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2011 (7) TMI 541 - HC - Income TaxDeemed export under the provisions of the Special Economic Zones Act, 2005 - Exemption u/s 10A - For the assessment year 2004-05, the Assessing Officer allowed assessee's claim of exemption only on the profits derived on actual exports and disallowed the claim made for sale of components to the industrial unit at MSEZ - when section 10A, provides for exemption only on profits derived on export proceeds received in convertible foreign exchange, the Legislature never intended the benefit to be extended to local sales made by the units in the Special Economic Zone, whether as part of Domestic Tariff Area sales or inter-unit sales within the Zone or units in other Zones - the unit which purchased components from the assessee must be manufacturing final products and being a unit in the Special Economic Zone will be exporting the final product, on which that unit will get exemption on the entire profits which include the value of the components supplied by the assessee. Probably the Legislature did not want duplicity in exemption on export profit. That is why inter-unit sales in the Export Processing Zone are not treated as export within the meaning of section 10A of the Income-tax Act, no matter such transfers are treated as exports for the purpose of Customs and Excise duty exemption. When the exemption is only on actual profits derived on exports made against receipt in convertible foreign exchange, the Tribunal, in our view,has no justification to extend it to profits received on local sales within India against payment received in Indian rupees.
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