Adani Exports Vs ITO (Gujarat High Court)
Summary: The Gujarat High Court allowed the writ petition filed by Adani Exports, a partnership firm engaged in manufacturing and exporting gold jewellery from its SEZ unit at Sachin, Surat, and quashed the notice dated 27.03.2015 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2010-11, along with the consequential order dated 01.02.2016 rejecting the petitioner’s objections.
The petitioner had filed its return for AY 2010-11 on 29.09.2010 and claimed a deduction of Rs.149 crores under Section 10AA. The return was selected for scrutiny and notices under Sections 143(2) and 142(1) were issued. The petitioner furnished details including the ledger accounts of partners, stock particulars, purchase invoices, details of gold purchased from Adani Enterprises Limited (AEL), and information concerning the manufacture and export of gold jewellery. The Assessing Officer completed the scrutiny assessment under Section 143(3) on 23.12.2011.
The subsequent notice under Section 148 proceeded on two grounds: first, that non-payment of interest on partners’ capital had inflated the profits and consequently resulted in a higher deduction under Section 10AA; and second, that gold had been purchased from the sister concern at a price lower than the prevailing market rate, allegedly resulting in profits in excess of ordinary commercial profits. The Revenue sought to invoke Section 80-IA(10) read with Section 10AA(9).
