TMI Blog2011 (1) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... d amendment, merely because a unit has obtained a certificate from the concerned authorities, that is not sufficient to avail of the benefit of exemption. After obtaining such a certificate, they must demonstrate that 75 per cent. of their manufactured items have been exported. From this undisputed fact, it is clear that the units, which are established prior to April 1, 1994, have the advantage of claiming this exemption even by exporting a fraction of their production. The mischief is sought to be avoided by this amendment by prescribing 75 per cent. as the level of exports, which has to be satisfied by the assessee - thus by a wrong interpretation, the AO has disallowed the exemption - Appeals are dismissed. - - - - - Dated:- 25-1-2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, based on the Circular No. 684, dated June 10, 1994, (see [1994] 208 ITR (St.) 8) issued by the Central Board of Direct Taxes. Aggrieved by the same, the Revenue is in appeal. 3. The learned counsel appearing for the Revenue, assailing the impugned order, contends that section 10B was introduced into the statute by the Finance Act, 1988, with effect from April 1, 1989. The amendment relied upon came into effect from April 1, 1994. Before eligible for that benefit, as it is clear from the section, the assessee has to satisfy two conditions. Firstly, the total exports of the assessee should be more than 75 per cent. of its total turnover. Secondly, the assessee must have commenced production subsequent to April 1, 1994. In the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) Act, 1951 (65 of 1951), and the rules made under that Act." 7. As the definition of "hundred per cent. export-oriented undertaking" stood then, it is not the requirement of the law that such an undertaking should have exported its entire production. The requirement is obtaining a certificate from the concerned authority. 8. As it is clear from Circular No. 684, dated June 10, 1994, issued by the Board explaining the amendment brought about "restricting five-year tax holiday under section 10B of the Income-tax Act to 100 per cent. export oriented undertakings exporting at least 75 per cent. of their turnover", which reads as under ([1994] 208 ITR (St.) 8, 24) : "23. Under section 10B of the Income-tax Act, a five-year tax holi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich, in any previous year, export less than 75 per cent. of their turnover will not be allowed the exemption under section 10B in respect of that previous year. They can, in such a case, avail of the normal 100 per cent. deduction under section 80HHC on the export profits. The restriction will apply prospectively to 100 per cent. EOUs which commence production on or after April 1, 1994. 23.5 This amendment takes effect from April 1, 1995, and will, accordingly, apply in relation to the assessment year 1995-96 and subsequent years." 9. Therefore, from the said clarificatory circular, it is clear that section 10B was introduced in the year 1989 and the heading of the section made it clear-special provision is in respect of newly esta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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