The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that the activities carried out by the assessee falls within the ambit of “services”, the expression used in Section 10AA of the Income Tax Act,1961 and the profits and gains derived from such services rendered from SEZ (Special Economic Zone ) would be eligible for deduction under Section 10AA of the Income Tax Act.
The assessee company Bytescale Technologies Private Limited is engaged in import and re-export of goods. The assessee is carrying out its trading activities from SEZ for Free Trade and Warehousing Zone (FTWZ). The assessee claimed deduction under Section 10AA of the Income Tax Act in respect of profit and gains derived from export/services carried out from specified SEZ Unit.
The Assessing Officer disallowed assessee’s claim of deduction under Section 10AA of the Income Tax Act on the ground that the assessee is not involved in the business of manufacturing or producing any article or thing nor the assessee is providing any services, and thus disallowed assessee’s claim of deduction amounting to Rs.1,92,72,332/.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income-Tax (Appeals) [CIT(A)] , the CIT(A) vide impugned order reversed the findings of Assessing Officer and allowed the benefit of deduction under Section 10AA of the Income Tax Act to the assessee holding that the activity of trading i.e. import and re-export of the imported goods falls within the meaning of the term “services” as defined under Section 2(z) of the Special Economic Zone Act, 2005.
The Revenue filed an appeal before the ITAT, Kamble Minal Mohan representing the Department vehemently supported the assessment order and submitted that no manufacturing or production is being carried out by the assessee. No services are performed by the assessee so as to be eligible to claim the benefit of Section 10AA of the Income Tax Act
Rajesh R. Shah appearing on behalf of the assessee emphatically supported the impugned order submits that the assessee is rendering services. The activity of trading i.e. import of goods and thereafter re-exporting of the same falls within the definition of services as defined under the SEZ Act.
The Bench comprising of Vikas Awasthy, Judicial Member and Om Prakash Kant, Accountant Member observed that the activities carried out by the assessee falls within the ambit of “services”, the expression used in Section 10AA of the Income Tax Act and the profits and gains derived from such services rendered from SEZ would be eligible for deduction under Section 10AA of the Income Tax Act.
Hence, the Tribunal found no infirmity in the impugned order, thus upheld the CIT (A) order and the appeal of Revenue is dismissed being devoid of any merit.
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