The ITAT was ruling in the case of Reliance Industries Limited (RIL) and the issue of taxability of company’s profits from SEZ. As per the details of the case RIL had claimed deductions under two sections of the income tax act. The tax department had challenged this and the matter had reached ITAT Mumbai.
The company had made profits from its refinery located in Moti Khavdi SEZ. RIL had claimed deductions of Rs 7530 crore under section 10AA of the income tax act. The act deals with the profits made from SEZ units. The company had claimed tax deductions of the remaining profit—Rs 698 crore under a separate section—section 80 IB (9) of the income tax act. This section deals with tax exemptions or deductions for certain industrial units in infrastructure sector.
“Deduction under section 10AA can be computed based on the gross profit gains or commercial profits made from an SEZ. This is not based on income computed on business gains or taxable profits. Simultaneous deductions under 80 IB (9) by the taxpayer can be claimed for balance profits which are not allowed under the earlier section,” a Dhruva Advisors tax research note said.
The tax department had argued that Rs 698 crore should be taxable and the exemption should be disallowed.
“The decision of the ITAT allowing deduction under section 10AA based on gross profit is path breaking. Taxpayers should certainly evaluate the possibility of making a claim for additional deduction under section 10AA of the act especially before 2018/19. And from 2018/19 onwards there may still be some possibility that despite the explanation to the section 10AA(1) claim of deduction on the basis of commercial profits could be merited,” the Dhruva Advisors research note read.
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5 Comments on this Story
Sanujit Roy51 days ago
SEZ concept in question during pandemic as majority of the occupants of commercial real estate wants to get free
Vishwas Wadekar51 days ago
Mr. Singh and Mr. Gupta the sections provide for exemption and it will be given to anyone. Your knowledge of Income Tax and its provisions is totally zero. But don't publicise it so brazenly. People will throw story es at you.
Vk Singh52 days ago
Specially Modi provide special facilities for special companies. In India only two special men for Modi who are Adani and Ambani.