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2015 (11) TMI 851 - ITAT CHENNAI

2015 (11) TMI 851 - ITAT CHENNAI - [2015] 42 ITR (Trib) 285 (ITAT [Chen]) - Exclusion of expenses from the export turnover and total turnover - Held that:- As rightly argued by the learned representative for the assessee, both export turnover and total turnover shall be of the same factor. What was excluded from the export turnover cannot form part of total turnover. Therefore, this Tribunal is of the considered opinion that the Commissioner of Income-tax (Appeals) has rightly directed the Asses .....

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pment Commissioner, Special Economic Zone was ratified by the Board, it is not clear from the material available on record whether ratification was accorded by the Board constituted by the Government of India under section 14 of the Industries (Development and Regulation) Act, 1951. In the absence of any material to show that whether the approval was accorded by the Board constituted under the Industries (Development abd Regulation) Act, 1951, this Tribunal is of the considered opinion that the .....

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expenses from the export turnover. - Held that:- in view of the decision of the Special Bench in ITO v. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D ] the expenses which were excluded from the export turnover are also to be excluded from the total turnover. Since the Commissioner of Income-tax (Appeals) excluded the communication charges, foreign travel expenses, commission charges, etc., from export turnover, this Tribunal is of the considered opinion that the same are also to be excluded f .....

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rder of the Bench was delivered by 1. N. R. S. Ganesan (Judicial Member).-Both the Revenue and the assessee, filed the appeals against the order passed by the Commissioner of Income-tax (Appeals)-VI, Chennai, dated August 29, 2014. Therefore, we heard both appeals together and disposing the same by this common order. 2. Let us first take the Revenue's appeal in I. T. A. No. 2816/Mds/2014. The only ground raised by the Revenue is with regard to exclusion of expenses from the export turnover a .....

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from the export turnover need not be excluded from the total turnover. 4. On the contrary, Sh. T. Banusekar, the learned representative for the assessee, submitted that the export turnover and total turnover should be of the same factor. What was excluded from the export turnover has also to be excluded from the total turnover in view of the decision of the Special Bench of this Tribunal in ITO v. Sak Soft Ltd. [2009] 313 ITR (AT) 353 (Chennai) [SB]. 5. We have considered the rival submissions o .....

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y infirmity in the order of the lower authority. Accordingly, the same is confirmed. 6. Now coming to the assessee's appeal in I. T. A. No. 2770/Mds/2014, the first issue that arises for consideration is with regard to deduction under section 10B of the Income-tax Act, 1961 (in short "the Act"). 7. Sh. T. Banusekar, the learned representative for the assessee, submitted that the assessee is 100 per cent. export oriented unit eligible for exemption under section 10B of the Act. The .....

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d on March 25, 2011. The approval granted by the Board was communicated to the assessee by the Development Commissioner, a copy of which is available at page 8 of the paper-book. Therefore, according to the learned representative, it may not be correct to say that the Board's approval was not obtained. Even otherwise, according to the learned representative, the assessee is eligible for exemption under section 10A of the Act. Referring to the Instruction of the Central Board of Direct Taxes, .....

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section 10A of the Act. Therefore, the issue requires to be remitted back to the file of the Assessing Officer for reconsideration. 8. On the contrary, Sh. Joe Sebastian, the learned Departmental representative, submitted that Explanation 2(iv) to section 10B of the Act clearly says that 100 per cent. export oriented unit means an undertaking which is approved by the Board appointed by the Government of India under section 14 of the Industries (Development and Regulation) Act, 1951. Therefore, t .....

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velopment Commissioner of the Special Economic Zone. No material is available on the record to show that the assessee was approved by the Board constituted by the Government of India. According to the learned representative, the approval granted by the Development Commissioner was subsequently ratified by the Board nominated by the Ministry of Commerce. It is not known whether the Board of Approval nominated by the Ministry of Commerce was appointed under section 14 of the Industries (Developmen .....

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y confirmed the addition. The learned Departmental representative further submitted that the assessee is also not eligible for exemption under section 10A of the Act. 9. We have considered the rival submissions on either side and perused the relevant material on record. Explanation 2(iv) to section 10B clearly says that approval by the Board appointed by the Government of India under section 14 of the Industries (Development and Regulation) Act, 1951 is an essential condition. In this case, thou .....

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ulation) Act, 1951, this Tribunal is of the considered opinion that the matter needs to be re-examined. Moreover, section 10A also gives exemption to 100 per cent. export oriented unit. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer in the light of the provisions of section 10A of the Act, in case the assessee is not eligible under section 10B of the Act. Accordingly, the orders of the lower authorities are set aside and the .....

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w, after giving a reasonable opportunity to the assessee. 10. The next issue that arises for consideration is with regard to determination of eligible export turnover. 11. During the course of hearing, the learned representative for the assessee submitted that the assessee is not pressing this ground. Accordingly, the ground raised by the assessee with regard to determination of eligible export turnover is dismissed. 12. The next ground of appeal is with regard to exclusion of foreign travel exp .....

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and communication expenses, freight outward and commission expenses from the export turnover. The Commissioner also directed the Assessing Officer to exclude the same from the total turnover also. Referring to Explanation 2(iv) to section 10A of the Act, the learned representative submitted that the export turnover does not include freight, telecommunication charges or insurance attributable to the delivery of the articles, etc. These facts are not appreciated by the Commissioner as well as the .....

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