M/s. Gokul Overseas Ltd., Patan V. The ACIT.,Patan Circle, Patan

ITA 1028/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0712 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 14-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 12-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed export
• Section: 10AA; 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.1028/AHD/2013 ( / ASSESSMENT YEAR : 2009-10) M/S.GOKUL OVERSEAS 29, AMBIC NAGAR CO- OP.SOCIETY OPP. GEB HIGHWAY ROAD SIDDHPUR 384 151 / VS. THE ACIT PATAN CIRCLE PATAN $ ./ ./ PAN/GIR NO. : AACFG 9539 L ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $&) / APPELLANT BY : SHRI TUSHAR HEMANI, AR '($&*) / RESPONDENT BY : SHRI SANJAY KUMAR, SR.DR +* / DATE OF HEARING 21/07/2016 ,-./* / DATE OF PRONOUNCEMENT 30/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR DAT ED 22/01/2013 FOR THE ASSESSMENT YEAR (AY) 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 2 - 2.1. ASSESSEE IS A PARTNERSHIP-FIRM STATED TO BE EN GAGED IN THE BUSINESS OF MANUFACTURING OF CASTOR OIL AND ITS DERIVATIVES. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2009-10 ON 30/09/2009 DECLA RING TOTAL INCOME OF RS.43,94,110/-. THE CASE WAS SELECTED FOR SCRUT INY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') VIDE ORDER D ATED 29/12/2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,40,58,810/-. A GGRIEVED BY THE ORDER OF ASSESSING OFFICER (AO), ASSESSEE CARRIED THE MAT TER BEFORE THE LD.CIT(A) WHO VIDE ORDER DATED 22/01/2013 (IN APPEA L NO.CIT(A)/GNR/321/2011-12) UPHELD THE ORDER OF AO A ND THEREBY DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED B Y THE ORDER OF THE LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND O N THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.96,64,698 /- U/S 10AA OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN EXCLUDING EXPORT TUR NOVER OF RS.17,64,95,304/- FROM THE TOTAL EXPORT TURNOVER OF THE APPELLANT FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 10AA OF THE AC T. 3. ALTERNATIVELY AND WITHOUT PREJUDICE, IF THE EXP ORT TURNOVER IS EXCLUDED FROM THE COMPUTATION, CORRESPONDINGLY IDEN TICAL AMOUNT MAY KINDLY BE REDUCED FROM TOTAL TURNOVER. 4. ALTERNATIVELY AND WITHOUT PREJUDICE, IF THE EX PORT TURNOVER IS EXCLUDED FROM THE COMPUTATION, CORRESPONDINGLY DIRE CT AND INDIRECT ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 3 - EXPENDITURE RELATING TO SUCH EXPORT TURNOVER MAY AL SO KINDLY BE EXCLUDED FROM THE COMPUTATION OF THE DEDUCTION U/S 10AA OF THE ACT. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDE RS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION S UBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEE N CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWE R AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTI CE AND THEREFORE DESERVES TO BE QUASHED. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD.AO IN LEVYING INTEREST U/S.234A/B/C OF THE ACT. 7. THE LEARNED CIT(A) WAS ERRED IN AW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD.AO IN INITIATING PENALT Y U/S.271(1)(C) OF THE ACT. 3. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT T HOUGH ASSESSEE HAS RAISED VARIOUS GROUNDS, BUT THE SOLITARY ISSUE WHIC H TO BE DECIDED IS WITH RESPECT TO ALLOWING OF DEDUCTION U/S.10AA OF THE AC T. 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAD CLAIMED DEDUCTION OF RS.18,29,20,780/- U/S.10AA OF THE ACT. ON PERUSING THE PROFIT & LOSS ACCOUNT, AO NOT ICED THAT ASSESSEE HAD SHOWN TOTAL EXPORT TURNOVER OF RS.3,43,39,26,56 1/- WHICH INCLUDED EXPORT SALES AS SUPPORTING MANUFACTURER (RS.17,11,2 4,107/-), SALES TO EXPORT ORIENTED UNITS (EOUS) (RS.33,13,920/-) AND SALES TO OTHER SEZ (RS.20,57,277/-). AO WAS OF THE VIEW THAT DEDUCTION U/S.10AA CAN BE CLAIMED ONLY ON THE DIRECT EXPORTS MADE BY T HE ASSESSEE UNIT AND ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 4 - NOT THROUGH ANY OTHER ENTITY OR AGENCY. AO WAS FUR THER OF THE VIEW THAT DEDUCTION U/S.10AA OF THE ACT IS AVAILABLE TO AN AS SESSEE WHO MANUFACTURES OR PRODUCES ARTICLE OR THING FROM OWN UNITS AND THAT DEDUCTIBLE PROFITS SHOULD BE THE PROFITS AND GAINS DERIVED FROM EXPORTS MADE BY THE ASSESSEE. HE FURTHER HELD AS PER THE PROVISIONS OF SECTION 10AA, THE EXPORT TURNOVER MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKING BEING THE UNIT OF ARTICLES OR TH INGS. AO THEREFORE CONCLUDED THAT THE EXPORT SALES MADE BY THE ASSESSE E AS SUPPORTING MANUFACTURER, SALES TO EOUS AND OTHER SEZ WERE N OT DIRECT EXPORT OF THE ASSESSEE AND THEREFORE ASSESSEE WAS NOT ELIGIBL E FOR DEDUCTION FROM THE PROFITS MADE OF ITS SALES. HE ACCORDINGLY RECA LCULATED THE DEDUCTION U/S.10AA OF THE ACT AT RS.17,32,56,882/- AS AGAINST THE CLAIM OF DEDUCTION OF ASSESSEE OF RS.18,29,20,780/- AND THUS DISALLOWED THE EXCESS CLAIM OF RS.96,94,698/-. AGGRIEVED BY THE O RDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) WHO UPHELD THE ORDER OF AO AND DISMISS THE APPEAL OF THE ASSESSEE BY HOLDING AS UN DER:- 3.5. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE LAW. THE EXPORT TURNOVER IS SPECIFICALLY DEFINED IN EXPLANATION 1(I ) OF THE SECTION ITSELF. FOR READY REFERENCE, IT IS REPRODUCED AS UNDER:- EXPLANATION 1: - FOR THE PURPOSES OF THIS SECTION (I) EXPORT TURNOVER MEANS THE CONSIDERATION IN RESPEC T OF EXPORT BY THE UNDERTAKING, BEING THE UNIT OF ARTICLES OR T HINGS OR SERVICES RECEIVED IN OR BROUGHT INTO, INDIA BY THE ASSESSEE BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTIC LES OR THINGS ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 5 - OUTSIDE INDIA OR EXPENSES. IF ANY, INCURRED IN FOR EIGN EXCHANGE IN RENDERING OF SERVICES (INCLUDING COMPUTER SOFTWA RE) OUTSIDE INDIA; (II) EXPORT IN RELATION TO THE SPECIAL ECONOMIC ZONES MEANS TAKING GOODS OR PROVIDING SERVICES OUT OF INDIA FROM A SPE CIAL ECONOMIC ZONE BY LAND, SEA, AIR, OR BY ANY OTHER MO DE, WHETHER PHYSICAL OR OTHERWISE. WHEN THE TERM HAS BEEN CLEARLY DEFINED IN THE INCOM E-TAX ACT ITSELF, THERE IS NO QUESTION TO REFERRING TO ANY OTHER CODE OR ACT CLEARLY AND UNDISPUTEDLY, THE CONCEPT OF DEEMED EXPORT UNDER TH E SPECIAL ECONOMIC ZONES ACT IS NOT INCORPORATED IN THE SCHEME OF EXEM PTION UNDER SECTION 10A OF THE INCOME-TAX ACT OR SIMILARLY WORDED SECTI ON 10AA OF THE IT ACT. IT IS THE SETTLED POSITION THAT THE INCOME-TA X ACT IS A SELF-CONTAINED CODE AND THE VALIDITY OR CORRECTNESS OF THE ASSESSM ENT HAS TO BE CONSIDERED WITH REFERENCE TO STATUTORY PROVISIONS. THE INCOME-TAX ACT REFERS TO SEVERAL STATUTES IN DIFFERENT PLACES AND WHEREVER REQUIRED, PROVISIONS OF SUCH STATUTES ARE INCORPORATED IN THE ACT THROUGH REFERENCE OR BY INCORPORATION. THIS IS NOT THE CAS E IN THIS SECTION. WHEN SECTION 10AA, PROVIDES FOR EXEMPTION ONLY ON P ROFITS DERIVED ON EXPORT PROCEEDS RECEIVED IN CONVERTIBLE FOREIGN EXC HANGE, THE LEGISLATURE NEVER INTENDED THE BENEFIT TO BE EXTEND ED TO LOCAL SALES MADE BY THE UNITS IN THE SPECIAL ECONOMIC ZONE, WHE THER AS PART OF DOMESTIC TARIFF AREA SALES OR INTER-UNIT SALES WITH IN THE ZONE OR UNITS IN OTHER ZONES. IN FACT ALL SPECIAL ECONOMIC ZONES AR E ALLOWED TO MAKE 25 PER CENT SALES TO DOMESTIC TARIFF AREA AND THE P ROFIT DERIVED FROM SUCH SALES ARE NOT ENTITLED TO EXEMPTION. EXEMPTIO N UNDER SECTION 10AA IS SPECIFICALLY GEARED TO PROFITS ON ACTUAL EXPORTS , THAT TOO, MADE AGAINST RECEIPT OF CONVERTIBLE FOREIGN EXCHANGE. I HAVE NOTED THAT THE PROVISIONS OF SECTION 10AA AN D SECTION 10A ARE SAME AS FAR AS THE DEFINITION OF EXPORT TURNOV ER IS CONCERNED. THE HONBLE KERALA HIGH COURT IN THE CASE OF ELECTRONIC S CONTROL & DISCHARGE SYSTEMS PVT.LTD. 245 CTR 465 WHILE DECIDI NG THE ISSUE IN RESPECT OF SECTION 10A HAS OBSERVED THE FOLLOWING: ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 6 - AFTER HEARING BOTH SIDES AND AFTER GOING THROUGH T HE ABOVE REFERRED PROVISIONS OF THE INCOME-TAX ACT AND THE PROVISIONS OF THE SPECIAL ECONOMIC ZONES ACT, 2005, WE ARE UNABLE TO UPHOLD T HE ORDER OF THE TRIBUNAL BECAUSE THE CONCEPT OF DEEMED EXPORT UNDER THE SPECIAL ECONOMIC ZONES ACT IS NOT INCORPORATED IN THE SCHEM E OF EXEMPTION UNDER SECTION 10A OF THE INCOME-TAX ACT AND IT IS T HE SETTLED POSITION THAT THE INCOME-TAX ACT IS A SELF-CONTAINED CODE AN D 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 REFERRED TO IN THE INCOME-TAX ACT. THE INCOME-TAX ACT REFERS TO SEVERAL STATUTES IN DI FFERENT PLACES AND WHEREVER REQUIRED, PROVISIONS OF SUCH STATUTES ARE INCORPORATED IN THE ACT THROUGH REFERENCE OR BY INCORPORATION. IT IS NOT AS IF THE PARLIAMENT IS UNAWARE OF OTHER STATUTES WHICH HAVE SPECIFIC PURPOSES INTER-UNIT TRANSFERS IN ECONOMIC ZONES ARE TREATED AS EXPORTS FOR THE PURPOSE OF CUSTOMS ACT AND THE CENTRAL EXCISE ACT. HOWEVER, WHEN SECTION 10A, PROVIDES FOR EXEMPTION ONLY ON PROFITS DERIVED ON EXPORT PROCEEDS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE, THE LEGISLATURE NEVER INTENDED THE BENEFIT TO BE EXTENDED TO LOCAL SALES MADE BY THE UNITS IN THE SPECIAL ECONOMIC ZONE, WHETHER AS PART OF DOMESTIC TARIFF AREA SALES OR INTER-UNIT SALES WITHIN THE ZO NE OR UNITS IN OTHER ZONES. IN FACT ALL SPECIAL ECONOMIC ZONES ARE ALLO WED TO MAKE 25 PER CENT SALES TO DOMESTIC TARIFF AREA AND THE PROFIT D ERIVED FROM SUCH SALES ARE NOT ENTITLED TO EXEMPTION. EXEMPTION UND ER SECTION 10A(3) IS SPECIFICALLY GEARED TO PROFIT ON ACTUAL EXPORTS, TH AT TOO, MADE AGAINST RECEIPT OF CONVERTIBLE FOREIGN EXCHANGE. WE ARE OF THE VIEW THAT IF THE PROVISIONS OF THE SPECIAL ECONOMIC ZONES ACT, 2005, ARE BROUGHT INTO EXTEND THE EXEMPTION ON PROFITS DERIVED ON INTER-UN IT SALE MADE BY INDUSTRIES WITHIN THE EXPORT PROCESSING ZONE, THE C OURT WILL BE RE- WRITING THE LEGISLATION WHICH IS EXACTLY WHAT THE T RIBUNAL HAS DONE. IN FACT, THE UNIT WHICH PURCHASED COMPONENTS FROM THE ASSESSEE MUST BE MANUFACTURING FINAL PRODUCTS AND BEING A UNIT IN TH E SPECIAL ECONOMIC ZONE WILL BE EXPORTING THE FINAL PRODUCT, ON WHICH THAT UNIT WILL GET EXEMPTION ON THE ENTIRE PROFITS WHICH INCLUDE THE V ALUE OF THE COMPONENTS SUPPLIED BY THE ASSESSEE. PROBABLY THE LEGISLATURE DID NOT WANT DUPLICITY IN EXEMPTION ON EXPORT PROFIT. THAT IS WHY INTER- UNIT SALES IN THE EXPORT PROCESSING ZONE ARE NOT TR EATED AS EXPORT WITHIN THE MEANING OF SECTION 10A OF THE INCOME-TAX ACT, NO MATTER SUCH TRANSFERS ARE TRETED AS EXPORTS FOR THE PURPOS E OF CUSTOMS AND ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 7 - EXCISE DUTY EXEMPTION. WHEN THE EXEMPTION IS ONLY ON ACTUAL PROFITS DERIVED ON EXPORTS MODE AGAINST RECEIPT IN CONVERTI BLE FOREIGN EXCHANGE, THE TRIBUNAL, IN OUR VIEW, HAS NO JUSTIFI CATION TO EXTEND IT TO PROFITS RECEIVED ON LOCAL SALES WITHIN INDIA AGAINS T PAYMENT RECEIVED IN INDIAN RUPEES. FOR THE ABOVE REASONS, WE ARE UN ABLE TO SUSTAIN THE ORDERS OF THE TRIBUNAL AND WE, THEREFORE, ALLOW THE APPEALS BY REVERSING THE ORDERS OF THE TRIBUNAL AND BY RESTORI NG THE ORDERS CANCELLED BY THE TRIBUNAL. FOLLOWING THE DECISION OF THE HONBLE KERALA HIGH C OURT IN THE ABOVE CASE, IT IS HELD THAT ONLY THE DIRECT EXPORTS WHERE THE ASSESSEE BRINGS IN FOREIGN CONVERTIBLE EXCHANGE INTO INDIA QUALIFY ELI GIBLE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.10A A OF THE ACT. THE HONBLE ITAT, BANGALORE BENCH HAD ALSO DECIDED THE ISSUE ON THE LINES ABOVE IN THE CASE OF TATA ELXSI LTD. 184 (TAXMAN (M AG) 46. THE GROUNDS OF APPEAL ARE DISMISSED AND THE DECISION OF THE AO IS CONFIRMED. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US. 4.1. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT LD.CIT(A) CONF IRMED THE DISALLOWANCE FOR THE REASON THAT THE EXPORTS WERE N OT DIRECT EXPORTS WHERE THE ASSESSEE BRINGS IN CONVERTIBLE FOREIGN EXCHANGE . HE SUBMITTED THAT NEITHER THE DEFINITION OF EXPORT TURNOVER NOR EXPORT U/S.10AA OF THE ACT LAYS DOWN THE CONDITION OF DIRECT EXPORTS. HE FURTHER SUBMITTED THAT ASSESSEE HAVING EXPORTED THE GOODS IS NOT DISPUTED BY AO NOR THE RECEIPT OF CONSIDERATION IN INDIA HAS BEEN DISPUTED. THERE FORE, SINCE THE ASSESSEE HAS FULFILLED THE CONDITION OF EXPORTING AND RECEIV ING THE CONSIDERATION IN INDIA IT HAS FULFILLED THE CONDITIONS LAID DOWN U/S .10AA OF THE ACT AND IS ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 8 - THEREFORE ELIGIBLE FOR DEDUCTION. HE FURTHER SUBMI TTED THAT IF THE LEGISLATURE INTENDED TO EXEMPT ONLY DIRECT EXPORTS, IT WOULD HAVE SPECIFIED SO AS WAS DONE IN SECTION 10BA OF THE ACT WHICH GRANTS A DEDUCTION ONLY FOR EXPORTS OUT OF INDIA AND DEFI NES THE SAME SPECIFICALLY IN EXPLANATION(D) BY EXCLUDING THE TRA NSACTIONS NOT INVOLVING CUSTOMS CLEARANCE. HE FURTHER SUBMITTED THAT SEC TION 10AA OF THE ACT DOES NOT SPECIFY THAT THE SAME UNITS SHOULD EXPORT. HE SUBMITTED THAT LD.CIT(A) CONFIRMED THE DISALLOWANCE BY RELYING ON THE DECISION OF HONBLE KERALA HIGH COURT RENDERED IN THE CASE OF C IT VS. ELECTRONIC CONTROLS & DISCHARGE SYSTEMS (P) LTD. REPORTED IN ( 2011) 245 CTR 465. HE SUBMITTED THAT LD.CIT(A) HAS WRONGLY RELIED ON T HE AFORESAID DECISION BECAUSE THE DECISION RELIED UPON BY LD.CIT(A) DEALT WITH SECTION 10A AND NOT WITH SECTION 10AA AND THAT THE DEFINITION OF EXPORT TURNOVER ARE NOT SIMILAR IN SECTION 10A AND SECTION 10AA. HE FU RTHER SUBMITTED THAT LD.CIT(A) HAS ALSO DISMISSED THE APPEAL ON THE GROU ND THAT THE ASSESSEE DID NOT BRING IN CONVERTIBLE FOREIGN EXCHANGE. H E SUBMITTED THAT THE CONDITION OF BRINGING IN CONVERTIBLE FOREIGN EXCHAN GE EXISTS IN THE DEFINITION OF EXPORT TURNOVER U/S.10A AND 10B OF TH E ACT BUT THERE IS NO MENTION OF CONVERTIBLE FOREIGN EXCHANGE IN THE DEFI NITION OF EXPORT TURNOVER U/S.10AA OF THE ACT. HE FURTHER SUBMITTE D THAT SUB-SECTION(3) OF SECTION 10A AND 10B SPECIFICALLY MAKES THESE SEC TION APPLICABLE IF A SALE PROCEEDS ARE BROUGHT INTO INDIA BY THE ASSESSE E IN CONVERTIBLE FOREIGN EXCHANGE BUT THERE IS NO EQUIVALENT SUB-SEC TION IN 10AA OF THE ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 9 - ACT AND THEREFORE THE RECEIPT OF CONVERTIBLE FOREIG N EXCHANGE IS NOT A NECESSARY CONDITION FOR CLAIMING DEDUCTION U/S.10AA OF THE ACT. HE THEREFORE SUBMITTED THAT FOR RECEIPTS TO BE CONSIDE RED AS EXPORT TURNOVER U/S.10AA OF THE ACT, THE ONLY CONDITIONS ARE THAT THE GOODS OR SERVICES ARE ULTIMATELY EXPORTED AND THAT THE CONSI DERATION FOR EXPORT SALES IS RECEIVED IN INDIA. IN THE CASE OF THE ASS ESSEE IN ALL THREE CASES, WHERE THE AO HAS DENIED THE CLAIM OF DEDUCTION U/S. 10AA OF THE ACT, THE GOODS HAVE LEFT INDIA AND THE CONSIDERATION WAS REC EIVED IN INDIA AND THEREFORE THE CONDITIONS FOR EXPORT TURNOVER WERE FULFILLED. IN HIS WRITTEN SUBMISSIONS, HE ALSO PLACED IN A TABULAR FO RM THE VARIOUS DEFINITIONS OF EXPORT TURNOVER U/S.10AA, 10A, 10B & 10BA WHICH IS REPRODUCED HEREUNDER:- S.L0AA S.L0A S.L0B S.L0BA EXPLANATION 1 (I) EXPLANATION 2 (IV) EXPLANATION 2(III) EXPLANATION (C) 'EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKING, BEING THE UNIT OF ARTICLES OR THINGS OR SERVICES RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION 'EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKING OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE 'EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKING OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE 'EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKING OF ELIGIBLE ARTICLES OR THINGS RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 10 - CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN RENDERING OF SERVICES (INCLUDING COMPUTER SOFTWARE) OUTSIDE INDIA; FOREIGN EXCHANGE IN ACCORDANCE WITH SUB- SECTION (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA; FOREIGN EXCHANGE IN ACCORDANCE WITH SUB- SECTION (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA; IN ACCORDANCE WITH SUB- SECTION (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OUTSIDE INDIA; EXPLANATION 1 (II) EXPLANATION (D) 'EXPORT IN RELATION TO THE SPECIAL ECONOMIC ZONES' MEANS TAKING GOODS OR PROVIDING SERVICES OUT OF INDIA FROM A SPECIAL ECONOMIC ZONE BY LAND, SEA, AIR, OR BY ANY OTHER MODE, WHETHER PHYSICAL OR OTHERWISE; TERM 'EXPORT' NOT DEFINED. TERM 'EXPORT' NOT DEFINED. 'EXPORT OUT OF INDIA' SHALL NOT INCLUDE ANY TRANSACTION BY WAY OF SALE OR OTHERWISE, IN A SHOP, EMPORIUM OR ANY OTHER ESTABLISHMENT SITUATE IN INDIA, NOT INVOLVING CLEARANCE OF ANY CUSTOMS STATION AS DEFINED IN THE CUSTOMS ACT, 1962 (52 OF 1962). 4.2. HE THEREFORE SUBMITTED THAT THE ASSESSEE BE AL LOWED DEDUCTION ON THE EXPORT SALE AS SUPPORT MANUFACTURER, SALES TO EXPORT ORIENTED UNITS AND SALES IN SEZ. ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 11 - 4.3. THE LD.SR.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WHETHER THE EXPORT SALES AS SUPPORTING MANUFACTURER, SALES TO EOUS AND SEZS ARE ELIGIBLE F OR DEDUCTION U/S.10AA OF THE ACT. SECTION 10AA OF THE ACT PROVID ES FOR DEDUCTION OF 100% OF THE PROFITS AND GAINS DERIVED FROM EXPORT O F ARTICLES OR THINGS OR FROM SERVICES FOR A PERIOD OF FIVE CONSECUTIVE ASSE SSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS Y EAR IN WHICH THE UNIT BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR T HINGS OR PROVIDES SERVICES, AS THE CASE MAY BE. IT ALSO PROVIDES FOR 50% OF PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS THEREAFTER. AS PER CLAUSE (7) THE PROFITS DERIVED FROM THE EXPORT OF ARTICLE OR THINGS OR SERVICES SH ALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTA KING, BEING THE UNIT, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT O F SUCH ARTICLES OR THINGS OR SERVICES BEARS TO THE TOTAL TURNOVER OF T HE BUSINESS CARRIED ON BY THE UNDERTAKING. AS PER EXPLANATION 1(1) TO S. 10AA , 'EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE ASSESSEE BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSUR ANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OUTSIDE INDI A OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN RENDERING OF SERVIC ES OUTSIDE INDIA. IN ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 12 - OUR UNDERSTANDING, ON READING OF SUB SECTION 7 ALON G WITH THE EXPLANATION 1, THE DEDUCTION U/S 10AA, APART FROM F ULFILLING OF THE OTHER REQUIRED CONDITIONS STIPULATED, THE DEDUCTION OF PR OFITS FROM EXPORTS U/S 10AA WILL BE IN THE RATIO OF EXPORT TURNOVER TO THE TOTAL TURNOVER OF THE UNDERTAKING. WE FURTHER FIND THAT THE BRINGING IN I NDIA THE FOREIGN CURRENCY ON SALE OF GOODS HAS NOT BEEN STIPULATED I N 'EXPORT TURNOVER' THOUGH AS PER PROVISIONS OF S. 10A, WHICH IN RESPEC T OF SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED UNDERTAKING IN FREE TRADE ZONE, EXPLANATION 2(IV) THE 'EXPORT TURNOVER' SPECIFIES T HE CONDITION OF BRINGING INTO INDIA CONVERTIBLE FOREIGN EXCHANGE. S IMILARLY WE FIND THAT 'EXPORT TURNOVER' IN S. 10B (WHICH IS SPECIAL PROVI SION IN RESPECT OF NEWLY ESTABLISHED HUNDRED PERCENT EXPORT ORIENTED U NDERTAKING) AND IN S.10BA (WHICH IS SPECIAL PROVISION IN RESPECT OF EX PORT OF CERTAIN ARTICLES OR THINGS) STIPULATES THE BRINGING INTO IN DIA BY THE ASSESSEE OF CONVERTIBLE FOREIGN EXCHANGE. 5.1 IN THE PRESENT CASE, THE GOODS HAVE LEFT INDIA AND CONSIDERATION ON SALE OF SUCH GOODS HAVING BEING RECEIVED IN INDIA I S NOT IN DISPUTE AND IN SUCH A SITUATION WE ARE OF THE VIEW THAT DENIAL OF DEDUCTION U/S 10AA OF THE ACT IS UNCALLED FOR MORE SO, WHEN AS S.10AA OF THE ACT DOES NOT PROVIDE FOR EXPORT OF OWN GOODS OR BRINGING IN OF F OREIGN CURRENCY OF THE GOODS EXPORTED. WE FURTHER FIND THAT LD CIT(A) HAS RELIED ON THE DECISION OF HON'BLE KERALA HIGH COURT IN THE CASE O F ELECTRONICS CONTROL ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 13 - AND DISCHARGE SYSTEMS PVT. LTD. 245 CTR 465 IN COMI NG TO THE CONCLUSION THAT ONLY DIRECT EXPORTS WHERE THE ASSES SEE BRINGS FOREIGN CONVERTIBLE EXCHANGE INTO INDIA QUALIFIES FOR BEING ELIGIBLE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10AA OF THE ACT. WE FIND THAT HON'BLE KERALA HIGH COURT IN THE AFORE SAID CASE WAS DEALING WITH THE PROVISION OF S. 10A AND NOT WITH RESPECT T O S.10AA AND IN VIEW OF THE DIFFERENCE IN THE DEFINITION OF 'EXPORT TURN OVER' IN BOTH THE SECTIONS, WE ARE OF THE VIEW THAT THE AFORESAID DEC ISION OF HON'BLE KERALA HIGH COURT CANNOT BE RELIED BY THE REVENUE AUTHORIT IES FOR DENYING THE DEDUCTION TO ASSESSEE. BEFORE US, REVENUE HAS NOT P LACED ANY OTHER DIRECT DECISION WHERE THE ISSUE RELATED TO PROVISIONS OF S .10AA IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACTS, WE SET ASIDE THE OR DER OF LD CIT(A) AND THUS ALLOW THE GROUND OF ASSESSEE. 6. IN THE RESULT THE APPEAL OF ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/08/2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 30/ 08 /2016 3..,.../ T.C. NAIR, SR. PS ITA NO.1028/AHD /2013 M/S. GOKUL OVERSEAS VS. ASST.YEAR 2009-10 - 14 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-GANDHINAGAR 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 21.7.16 (DICTATION-PAD 10 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1.8.2016/18.8.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.30.8.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.8.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER