TMI Blog2014 (11) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with STPI or only for the amounts earned after such registration. If the assessee has to derive the benefits of the special provisions of Sec.10A, the assessee has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year in the STPI Unit and it will be entitled to deduction under Sec.10A in respect of profits attributed to export turn over – the Tribunal was rightly of the view that the Circular issued under Section 10B cannot be made applicable to the case falling under sec.10A - There is a clear distinction between the establishment of Sec.10A and the special provisions of Sec.10B of the Act which defines 100% Export Oriented Undertakings - There is no scope for drawing inference from the provisions of Sec.10B as the assessee satisfies the requirement of Sec.10A, it will be entitled to such benefit - the AO has restricted the deduction based on an artificial cut off date (i.e.) 4.3.2000 which we hold is not the correct method of computation for benefit flowing under sec.10A – the order of the Tribunal is upheld – Decided against revenue. - T.C.(A) No.748 of 2009 - - - Dated:- 3-9-2014 - R. Sudhakar And G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Turnover for the purpose of 80HHE (Rs.5.40 Crores-Rs.3.69 Crores) 1,77,42,928 Total operating cost 5,73,99,949 Operating cost attributable to exports 4,09,05,068 Operating cost attributable to STFI 2,76,27,283 Operating cost towards exports eligible for deduction under section 80HHE 1,32,77,785 Profit of STPI Rs.3,69,34,525 Less:Operating cost attributable to STPI Rs.2,76,27,283 Profit of industrial unit STPI ₹ 93,06,241 Having arrived at the profit of STPI unit as above the Assessing Officer has restricted the same to the gross total income computed at ₹ 39,89,404/-. 5. The matter went on appeal before the Commissioner (Appeal) and the issue was considered by the Commissioner (Appeals) in the following manner: The di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be restricted by the profits derived from exports from and aftr the date of approval of the DTA units as 100% EOU. Though the circular was issued in the context of section 10B of the Act it is applicable to section 10A of the Act as well as both the sections provide for exemption of income in respect of newly established undertakings in any Free Trade zone or Electronic Hardware Technology park or software technology park or special economic zone commencing activities on or after the dates specified in sections 10A(2) and 108of the Act applies to newly established hundred percent Export oriented undertakings. Both the sections provide exemption or deduction in respect of profits derived from export of articles or things or computer software. The conditions prescribed are also similar under both the sections. Hence the above circular of Board is clearly applicable to the applicant case. Hence the assessee would be entitled for exemption under Section 10A of the Act only in respect of profits earned after it had been registered as a STPI unit and not for the earlier period. Hence the computation of exemption under section 10A of the Act by the Assessing Officer restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to manufacture or produce articles or things during the previous year relevant the assessment year - (a) commencing on or after the 1st day of April, 1981, in any free trade zone; or (b) commencing on or after the 1st day of April, 1994, in any electronic hardware technology park, or, as the case may be, software technology park; (ia) ...... (ii) ...... (iii) ...... (3) The profits and gains referred to in sub-section (1) shall not be included in the total income of the assessee in respect of any (ten) consecutive assessment years, beginning with the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things. (4) ..... (i) .... (ii) .... (iii) .... (iv) .... (5) ..... (6) .... (7) .... (8) .... Explanation :- For the purposes of this section: (i) free trade zone means the Kandla Free Trade Zone and the Santacruz Electronics Export Processing Zone and includes any other free trade zone which the Central Government may, by notification in the Official Gazette, specify for the purposes of this section. (ii) relevant assessment year means the ten consecut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estriction provided that deduction may be applicable only after registration with STPI or only for the amounts earned after such registration. 15. The Commissioner (Appeals) as well as the Assessing Authority fell into error by holding that registration as an STPI Unit is a requirement for the assessee to claim the benefit of Sec.10A. Sec.10A applies if any industrial undertaking has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year. 16. In this case, the date of Notification is 04.03.2000. We therefore hold that if the assessee has to derive the benefits of the special provisions of Sec.10A, the assessee has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year in the STPI Unit and it will be entitled to deduction under Sec.10A in respect of profits attributed to export turn over. 17. We, therefore, uphold the view of the Tribunal that the Circular issued under Section 10B cannot be made applicable to the case falling under sec.10A, as we find that Explanation 2 to Section 10B of the Act defines 100% Export Oriented Unit, which reads as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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