This appeal by the Revenue arises out of common order dated 23.02.2010 passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot in four different appeals of the Department as well as cross appeal of the assessee and corresponds to decision in Tax Appeal No. 883 of 2003 in respect of Assessment Year 2006-2007. 1.1 The following question is raised by the appellant as substantial question of law.
'Whether the Appellate Tribunal is right in law and on facts in holding that the assessee is entitled for deduction of Rs. 6,94,544/- u/s 10A of the Act ignoring that the assessee does not satisfy the conditions prescribed for allowance of deduction under the said section?”
2. We heard learned advocate Ms. Mona Bhatt for the appellant.
3. The assessee was an owner of food processing unit at Kandla Special Economic Zone. It filed his return of income for the Assessment Year 2006-2007 declaring his income. In that the assessee claimed deduction under section 10A of the Income Tax Act, 1961 (hereinafter referred to as 'the act' for sake of brevity) for Rs. 6,94,544/-. By the order dated 29/12/2008, the Assessing Officer declined the claim for deduction taking view that there was no export of goods, which was a necessary condition for claiming a benefit under section 10A.
3.1 The assessee preferred appeal before the Commissioner of Income Tax (Appeals). The CIT(A) considered the explanation of the assessee that it was not engaged in any service industry but was a unit established in the Special Economic Zone and was selling the goods after processing them. According to the assessee, he was a deemed exporter and that he fulfilled requisite conditions to get the deduction. The CIT(A) however, held against the assessee and confirmed the denial of exemption as per his order dated 27.01.2010.
3.2 The assessee went in appeal before the Income Tax Appellate Tribunal. The Tribunal took a view that as the assessee, who was an owner of food processing unit at Kandla Special Economic zone and was selling the goods after processing the same, which was a final product, was deemed to be the exporter. The Tribunal held that he was entitled to benefit of deduction under section 10A of the Act.
3.3 The Tribunal observed inter-alia as under :
“The section 10A also includes production of things; therefore the activity of the assessee is eligible as production as defined by the Hon'ble Supreme Court. The another issue raised by the AO is that the assessee is not earning foreign currency, the assessee has furnished various documents and papers to prove that the earnings are in foreign currency, the assessee has submitted the bank advice in which the amount are received and credited in foreign currency, the copy of bills are also raised to various parties in foreign currency, in the shipping bill the name of the assessee has been mentioned as processor. All evidences clearly prove that the goods are processed at SEZ and the same is exported outside India and the assessee has earned the receipt in foreign currency”
3.4 The Tribunal came to a conclusion that the assessee had executed direct physical exports, the income was earned in the foreign exchange, and that necessary conditions for claiming exemption under section 10A were met with.
4. The conclusion reached by the Tribunal about eligibility of the assessee for deduction under section 10A was based on consideration of the facts and material presented before it. The Tribunal considered the relevant material and found that the goods were produced at the Special Economic Zone, and that they were exported. Essentially the finding was in the realm of appreciation and factual in nature.
5. No error was committed by the Tribunal in allowing the appeal of the assessee. No substantial question of law arises for consideration in the facts and circumstances. Therefore, this appeal deserves a dismissal.
6. It is pertinent to mention that we have dismissed Department's Appeal TA No. 659 of 2011 by our order of even date involving identical question in relation to Assessment Year 2005- 2006. It also deserves to be mentioned that in respect of earlier assessment year 2004-2005, the very issue was decided in favour of the assessee by a division bench of this Court rejecting the department’s appeal being Tax Appeal No. 941/2010.
7. Accordingly, the present appeal is dismissed.
[V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi