Section 10AA — the law in short
What the courts have decided on section 10AA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Genesys International Corporation Ltd v ACIT
High CourtHelps taxpayerValidity unconfirmed
We claimed s.10AA on our SEZ unit without first setting off the losses of our other units, and the officer now wants to reopen the assessment to undo it. Is that a good reason to reopen?
No. The Bombay High Court held that the very premise of the reopening - that the s.10AA deduction should have been given only after setting off the losses of the ineligible units - is in the teeth of the Supreme Court's decision in CIT v Yokogawa India Ltd, so it could not found a reason to believe income had escaped. The other two grounds also failed: the six month repatriation condition was introduced only by the Finance Act 2024 and did not apply to assessment year 2017-18, and the fact that the claim was made in the return under 'any other amount allowable as deduction' rather than in the s.10AA schedule was explained by the return utility itself. The notice was quashed as a change of opinion.
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Pr. CIT-7 v Om Nanotech Pvt Ltd
High CourtHelps taxpayerValidity unconfirmed
Our SEZ unit imports goods and re-exports them without manufacturing. The officer says s.10AA is only for manufacture or services and has denied the whole claim. Is trading within s.10AA?
Yes, where the trading is import for the purpose of re-export. The Delhi High Court held that s.10AA was inserted by the SEZ Act 2005 and must be read with that Act, in which 'services' is defined; rule 76 of the SEZ Rules 2006 lists trading among the prescribed services and its Explanation says trading, for the purposes of the Second Schedule to the SEZ Act, means import for the purposes of re-export. So the profits of an SEZ trading unit that imports and re-exports qualify for deduction under s.10AA.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.