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2016 (7) TMI 1552 - AT - Income TaxExemption u/s 10AA - what constitutes export in terms of section 10AA? - HELD THAT:- In the present appeal, we are concerned with the issue what constitutes export in terms of section 10AA of the Act. Therefore, in our view, the assessee would be eligible to avail exemption under section 10AA in respect of goods / services directly exported by it and it will not get any exemption in respect of sales made to other SEZ unit which cannot be treated as export sales. The fact that assessee realized the sale proceeds in foreign exchange would also not entitle the assessee to claim exemption on sales effected to another SEZ unit. In the present case, there is no dispute that assessee being a SEZ unit is eligible to claim exemption u/s 10AA subject to fulfillment of conditions prescribed therein. Therefore, as far as assessee’s claim of eligibility u/s 10AA is concerned, there is no doubt about that. We are only concerned with the computation of exemption u/s 10AA which is restricted only to export sales. In other words, exemption u/s 10AA has to be computed on each assessment year independently on the quantum of export sales made by assessee. If we pose a question to ourselves, can an assessee be allowed exemption u/s 10AA without exporting any goods or services in a particular assessment year only because in past assessment years it has been allowed such exemption? The answer will be “No”! Allowance of exemption in such a case would not only be against legislative intent but also defeat the purpose for which the provision was enacted. The decision of the Hon'ble Bombay High Court in in Western Outdoor Interactive Pvt. Ltd. [2012 (8) TMI 709 - BOMBAY HIGH COURT] cannot be interpreted in a manner to suggest that even without fulfilling the basic conditions of statutory provision, it can claim deduction merely because such deduction was allowed in earlier assessment years. As far as the decisions of the Tribunal in Goenka Diamonds and Jewellery Ltd. [2012 (3) TMI 258 - ITAT JAIPUR] and Gitanjali Exports Corp. Ltd. [2013 (11) TMI 563 - ITAT MUMBAI] relied upon by the learned Authorised Representative, on a perusal of the order of the Tribunal, we are of the view that they are of no help to the assessee as they were not directly on the issue whether sales to another SEZ unit will be treated as deemed export. Moreover, in both the decisions, the Tribunal has referred to instructions issued by the Ministry of Commerce and Industries clarifying that service includes trading also for the purpose of claiming exemption under section 10AA, whereas, there is no such instruction in relation to export vis–a–vis sales made to another SEZ unit. As stated earlier, the assessee is eligible for exemption under section 10AA in respect of direct export sales made by it. We, therefore, direct the Assessing Officer to verify the quantum of export sales directly made by the assessee and allow exemption under section 10AA in respect of such turnover.
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