Commissioner of Income Tax, Guntur v. M/s. Bommidala Enterprises Pvt. Ltd.

November 26, 2021

Civil Appeal No. 8774 of 2016

Income Tax — Income Tax Act,1961 — S. 10-AA — The question of law raised by the appellant revenue that whether trading activity carried on by the SEZ unit of the respondent-assessee is to be considered as ‘service’ eligible for exemption under S. 10-AA is brushed aside by the high court holding that the tribunal has held it to be a ‘service’ and that it is a question of fact — Legality and justifiability — Held, whether the trading activity carried on by the SEZ unit of the respondent-assessee is a question of law and not a question of fact and the high court is in error in not entertaining the said plea and dismissing the appeal of the revenue by labelling it as a question of fact — The order of the high court is set aside and remanded the matter to high court to decide the question of law (Para 3)

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(A.K. Sikri and D.Y. Chandrachud, JJ.)

Commissioner of Income Tax, Guntur ___________________ Appellant

M/s. Bommidala Enterprises Pvt. Ltd. __________________ Respondent

Civil Appeal No. 8774 of 2016 [Arising out of SLP (C) No. 13081 of 2014], decided on September 2, 2016

The Order of the court was delivered by

Order

1. Leave granted.

2. The question of law that was raised by the appellant-Revenue herein before the High Court was as to whether trading activity carried on by the SEZ unit of the respondent-assessee is to be considered as ‘service’ eligible for exemption under Section 10AA of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’). It was the submission of the appellant that for this purpose, the Income Tax Appellate Tribunal could not have relied upon the definition of ‘services’ as per SEZ Rules when there is no such provision under Section 10AA of the Act.

3. A perusal of the order of the High Court shows that this aspect is not considered and brushed aside by merely saying that the Tribunal has held it to be a ‘service’ and that it is a question of fact. No doubt, insofar as activity carried on by the respondent-assessee is concerned, factual aspects are not in dispute. However, whether that would constitute ‘service’ within the meaning of Section 10AA of the Act would be a question of law and not a question of fact. The High Court is, therefore, in error in not entertaining the said plea and dismissing the appeal of the Revenue by labelling it as a question of fact. We, accordingly, set aside the order of the High Court and remand the case to the High Court to decide the aforesaid question of law.

4. Accordingly, the appeal stands disposed of.

Petition(s) for Special Leave to Appeal (C) No. 13081/2014

Commissioner of Income Tax, Guntur ___________________ Petitioner

M/s. Bommidala Enterprises Pvt. Ltd __________________ Respondent

Date : 02/09/2016 This petition was called on for hearing today.

(Before A.K. Sikri and D.Y. Chandrachud, JJ.)

For Petitioner(s) Mr. Ranjit Kumar, SG.

Ms. Sunita Rani Singh, Adv.

Mr. S. A. Haseeb, Adv.

Mrs. Anil Katiyar, Adv.

For Respondent(s) Mr. A. Subba Rao, Adv.

UPON hearing the counsel the Court made the following

Order

5. Leave granted.

6. The appeal stands disposed of in terms of the signed order.

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