9911796707
TMI Blog2022 (6) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... of the quantum of deduction and accepting the revised calculation furnished by the assessee to it. The Ld. CIT further noted that from the records that on account of the same the assessee was erroneously granted deduction u/s. 10AA on account of: (a) export incentive of Rs. 34,50,931/- which as per the decision of the Hon'ble Apex Court in Liberty India Ltd. 317 ITR 218 (SC) did not constitute income derived from export so as to be eligible to deduction u/s. 10AA of the Act. (b) on domestic sales made by the assessee within SEZ of Rs. 396.22 lakhs which was not eligible to deduction since as per law, the assessee was eligible to deduction only on profit earned from export sales. 3. Accordingly show cause notice was issued to the assessee who filed detailed submissions contending that its claim was in accordance with law with respect to both the issues, since the export incentive was not an incentive given to the assessee but was incentive by way of Excise Duty Refund to the party from whom goods had been purchased by the assessee who in turn had passed on the incentive to the assessee. That therefore it merely tantamounted to reduction in purchase price of goods and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. 7. Ground no. 2 & 3 are legal grounds challenging the proceedings initiated u/s. 263 of the Act. The said grounds were not pressed before us and hence are dismissed as not pressed. 8. Ground no. 4 to 8 have been raised on the merits of the case and arguments with respect to the same were made during the course of hearing before us. 9. Taking up the first aspect considered by the Ld. PCIT in his order, i.e relating to the deduction claimed by the assessee on export incentives. The contention of the ld.counsel for the assessee before us was that it had been explained to the Ld. PCIT that the export incentive was not of the assessee but related to a vendor of the assessee who had passed on the benefit to the assessee. That the export incentive related to Excise Duty Refund granted and received by one of the vendors of the assessee, M/s. Gangaram R.K. Industries Pvt. Ltd. on account of sale of goods to a unit in SEZ (the assessee), which refund had been passed by the vendor to the assessee. That the same merely tantamounted to reduction in purchase price of the goods purchased by the assessee from the said vendor and by no stretch of logic was export incentive of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty received by the assessee is purely on account of export promotion policy similar to a case of Duty Drawback., The case laws relied upon by the assessee do not help him and the auditors have correctly classified the refund of excise duty as incentive. This action of the auditors is also supported by the decision of Supreme Court in the caseof Liberty India Ltd. 317 ITR 218(SC). 11. Ld. Counsel for the assessee pointed out that the ld. CIT despite acknowledging the fact that the excise duty refund was not of the assessee still went on to hold that the same was export incentive earned by the assessee and applying the decision of the Hon'ble Apex Court in the case of Liberty India Ltd. 317 ITR 218 held that the assessee was not entitled to deduction u/s. 10AA of the Act. Ld. Counsel for the assessee pointed out that the said decision was not applicable to the facts of the present case since the export incentive was not of the assessee. 12. Ld. D.R. however supported the order of the Ld. CIT and contended that the decision of the Hon'ble Apex Court in the case of Liberty India Ltd. (supra) squarely applied to the present case and the Ld. CIT had rightly held therefore that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esse had not directly exported the goods, all other conditions prescribed u/s. 10AA were fulfilled, with the goods having been exported outside India and convertible Foreign Exchange also having been received. Ld. Counsel for the assessee contended that the Ld. CIT had denied deduction on these export which amounted to Rs. 396.22 lakhs solely for the reason that as per him the indirect exports were not eligible for deduction u/s. 10AA of the Act. Our attention was drawn to the findings of the ld. PCIT in this regard at para 4.2 to 4.2.5 of the order. 4.2 Export-Sales : The assessee has explained that the goods of the value of Rs.396.22 lakhs had been physically exported outside India and convertible foreign exchange was also duly received in respect of the aforesaid sale. He has attached a copy of invoice& shipping bills in support of the said export. However it is again reiterated that the goods were exported through Glonet Marketing Pvt. Ltd., which the assessee admitted that was permitted under the SEZ Policy. The assessee states that the requirements under section 10AA are only for the manufacturing of goods in SEZ and the export thereof. 4.2.1 1 have gone through the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like to clarify that the IT Act is not governed by the SEZ policy. Under the SEZ policy, any sales made to a Unit in SEZ is also considered as an export. However, recently, the Rajkot ITAT in the case of Monarch Overseas vide 1TA No. 253/Rjt/2011 and in the case of M/s. Sameer Industries vide ITA No.397/Rjt/2006 have held that inspite of the fact that the sales in SEZ are treated as deemed export yet they are not considered as export for the purposes of section 10A. Recently the Hon'ble Kerala High Court also had an occasion to consider the application of SEZ Rules to the Income Tax Act in the case of C1T vs. Electronic Controls & Discharge Systems Pvt.Ltd. 245 CTR 465(Ker) by holding as under: "the concept of deemed export under the Special Economic Zones Act is not incorporated in the scheme of exemption under section 10A of the Income-tax Act and it is the settled position that the Income-tax Act is a self-contained code and the validity or correctness of the assessment has to be considered with reference to statutory provisions. It is not as if the Special Economic Zones Act. 2005 or the Foreign Exchange Regulation Act or the Foreign Exchange Management Act are not referr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
