and calls for no further estimation based on surmises. It 14 is pleaded by the assessee that reasonings given by the CIT(A) for deletion of the addition are objective and correct the order needs to be upheld.
10. We have heard the rival contentions and perused the material available on record. Ld. CIT(A) has deleted this disallowance by following observations:
"The AO has held that any extra profit realized by the assessee as a result of the services know-how and special knowledge of the director cannot be attributed to the business of the industrial undertaking and thus cannot be held to be eligible for deduction u/s 80IC of the Act. The AO has estimated the value of services know-how and special knowledge of the director to be 5% of the sale value of the products and has accordingly held that 5% of the sale value is attributable to the service, know-how and special knowledge of the director and not to the eligible industrial undertaking. As per the profit & loss a/c and as per the assessment order a sum of Rs. 23,00,000/- is being paid to the directors as salary and another Rs. 13,00,000/- is being paid to M/s R.D. Enterprises, the distributor of the products of the company. The AO has held that 5% of the turnover of the company is attributable to the experience and specialized knowledge of the director and not to the eligible unit. As per the P&L a/c for the period ending 31-03-2006, the director's remuneration was Rs. 60,000/-. Over a period of two years it has been increased to Rs. 23,00,000/-. This shows that adequate compensation is being provided to the director for his services, knowledge, contract and skills. As the company ha adequately compensated the director for using their experience and specialized knowledge, therefore, the benefit accruing to the company belongs to it and would form part of its eligible profit. Benefit accruing a company as a result of experience or knowledge of its employees (Directors) cannot be used to bifurcate the eligible profit derived by the industrial undertaking u/s 80IC. Therefore, the decision of the AO that 5% of the sale value does not form part of the eligible profit is not sustained."15
9.2. In our view the reasoning adopted by CIT(A) is proper and justified. While dealing with the first issue raised by revenue we have given elaborate reasons to hold that claim u/s 80IC can not be reduced on surmises and assumptions. For the same reasons we uphold the order of ld CIT(A) on this issue. Revenue ground is dismissed.
10. The facts about third issue raised by revenue are - ld. AO held that entire profits derived by industrial undertaking at Haridwar cannot be allowed as it is to be allocated to other branches on the basis of salary and wages expenses. Thus only 12% of the profit derived from the industrial undertaking will be eligible for deduction under section 80-IC. Assessee claimed that all the purchases, sales and manufacturing activities are carried out at Haridwar industrial undertaking only. There is no rationale to hold that expenses incurred at the Branch offices/head office will be the basis for allowing deduction under section 80-IC of the Act. Rejecting assesses explanation AO reduced the claim u/s 80IC.
10.1. Aggrieved assessee preferred first appeal, where it was contended that it is not the case of the AO that all the expenses of head office or branches have not been deducted while computing 80-IC of the Act. The AO's contention is baseless as an assumption may be possible when there is a finding that part of these expenses is not deducted while working of the eligible income. When it un disputed that relevant expenses have been properly and correctly accounted for in the books which are duly audited and considered while computing the income of the eligible unit, there is no rationale in the assuming that any other activity is carried out by the appellant.
1610.2. Ld. CIT(A) deleted the reduction of claim u/s 80IC by observing as under:
"The AO has held that the entire profit cannot be held to be derived from the undertaking at Haridwar and has allocated the profit to different branches on the basis of expense under the head salary and wages. The AO has held that the entire profit cannot be held to be derived from the undertaking at Haridwar and has held that most of the income earning activities resulting in profit to the assessee is carried from places other than the eligible unit and thus this income cannot be held to be eligible for deduction u/s 80IC of the Act. The entire sales are being made from the Haridwar branch. This is further confirmed from the VAT details filed by the appellant. The excise records also confirm that the entire manufacturing activities is being carried out at Haridwar Unit. The affidavit has also been filed by the Director of the appellant company during assessment proceedings confirming that all sales and purchases are being made by the Haridwar Unit. The other units of the appellant company are providing sales promotion and after sales service The income earning activities thus cannot be held to the carried out from places other than the eligible unit. Further, the appellant company has prepared a consolidated financial statement in which the expenses incurred by all the units and the head office have been reduced before arriving at the total eligible profit for claiming deduction u/s 80IC. Keeping in view the above facts and circumstances, the decision of the AO is not sustained."
11. Ld. DR relied on the order of AO and ld. Counsel for assessee on the order of CIT(A).
12. We have heard the rival contentions and perused the material available on record. It is not disputed that assessee filed a consolidated financial statement in which the expenses incurred by all the units and the 17 head office have been reduced before arriving at the total eligible profit for claiming deduction u/s 80IC. AO has not controverted this statement in any manner. All sales, purchases and manufacturing activities are carried out by the Haridwar Unit. The other branches are providing sales promotion and after sales service The income earning activities thus cannot be held to the carried out from places other than the eligible unit besides in consolidated financial statement the income of these branches has already been reduced. In consideration of all these facts and circumstances we uphold the order of CIT(A), this ground of the revenue is dismissed.
13. Apropos assesses remaining issue about MAT, Ld. AO held that the assessee is liable to pay MAT under Section 115JB. The CIT(A) has upheld the order. In this regard it may be relevant to refer to sub-section (6) of Section 115JB which reads as under:-
"(6) The provisions of this section shall not apply to the income accrued or arising on or after the 1st day of April, 2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone, as the case may be."
13.1. The authorities below have held that this exemption is available to SEZ only and that too when the assessee is a developer. On going through the above sub-section (6) it is clear that the exemption is available "from any business carried on............... in a unit." The assessee has carried on the business in its unit at Haridwar and hence it is eligible for deduction under Section 115JB of the Act. The word between Unit and Special Economic Zone is not 'of', it is 'or'. Thus the unit does not get quantified with Special Economic Zone. The word 'Unit' is independent and hence the deduction 18 cannot be restricted to a unit of SEZ. The deduction will be available from any business carried on in a Unit.
14. After hearing both the parties and perusing the material available on record we see no infirmity in the orders of authorities below which are upheld. Assessee's ground in this behalf is dismissed.
15. In the result revenue's appeal is dismissed and assessee's appeal is partly allowed.
Order pronounced in open court on 10-01-2014.
Sd/- Sd/-
( SHAMIM YAHYA ) ( R.P. TOLANI )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 10-01-2014.
MP
Copy to :
1. Assessee
2. AO
3. CIT
4. CIT(A)
5. DR
19