Thursday, 7 June 2018

Allows Sec. 10AA benefit on trading activity, imports ‘service’ definition from SEZ rules

Kolkata ITAT allows Sec. 10AA benefit to assessee in respect of international trading, warehousing and consultancy income for AY 2009-10; ITAT acknowledges that trading activity is not expressly covered u/s 10AA, but observes that as per the Special Economic Zone Act, 2005 (SEZ Act) and its Rules, 2006, definition of ‘service’ included trading activity; Rejects Revenue’s stand that the ‘service’ definition as specified in SEZ Act cannot be imported for the purpose of the income tax, referring to Sec. 51(1) of the SEZ Act, ITAT holds that “the provisions as specified under the SEZ Act, 2005 would have overriding effect on the Income Tax Act because SEZ Act is a Special Act and a later Act of the Parliament.”, relies on co-ordinate bench ruling in assessee’s own case of earlier year; Likewise, notes that the definition of ‘service’ under SEZ rules include ‘warehousing activity’ also, therefore holds that the warehousing income qualifies for exemption u/s. 10AA on the same reasoning as that given for trading activity; Further,  notes that consultancy services rendered by assessee were intrinsically linked to the normal import-export activity carried on by assessee and the same are covered under the head ‘other business service’ of SEZ Rules by applying ejusdem generis:ITAT 

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