Though vide Instruction no. 1/2006 dated 24-03-2006, it was clarified that trading units can be set up in the SEZ. However, the modification was made on 24-05-2006 in which it was made clear that the deduction u/s 10AA will be available in respect of the trading in the nature of re-export of imported good. Thus the assessees were promised that they will be eligible for deduction u/s 10AA of the Act in respect of the profit earning on trading of re-export of imported goods. The revenue has not been able to show us that such instruction was not withdrawn or the Board has issued instruction that instructin dated 24-05-206 from the Ministry of Commerce will not be applicable for the purpose of allowing exemption u/s 10AA of the Act. Hence, in view of the doctrine of promissory estoppel, we hold that the assessee is entitled to deduction.
We have also reproduced Section 51 of the SEZ Act. As per this Section, it is mentioned that notwithstanding any thing inconsistent therewith contained in any other law for the time being in fore or in any instrument having effect by virtue of any law other than this Act, the provision of SEZ Act will prevail. The Hon’ble Apex Court in the case of Tax Recovery Officer, Vs. Custodian Appointed under the Special Court, 293 ITR 369 had an occasion to consider the meaning of language employed in Section 13 of the Special Court Act. In Section 13 of the Special Court Act, it was stated that provision of the Act shall have effect notwithstanding any thing inconsistent therewith contained in any other law for the time being in force. The Hon’ble Apex Court held that there can be no manner of doubt that the provision of Special Court Act wherever they are applicable shall prevail over the provision of the Income tax Act. The Hon’ble Delhi High Court in the case of CIT Vs. Vasisth Chay Vaapar Ltd., 330 ITR 440 held that when there is a provision in another enactment which contains a non obstente clause than that would override the provisions of the Income Tax Act. Thus one will have to consider the implication of Section 51 of the SEZ Act. It means that anything in-consistent to the provision of the SEZ Act will not be considered. Thus the word services as mentioned in Section 10AA cannot be construed in-consistently with the definition of services given in the SEZ Act. Under the SEZ act, the trading is included in the services provided the trading is export of imported goods. We therefore, feel that the assessee is entitled to deduction u/s 10AA of the Act and therefore, the ld. CIT(A) was justified in allowing the exemption.