(PER : HONOURABLE MS JUSTICE SONIA GOKANI) Challenging the order of the Income Tax Appellate Tribunal, Ahmedabad dated 20th July 2012, this Tax Appeal is preferred under Section 260-A of the Income-tax Act, 1961 [ Act for short], proposing following substantial questions of law for our consideration :-
{A} Whether on the facts and circumstances of the case and as per law, the Hon'ble ITAT is right in granting exemption u/s.10AA of the I.T. Act to the assessee without appreciating that assessee was not in a position to manufacture jewellery in its SEZ unit as machinery and other infrastructure facilities were inadequate for the manufacturing during the year ?
{B} Whether on the facts and circumstances of the case and as per law, the Hon'ble ITAT is right in granting exemption u/s.10AA of the I.T. Act mainly relying on the ground that the A.O. has allowed the exemption is granted to the unit and not to the assessee and also each A.Y. is separate assessment and principle of res-judicature is not applicable in the proceeding under Income Tax Act ?
{C} Whether on the facts and circumstances of the case and as per law, the Hon'ble ITAT is right deleting the addition made on account of unexplained partners capital on the grounds that the A.O. has liberty to examine the issue at the hands of the partners and addition can be made only at the hand of the partner without appreciating that firm is a separate entity it has to explain its sources of funds ? .
It appears that the Assessing Officer had rejected the claim of deduction of the assessee-respondent amounting to Rs. 3,87,83,095/= in a return filed by the assessee for the A.Y 2008-09, it claimed to have been engaged in the business of manufacturing and exporting jewellery and its unit to have been established at Surat SEZ, deduction was claimed. On making observations and on examining the purchase bills and details of items; plant and machinery, the Assessing Officer concluded that the assessee respondent was unable to manufacture jewellery in SEZ. Aggrieved by this, the assessee claimed such deduction before the CIT [A] which concurred with the Assessing Officer.
When challenged before the Tribunal, by a detailed order, it allowed claim of the assessee-respondent. The Tribunal noted each objection in greater detail. However, suffice to note that every objection raised by the Assessing Officer and confirmed by the CIT [A] have been aptly dealt with by the Tribunal. For example, it could be noted that the objection with regard to the complete construction of the building was not found from the record, the Tribunal found that such aspect was not sufficient for holding that the same was not ready for commencement of production. With regard to the purchase of machinery, it did not find any valid basis to doubt either the purchase, or to hold that there were no sufficient machineries for production. It can be said from the totality of the facts and the reasons given by the Tribunal that it has rightly and aptly concluded that the assessee s claim under Section 10AA was allowable. No question of law arises much less substantial question of law for us to consider the said question any further.
Question B is more in the nature of argumentative to the question (A). Even otherwise, grant of exemption in the previous or subsequent years, is not the sole ground for grant of exemption u/s.10AA of the Act in the year under consideration. This question in any case raises no question of law and is therefore, rejected.
With regard to Question {C}, the issue is squarely covered by the decision of this Court rendered in case of CIT v. Pankaj Dyestuff Industries [I.T. Reference No. 241/1993 :: Decided on 6.7.2005]. Issue is covered, and therefore, the present Tax Appeal deserves to be dismissed.
Resultantly, Tax Appeal is dismissed.
(AKIL KURESHI, J.) (Ms. SONIA GOKANI, J.) Prakash* Page 4 of 4