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TMI Blog2012 (9) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the business of manufacturing of brass parts and hardware items. The return of income was filed on 13-10-2007 returning total income at Rs.51,070/-. After processing, the return was selected for scrutiny. After scrutiny, the Assessing Officer disallowed, inter alia, a sum of Rs.9,72,212/- being the deduction claimed by the assessee u/s.10B of the Income-tax Act, with the following observations:- "3.6 Since the assessee has not sold the goods outside India but sold to 100% EOU in India. the above referred decision of Rajasthan High court in the case of Laxmi Industries V.CIT. (2006) 250 ITR 616 (Raj)as well as the same relied by the ITAT ,Ahmedabad Bench -A in the case of Neval Overseas Pvt. Ltd. Vs ITO.{ITANo.3023/Ahdl2004.] becomes a guiding principal to conclude the issue in the present case. Respectfully following these decisions I hold that the sale of Rs.59,78,515/ made by the assessee to other 100% EOU within the territory of India is not an export even though the such sale is made against the Form CT-3,and treated as deemed export under the Exim Policy .As a result, the first condition for claiming the deduction U/s I0B of the Act is not found satisfactory. 3.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and accordingly the difference of Rs.9,72,212lbeing the excess claim of the deduction is here by disallowed and added with the total income." "6. I have carefully considered the issue. I find that, in this case sales have been made to the party after obtaining permission from the Govt.' of India, Ministry of Commerce & Industries under CT-3 scheme. It is' also a fact that entire sale proceeds have been received in' convertible foreign exchange and not in Indian rupees. It' is also seen that the appellant had produced foreign inward remittance certificate in this regard to show that the amount was received in India in foreign exchange. Therefore, the same has to be treated as export turnover for the purpose of calculation of deduction u/s.10B which' provides that if money is received in convertible foreign exchange, the same would be entitled to deduction u/s.l0B. Apparently, when sales are made after obtaining permission from Government under CT- 3 scheme, same is deemed to be export and deduction can be disallowed only if the sale proceeds are not received in convertible foreign exchange and are received in' Indian rupees. In this case, the sale proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009. i) Relevant extract from the website of Kandla Special Economic Zone which substantiates that M/s Apple Enterprises Engineering Private Limited is registered as 100% EOU is enclosed at pg17. ii) Copies of sales Invoice issued to M/s Apple Enterprises Engineering Private Limited wherein the necessary permission granted by the Superintendent of Central Excise, Jamnagar to issue invoice under CT 3 has been stated is enclosed at pg 18 to 20. iii) Copy of ledger account of M/s Apple Enterprises Engineering Private Limited & CT 3 sales is enclosed at pg 21 to 22. iv) Copy of the bank payment advice along with copy of the bank statement evidencing payment received in foreign exchange and are enclosed at pg 23 to 26. 5. As per para 6.14 of the Foreign Trade Policy & Handbook of Procedures - Supplies to other EOU/EHTP/STP/BTP/SEZ units shall be counted towards NFE (Net Foreign Exchange) provided that such goods are permissible for procurement by these units. 6. Further as per para 6.18 of the Foreign Trade Policy & Handbook of Procedures Export through other exports - an EOU / EHTP /STP / BTP unit b. Level of NFE or any other conditions relating to imports and exports as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industry. Under the said permission, the requirement of Ministry of Commerce ft Industry is that the payment against the above supplies shall be received in foreign exchange. The appellant has also produced the foreign inward remittance certificate of the sale made through above parties in respect of the above amounts except the amount of Rs.3,61,3641- being DTA(CT-3) sale to MIs. Western Impex. In view of the same, I hold that the appellant is not eligible to include amount of Rs.3,61,3641- in the export turnover, but the balance amount of Rs.17,70,0151- out of the above amount of Rs.21 ,35,3791- is to be considered as export turnover of the appellant. The A O is accordingly, directed allow deduction uls.10B of the Act to the appellant on total exports Income Tax Officer vs Anita Synthetics (P) Ltd (2006) 100 TTJ (Ahm) 277 as summarized below: " ...•• In absence of any specific definition in the Act, the word 'export' has to being interpreted in accordance with the meaning ascribed to it under relevant exim policy which deems the sale by one EOU to another as export." Conclusion Sale of goods by one EOU to another at the relevant time was deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowed the deduction u/s.10B. In view of this and, as money has been received convertible foreign exchange, the AO is directed to allow claim of deduction u/s.10B as claimed by the appellant. 18. Moreover, the Jurisdictional Income Tax Appellate Tribunal has also dismissed the appeal filed by the revenue in case of Shree Krishna Enterprise in ITA No. 21/RJT/2007 vide its order dated 24-07-2009 and sustained the order of the Commissioner of Income Tax (Appeals) allowing the claim of deduction u/s.10B on the sales made to other EOU under the CT-3 scheme. 6. We have heard both the parties and carefully considered their submissions. It is clear on plain reading of sub-section (3) of section 10B that section 10B applies to the undertaking if the sale proceeds of articles or things or compute software "exported out of India" are received in, or brought into, India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf. It is quite apparent that two conditions are stipulated by sub-section (3) for availing the relief under section 10B. First ..... X X X X Extracts X X X X X X X X Extracts X X X X
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