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2014 (10) TMI 295 - AT - Income TaxRestriction of deduction u/s 10B – 100% Export Oriented Unit (EOU) - sales made by assessee to two 100% EOUs inside the country against Indian currency, who in turn had actually exported the goods outside India - Held that:- assessee will not be entitled for exemption u/s 10B in respect of turnover of ₹ 3,37,46,108 sold to 100% EOU in India. The contention of the ld. AR that decision of the Hon’ble AP High Court being factually distinguishable will not apply to assessee’s case, in our view, is devoid of merit. The conditions of sub-section (3) of section 10B has not been fulfilled in respect of the turnover sold to two other 100% EOU in India – relying upon Swayam Consultancy (P) Ltd vs. ITO [2011 (4) TMI 683 - Andhra Pradesh High Court] -the language of s. 10B(3) of the Act is plain - It does not admit any other meaning than what is conveyed by the language used - The benefit u/s 10B(1) of the Act is available to 100 per cent EOUs only if the sale proceeds of articles or things exported out of India are received in convertible foreign exchange - Two conditions should be satisfied before the benefit under s. 10B(1) of the Act is claimed. - Decided against the assessee. Deduction in respect of amount on sale of packing material to Nambia disallowed – Held that:- The only reason on which they have held that the amount would not be eligible for exemption u/s 10B is packing materials were not manufactured by assessee - the products manufactured by assessee could not have been exported without packing materials, hence, the observation by the lower authorities that it cannot be considered as part of the export turnover is not correct - When a particular article or thing cannot be exported without its container/packing, same has also to be considered as part of the product and consequently has to be treated as part of the export turnover of assessee - the turnover being part of the export turnover of the assessee would be eligible for deduction u/s 10B – Decided in favour of assessee.
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