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TMI Blog2011 (4) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding that, recalculation of benefit, u/s 10A, is to be done by reducing the expenses incurred in foreign currency of Rs. 6,284,429/- while calculating export turnover; 4. ld. CIT(A) erred in law and in facts of the case by treating interest earned on deposit kept for the purpose of business, amounting to Rs. 36,432/- as income from other sources" 3. Grounds of appeal no. 1 is regarding reducing the unrealized export proceedings while calculating the export turnover. The learned AR of the assessee has submitted that in view of the Reserve Bank of India's circular no. 9/2009-10 dated 1.7.2009, the existing time limit of six month or 12 month in the earlier circular for extension of time limit by the competent authority has been taken away, therefore, there is no time limit for bringing the exports proceeding to avail the deduction u/s 10A. The learned AR has referred the said circular and submitted that in case of the unit situated in Special Economic Zone (SEZ) they are permitted to realize and repatriate India the full value of goods at any time and there is no prohibition of time limit for realization for export made by the SEZ. The learned AR has also referred th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in foreign exchange." 6. It is manifest from the sub-section (3) to section 10A that bringing the sales proceeds of export of the goods or articles into India in convertible foreign exchange within the period of six months or such further period as the competent authority may allow is mandatory condition. For this purpose earlier the RBI issued circulars from time to time for granting the further extension period of six months or 12 months as the case may be. Ultimately, by the master circular no. 9/2009-10 dated 1.7.2009, the said limit of extension by the competent authority/RBI was done away. The effect of the master circular as well as the circular no. 91 dated 1.4.2003 is that the condition on the competent authority to extend the time period up to six months or one year is removed. In other words, after these new circulars, the RBI or the competent authority may extend the time limit beyond 6 months or 12 months without any restriction of period as it was prescribed in the earlier circulars. Therefore, the amendment in the circular is only lifting the restriction of time period of granting the extension and it does not mean that the condition of granting extension has been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee is not permissible under the provisions of Act, therefore, the same will not be reduced from the export turnover. 13. We have considered the rival contentions and relevant record. We find that the AO reduced the amount which was utilized by the assessee for imports on the ground that the assessee did not brought this export turnover in foreign exchange. When the import expenditure is allowable then it would not be just for insisting the two way traffic of the same amount first bring the entire export proceedings in foreign exchange and then again make the payment for imports. Therefore, the payment made for imports against the export realization is deemed to be brought to India. As there is no requirement of two way traffic of the same amount as held by the Hon. Supreme Court in the case of J. B. Boda & Co. (P.) Ltd. (supra). In the said case, the Hon Supreme Court has held as under : "The facts brought out in this case are clear as to how the remittance to the foreign reinsurance company is made through the Reserve Bank of India in conformity with the agreement between the appellant and the foreign reinsurers, and that the remittance statement filed along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etting off' of export receivables against import payments for units located in Special Economic Zones subject to the following : (i) The 'netting off' of export receivables against import payments is in respect of the same Indian entity and the overseas buyer/supplier (bilateral netting). The netting may be done as on date of balance sheet of the unit in SEZ. (ii) The details of export of goods is documented in GR(O) forms/DTR as the case may be while details of import of goods/services is recorded through A1/A2 form as the case may be. The relative GR/SDF forms will be treated as complete by the designated authorised dealer only after the entire proceeds are adjusted/received. (iii) Both the transactions of sale and purchase in 'R' Returns under FET-ERS are reported separately. (iv) The export/import transactions with ACU countries are kept outside the arrangement. (v) All the relevant documents are submitted to the concerned authorised dealer who should comply with all the regulatory requirements relating to the transactions." 15. Accordingly, in view of the decision of the Hon. Supreme Court as well as the RBI Circular, we decide this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight and insurance are to be excluded from the sale proceeds of the articles and goods for the purpose of export turnover. Since the AO has not given the findings that the other expenditure in foreign currency are for providing the technical services outside India, therefore, the same cannot be excluded as per the meaning of export turnover provided under Explanation (2)(IV). Further, in view of the decision of the Special Bench of this Tribunal, CHENNAI Bench in the case of Zylog Systems Ltd (supra), the expenditure other than freight and insurance not incurred for technical services outside India cannot be excluded while calculating export turnover. 21. Grounds of appeal no. 3 is partly allowed. 22. Grounds of appeal no. 4 is regarding the interest earned on deposits as income from other sources. 23. WE have heard both the parties and considered the relevant record. This issue is settled by the various decision of the various High Court and particularly the decision of the Hon. Madras High Court in the case of CIT v. Menon Impex (P.) Ltd. [2003] 259 ITR 403/128 Taxman 11 held as under : "Held, that the interest received by the assessee was on deposits made by it in the banks ..... X X X X Extracts X X X X X X X X Extracts X X X X
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