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2016 (4) TMI 255 - GUJARAT HIGH COURT

2016 (4) TMI 255 - GUJARAT HIGH COURT - TMI - Eligibility for exemption u/s 10B - whether assessee had established a new 100% Export Oriented Undertaking eligible for exemption u/s 10B of the Income Tax Act and not SEZ Unit as held by ITAT? - Held that:- From the facts as emerging from the record, it is evident that the assessee's Unit was granted approval as a 100% Export Oriented Undertaking by a letter of permission dated 02.02.2007, which was ratified in the second meeting of the Board for A .....

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deduction under section 10B of the Act. Evidently therefore, the conclusion arrived at by the Commissioner of Income Tax is based upon an erroneous finding of fact. The Tribunal, therefore, did not commit any error in holding that the assessee was a 100% Export Oriented Undertaking and not an SEZ Unit and therefore, entitled to deduction under section 10B of the Act. - Decided in favour of assessee - Tax Appeal No. 255 of 2016 - Dated:- 21-3-2016 - Harsha Devani And G. R. Udhwani, JJ. For the A .....

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es of the case, the learned Income Tax Appellate Tribunal has erred in law and on facts in holding that the respondent assessee had established a new 100% Export Oriented Undertaking eligible for exemption u/s 10B of the Income Tax Act and not SEZ Unit?" 2. The assessment year is 2010-11 and the relevant accounting period is the previous year 2009-10. The assessee, which is assessed in the status of a firm, develops software for foreign clients. The assessee filed its return of income on 17 .....

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velopment Commissioner, Kandla Special Economic Zone had granted it approval under the EOU Scheme by permission letter dated 02.02.2007 as a 100% Export Oriented Unit and not an Undertaking as provided by the Board. He, accordingly, was of the view that the approval permitted to an SEZ (Special Economic Zone) Unit did not carry the same meaning as an Undertaking envisaged under section 10B of the Act. He, therefore, issued a notice dated 04.02.2014 under section 263 of the Act seeking to reverse .....

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cord the letter for ready reference. The assessee reiterated its status as a 100% Export Oriented Undertaking instead of an SEZ Unit. The Commissioner of Income Tax, however, did not agree with the submissions advanced by the assessee and was of the view that a 'Unit' under SEZ does not contain the same meaning as an 'undertaking' envisaged in section 10B of the Act. Further as per clause (zc) of section 2 of the Special Economic Zones Act, 2005, a 'Unit' means a unit set .....

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eal before the Tribunal, which, after considering the merits of the case, allowed the assessee's appeal. 4. Mr. Varun Patel, learned standing counsel for the appellant, assailed the impugned order by placing reliance upon the findings recorded by the Commissioner of Income Tax and submitted that the assessee not having satisfied the requirements for availing the benefit under section 10B of the Act, the Commissioner of Income-tax had rightly set aside the assessment order. It was submitted t .....

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s advanced by the learned counsel for the appellant and perused the impugned order passed by the Tribunal, the order under section 263 of the Act as well as the assessment order under section 143(3) of the Act. 6. A perusal of the impugned order reveals that the Tribunal has, upon appreciation of the evidence on record, taken note of the fact that the Development Commissioner, Kandla Special Economic Zone, Ministry of Commerce and Industry had granted approval to the assessee in EOU Scheme 2004- .....

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ding also takes care of Commissioner of Income Tax's observation that an SEZ Unit cannot be held eligible for section 10B deduction being established outside the defined SEZ. The Tribunal placed reliance upon the decision of the Delhi High Court in the case of Commissioner of Income Tax v. Enable Export Pvt. Ltd. rendered on 14.09.2009 in ITA No.1072 of 2011, wherein it was held that once the Development Commissioner, exercising powers of the Board of Approval, gives his assent to an Underta .....

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Oriented Undertaking, but an Export Oriented Unit and does not have the approval of the Board of Approval. However, upon the assessee bringing it to the notice of the Commissioner of Income Tax that both the above factors are satisfied, the Commissioner of Income Tax has proceeded on a totally different footing that a 'Unit' under Special Economic Zone does not carry the same meaning as an 'Undertaking' as envisaged under section 10B of the Act and that the petitioner's unit .....

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