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2023 (4) TMI 636 - DELHI HIGH COURTDeduction u/s 10AA - disallowing the deduction as that the deduction could be claimed only against articles manufactured in, or against the services which emanated from, the NSEZ - whether or not the Tribunal could have taken recourse to the definition of expression “services” given in the 2005 Act and the 2006 Rules framed thereunder? - HELD THAT:- The undisputed position is that the definition of the expression “services” is not provided in the 1961 Act. That being said, a plain reading of the language of Section 10AA of the 1961 Act would show that an assessee can claim deduction equivalent to 100% of profits and gains derived from export of services. Whether trading services of the nature which the respondent/assessee was involved in would fall within the ambit and scope of Section 10AA ? - A plain reading of Section 27 of the 2005 Act would show that, clearly, the provisions of 1961 Act are made applicable to a developer or entrepreneur who carries out authorized operations in the SEZ, subject to modifications specified in the Second Schedule appended to the 2005 Act. The Second Schedule of the 2005 Act, which adverts to the modifications made in the 1961 Act, concededly, refers to Section 10AA of the 1961 Act. Thus, having regard to the fact that the deduction made available to an assessee under Section 10AA of the 1961 Act, which has a unit located in the SEZ, is rooted in the 2005 Act, one would, in our opinion, necessarily have to advert to the definition of expression “services” contained in the said Act. A plain reading of the Explanation would show that trading for the purposes of the Second Schedule of the 2005 Act means import for the purposes of re-export. Undoubtedly, the 2005 Act and Rule 76 point in the direction that the expression “services” means services which are offered by way of re-export of articles that are imported into the country. If there was any doubt as regards this aspect of the matter, the same is clarified if one were to peruse Instruction No.4 dated 24.05.2006 issued by the Government of India, Ministry of Commerce and Industry, Department of Commerce.. The aforementioned Instruction has been adopted by the Export Promotion Council [in short, “EPC”] via its Circular No.17 dated 29.05.2006. Likewise, after Rule 76 was inserted in the 2006 Rules, the EPC for EOUs and SEZ units issued another Circular dated 16.11.2006. Thus we have no doubt that it was always intended that the deduction under Section 10AA of the 1961 Act will also be available qua those articles which, upon import to the unit located in SEZ, were thereafter re-exported. Decided in favour of assessee.
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