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2016 (7) TMI 317 - ITAT BANGALORE

2016 (7) TMI 317 - ITAT BANGALORE - TMI - Deduction claimed u/s.10B denied - Held that:- The tone and tenor of the judgment of Tata Elxsi Ltd [2015 (10) TMI 634 - KARNATAKA HIGH COURT ] says that benefits u/s.10A of the Act could not be denied even to a manufacturer who was supplying goods to a STP unit which had exported and received foreign exchange. Considering this judgment of Hon’ble jurisdictional High Court, we are of the opinion that the matter requires a fresh look by the AO. The AO has .....

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e for statistical purpose. - I.T.A No. 184/Bang/2014 - Dated:- 27-5-2016 - Shri. Sunil Kumar Yadav, Judicial Member Versus Shri. Abraham P. George, Accountant Member For the Assessee : Shri. S. Sridhar, Advocate For the Revenue : Dr. P. K. Srihari, Addl. CIT ORDER Per Abraham P. George, Accountant Member In this appeal filed by assessee, its grievance is that it was not given the deduction claimed u/s.10B of the Income-tax Act, 1961 ( the Act in short). 02. Facts apropos are that assessee engage .....

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IPL had given the money in Indian currency. Assessee was unable to produce the foreign inward remittance certificate for the money received by it on the exports. Assessee stated that it was registered as an EOU by the competent authority in Cochin. As per the assessee, competent authority of the EOUs, namely, ACIT, Customs, had authorised it to receive the sale consideration in Indian currency from TTIPL. Along with the above reply assessee also produced a copy of FIRC form obtained by TTIPL for .....

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goods were manufactured in an EOU were eligible for all the export benefits. 03. However the AO was not happy with the explanation given by the assessee. According to him, assessee had not received the export consideration in convertible foreign currency as require under sub-section (3) of Section 10B of the Act. Opinion of the AO was unless and until the export proceeds were realised in foreign currency itself, it would not be possible to give exemption u/s.10B of the Act. AO also noted that t .....

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wever, CIT (A) was of the opinion that approach of the AO was correct. According to him, the system of disclaimer certificate available in Section 80HHC of the Act, was not having a place in Section 10B of the Act. CIT (A) also noted that in assessee s own case for A. Ys. 2008-09 and 2009-10 similar claim was disallowed. Such disallowance was confirmed in appeal. Taking this view of the matter, he dismissed appeal of the assessee. 05. Now before us, Ld. AR admitted that for A Ys. 2008-09 and 200 .....

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ble jurisdictional High Court. Hon ble jurisdictional High Court in its judgment dt.20.10.2014 in ITA.411/2008, had over turned the decision of the Tribunal. As per the Ld. AR, their Lordship after considering clause 6.11 of EXIM policy, had held that benefits of Section 10A of the Act could be given even if the assessee was not a direct exporter but exported through another STP unit which received foreign exchange. Thus according to him, Tribunal decision in assessee s own case, in which relian .....

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currency. As per the Ld. AR such amount was transferred by TTIPL to the assessee in Indian currency. TTIPL had also issued a disclaimer certificate placed at paper book page 1, which clearly mentioned that assessee was a supporting manufacturer. 06. Per contra, Ld. DR strongly supported the orders of authorities below. 07. We have perused the material on record and heard the rival contentions. It is true that in assessee s own case for earlier years, namely 2008-09 and 2009-10, issue regarding w .....

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ter. Third Party Exports means exports made by an exporter or manufacture on behalf of another exporter(s). In such cases, export documents such as shipping bills etc., shall indicate name of both the manufacturing exporter/manufacturer and third part exporter(s). The BRC, GR declaration, export order and the invoice should be in the name of the third party exporter. In Third Party exports, the manufacturers are recognised as eligible for the benefits of the various Export Promotion Schemes. In .....

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the Act. In this regard we concur with the view expressed by the CIT(A) in para 5.5 of his order on this aspect. Once we come to a conclusion that the Assessee was only a supporting manufacturer and that u/s.10B of the Act exemption is not available to supporting manufacturer the other issues relating to allowing deduction u/s.10B viz., realization of export proceeds etc., become academic. Liberal interpretation, as suggested by the learned counsel for the Assessee, cannot be to the extent of co .....

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respect of exports made through third parties. In the case of TATA Elxsi Ltd. (supra), the assessee was a Software Technology Park unit. During the relevant assessment year, the assessee had made certain sales to M/s Texas Instruments India Ltd., which was also a registered STP. This transaction, assessee had claimed, as export for the purposes of s. 10A. This was not accepted by the AO and subsequently confirmed by the learned CIT(A). Before Tribunal the Assessee submitted that sale to M/S.Tex .....

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e & Industry, Department of Commerce, by which it was clarified that sales by one STP to another STP within India is a deemed export. The tribunal however rejected the claim made by the Assessee observing as follows: 14. We have heard rival submissions and perused the records. Chapter 8 of the Exim Policy issued by the Ministry of Commerce & Industry defines deemed export as under : "8.1 Deemed Exports refers to those transactions in which goods supplied do not leave country and pay .....

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inal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given." A cursory perusal would indicate that sale of such software by one STP to another STP within the country would be treated as deemed export only for the purpose of duty draw back and exempt from terminal excise duty. As rightly contended by the learned Departmental Representative, s. 10A, with relevant proviso, stood during the relevant time itself provides that when domestic .....

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units are as under : (a) Exemption from income-tax as per ss. 10A and 10B of IT Act." Further, from the perusal of the Exim Policy (Chapter 6) extracted above, it is seen that whatever benefit given should be as per the provisions of ss. 10A and 10B of the IT Act. Apart from the benefit conferred under the aforesaid chapter, nothing has been indicated in respect of any deemed export when the issue is considered under the IT Act. The Exim Policy extracted above (Chapter 8.1 and 8.3) obviousl .....

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of the view that the CIT(A) was justified in upholding the order of the AO refusing to allow deduction u/s.10B of the Act to the Assessee. We uphold the orders of CIT(A) and dismiss the appeals by the Assessee. 08. Finding of the Tribunal that assessee was a manufacturer and TTIPL was the buyer and TTIPL, Europe, S. A, Belgium was the consignee. Thus TTIPL was a third party exporter. After going through the provisions of Section 10B and Section 80HHC of the Act, this Tribunal held that Section 1 .....

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iled by the assessee concerned before the Hon ble jurisdictional High Court. Hon ble jurisdictional High Court in its judgment dt.20.10.2014, in ITA.411/2008, held as under at paras 18 to 21 of its order : 18. As Section 10A was introduced to give effect to the Exim Policy of the Central Government, we have to take into consideration the provisions of the Exim Policy. 19. Paragraph 6.10 of the Exim Policy speaks about exchange through others. It provides that a EOU/EHTP/STP/BTP unit may export g .....

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P unit concerned. b) Level of NFE or any other conditions relating to imports and exports as prescribed shall continue to be discharged by EOU/ EHTP/ STP unit concerned. c) Export orders so procured shall be executed within parameters of EOU/ EHTP/ STP/ BTP schemes and goods shall be directly transferred from unit to port of shipment. d) Fulfillment of NFE by EOU/EHTP/STP/BTP units in regard to such exports shall be reckoned on basis of price at which goods are supplied by ECUs to other Exporter .....

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ay be done directly by him or through other exporter after fulfilling the conditions mentioned therein. Thirdly, such an export could yield foreign exchange which should be brought into the country. If all these three conditions are fulfilled, then the object of enacting Section 10A is fulfilled and the assessee would be entitled to the benefit of exemption from payment of Income Tax Act on the profits and gains derived by the Undertaking from the export. 21. Clause 6.11 of Exim Policy dealing w .....

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is treated as 'deemed export'. Therefore, when Section 10A of the Act was introduced to give effect to the Exim Policy, the supplies made from one STP to another STP has to be treated as 'deemed export' because Clause 6.19 specifically provides for export through Status Holder. It provides that an EOU/EHTP/STP/BTP unit may export goods manufactured /software developed by it through other exporter or Status holder recognized under this pol icy or any other EOU/EHTP/STP/SEZ/BTP uni .....

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