Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 0360 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-05-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
10-05-2016
Assessment Year
2010-2011
Appeal Filed On
03-02-2014
Judgement Text
ITA.184/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.184/BANG/2014 (ASSESSMENT YEAR : 2010-11) METRIX PRECISION COMPONENTS P. LTD, B-46, KSSIDC INDUSTRIAL ESTATE, KUMBALGODU, BENGALURU 560 074 .. APPELLANT PAN : AAECM6856F V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE- 12(1), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. S. SRIDHAR, ADVOCATE REVENUE BY : DR. P. K. SRIHARI, ADDL. CIT HEARD ON : 10.05.2016 PRONOUNCED ON : 27 .05.2016 O R D E R 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). ITA.184/BANG/2014 PAGE - 2 02. FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN MANU FACTURING AND EXPORTING OF AUTOMOTIVE COMPONENTS HAD FILED ITS RE TURN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF RS.20,21,471/- AFTER CLAIMING DEDUCTION U/S.10B OF THE ACT. DEDUCTION CLAIMED U/ S.10B OF THE ACT, WAS RS.2,91,91,134/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE AO THAT ASSESSEE THOUGH IT HAD EXPORTE D GOODS OUT OF INDIA, IT HAD NOT REALISED THE EXPORT PROCEEDS IN FOREIGN CUR RENCY FROM TOYOTA TSUSHO INDIA P. LTD, (TTIPL IN SHORT). TTIPL HAD GIVEN THE MONEY IN INDIAN CURRENCY. ASSESSEE WAS UNABLE TO PRODUCE TH E FOREIGN INWARD REMITTANCE CERTIFICATE FOR THE MONEY RECEIVED BY IT ON THE EXPORTS. ASSESSEE STATED THAT IT WAS REGISTERED AS AN EOU BY THE COMP ETENT AUTHORITY IN COCHIN. AS PER THE ASSESSEE, COMPETENT AUTHORITY O F THE EOUS, NAMELY, ACIT, CUSTOMS, HAD AUTHORISED IT TO RECEIVE THE SAL E CONSIDERATION IN INDIAN CURRENCY FROM TTIPL. ALONG WITH THE ABOVE R EPLY ASSESSEE ALSO PRODUCED A COPY OF FIRC FORM OBTAINED BY TTIPL FOR JUSTIFYING ITS CLAIM. CONTENTION OF THE ASSESSEE WAS THAT TTIPL HAD RECEI VED THE FOREIGN CURRENCY ONLY AS AN AGENT OF THE ASSESSEE. SAID PA RTY HAD ALSO GIVEN A LETTER STATING THAT NO BENEFIT OR DEDUCTION WAS BEING CLAI MED BY IT FOR THE EXPORT CONSIDERATION RECEIVED FOR EXPORTS MADE BY THE ASSE SSEE. ASSESSEE ALSO RELIED ON POLICY CIRCULAR NO.19 (RE-2006) 2004-09, DT.11.09.2006, FOR ITA.184/BANG/2014 PAGE - 3 CLAIMING THAT EXPORTS EFFECTED THROUGH THIRD PARTY AND FOREIGN EXCHANGE REALISED IN THE NAME OF THIRD PARTY, IF THE GOODS W ERE MANUFACTURED IN AN EOU WERE ELIGIBLE FOR ALL THE EXPORT BENEFITS. 03. HOWEVER THE AO WAS NOT HAPPY WITH THE EXPLANATI ON GIVEN BY THE ASSESSEE. ACCORDING TO HIM, ASSESSEE HAD NOT RECEI VED THE EXPORT CONSIDERATION IN CONVERTIBLE FOREIGN CURRENCY AS RE QUIRE UNDER SUB-SECTION (3) OF SECTION 10B OF THE ACT. OPINION OF THE AO W AS UNLESS AND UNTIL THE EXPORT PROCEEDS WERE REALISED IN FOREIGN CURRENCY I TSELF, IT WOULD NOT BE POSSIBLE TO GIVE EXEMPTION U/S.10B OF THE ACT. AO ALSO NOTED THAT THE CONCEPT OF THIRD PARTY EXPORTER DID NOT FIND A PLAC E IN SECTION 10B OF THE ACT, WHEREAS BENEFITS OF SECTION 80HHC OF THE ACT D ID ALLOW SUCH A CLAIM. HE THUS DISALLOWED THE CLAIM OF RS.2,91,91,134/-. 04. IN ITS APPEAL BEFORE THE CIT (A), ARGUMENT OF T HE ASSESSEE WAS THAT CUSTOMS AUTHORITIES HAD ALLOWED THE ASSESSEE TO REC EIVE THE EXPORT PROCEEDS IN INDIAN CURRENCY. AS PER THE ASSESSEE, PURPOSIVE PRINCIPLES OF INTERPRETATION OUGHT TO HAVE BEEN USED WHILE APPLYI NG SECTION 10B OF THE ACT. HOWEVER, CIT (A) WAS OF THE OPINION THAT APPR OACH OF THE AO WAS CORRECT. ACCORDING TO HIM, THE SYSTEM OF DISCLAIME R CERTIFICATE AVAILABLE IN SECTION 80HHC OF THE ACT, WAS NOT HAVING A PLACE IN SECTION 10B OF THE ITA.184/BANG/2014 PAGE - 4 ACT. CIT (A) ALSO NOTED THAT IN ASSESSEES OWN CAS E FOR A. YS. 2008-09 AND 2009-10 SIMILAR CLAIM WAS DISALLOWED. SUCH DISALLO WANCE WAS CONFIRMED IN APPEAL. TAKING THIS VIEW OF THE MATTER, HE DISM ISSED APPEAL OF THE ASSESSEE. 05. NOW BEFORE US, LD. AR ADMITTED THAT FOR A YS. 2 008-09 AND 2009-10 WHEN THE MATTER HAD REACHED THIS TRIBUNAL ON ASSESS EES APPEAL, IT WAS HELD AGAINST THE ASSESSEE IN ITA NO.1598/BANG/2012 AND I TA.248/BANG/2013, DT.11.04.2014. LD. AR ALSO PLACED A COPY OF THE OR DER OF THE TRIBUNAL. HOWEVER ACCORDING TO THE LD. AR, TRIBUNAL WHILE DEC IDING THE ISSUE IN FAVOUR OF THE REVENUE HAD RELIED ON ANOTHER COORDIN ATE BENCH DECISION IN TATA ELXSI LTD, V. ACIT[(2008) 1 DTR 237]. CONTENT ION OF THE LD. AR WAS THAT TATA ELXSI LTD, HAD MOVED IN FURTHER APPEA L BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. HONBLE JURISDICTIONAL HIGH COURT IN ITS JUDGMENT DT.20.10.2014 IN ITA.411/2008, HAD OVER TU RNED THE DECISION OF THE TRIBUNAL. AS PER THE LD. AR, THEIR LORDSHIP AF TER CONSIDERING CLAUSE 6.11 OF EXIM POLICY, HAD HELD THAT BENEFITS OF SEC TION 10A OF THE ACT COULD BE GIVEN EVEN IF THE ASSESSEE WAS NOT A DIREC T EXPORTER BUT EXPORTED THROUGH ANOTHER STP UNIT WHICH RECEIVED FOREIGN EXC HANGE. THUS ACCORDING TO HIM, TRIBUNAL DECISION IN ASSESSEES O WN CASE, IN WHICH ITA.184/BANG/2014 PAGE - 5 RELIANCE WAS PLACED ON THE DECISION OF COORDINATE B ENCH IN THE CASE OF TATA ELXSI LTD (SUPRA), COULD NO MORE BE APPLIED FOR THE IMPUGNED ASSESSMENT YEAR. AS PER THE LD. AR, BASED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI LTD (SUPRA), A SSESSEE WOULD BE ELIGIBLE FOR DEDUCTION U/S.10B OF THE ACT. ACCORDING TO HIM IT IS CLEAR FROM THE FIRC CERTIFICATE ISSUED FROM TTIPL PLACED AT PAPER BOOK PAGE 3 TO 19 THAT WHOLE OF THE EXPORT PROCEEDS WERE RECEIVED BY THEM IN FOREIGN CURRENCY. AS PER THE LD. AR SUCH AMOUNT WAS TRANSFERRED BY TT IPL TO THE ASSESSEE IN INDIAN CURRENCY. TTIPL HAD ALSO ISSUED A DISCLA IMER CERTIFICATE PLACED AT PAPER BOOK PAGE 1, WHICH CLEARLY MENTIONED THAT ASS ESSEE WAS A SUPPORTING MANUFACTURER. 06. PER CONTRA, LD. DR STRONGLY SUPPORTED THE ORDER S OF AUTHORITIES BELOW. 07. WE HAVE PERUSED THE MATERIAL ON RECORD AND HEAR D THE RIVAL CONTENTIONS. IT IS TRUE THAT IN ASSESSEES OWN CAS E FOR EARLIER YEARS, NAMELY 2008-09 AND 2009-10, ISSUE REGARDING WHETHER ASSESS EE WAS ELIGIBLE FOR CLAIM OF DEDUCTION U/S.10B OF THE ACT, WHEN EXPORT PROCEEDS WERE NOT RECEIVED BY IT IN FOREIGN CURRENCY HAD COME UP AND THIS TRIBUNAL IN ITS ORDER DT.11.04.2014 HAD HELD AS UNDER : ITA.184/BANG/2014 PAGE - 6 15. IT IS CLEAR FROM THE ABOVE SUBMISSIONS AS WELL AS THE INVOICES THAT THE ASSESSEE WAS MANUFACTURER AND TOYOTA TSUSH O INDIA PVT. LTD., WAS THE BUYER AND TOYOTA TSUSHO EUROPE S.A. B ELGIUM WAS THE CONSIGNEE. THUS FACTS GO TO SHOW THAT TOYOTA TS USHO INDIA PVT.LTD., WAS THIRD PARTY EXPORTER. THIRD PARTY E XPORTS MEANS EXPORTS MADE BY AN EXPORTER OR MANUFACTURE ON BEHAL F 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 FACT HAS BEEN THE CLAIM OF T HE ASSESSEE THAT IT DID GET THE BENEFITS OF EXPORT PROMOTION SCHEMES AND WAS RECOGNISED AS HAVING EXPORTED GOODS. 16. HOWEVER UNDER THE PROVISIONS OF SEC.10B OF THE ACT THERE IS NO PROVISIONS SIMILAR TO SEC.80HHC(1A) OF THE ACT CONF ERRING BENEFITS OF DEDUCTION ON A SUPPORTING MANUFACTURER IN RESPEC T OF EXPORTS DONE THROUGH EXPORT HOUSES. THE BENEFITS ALLOWED U NDER THE EXPORT PROMOTION SCHEMES WILL THEREFORE NOT HAVE ANY BEARI NG ON THE CLAIM OF THE ASSESSEE U/S.10B OF 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 ASSE SSEE 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 CONFERRING BENEFIT OF DEDUCTION WHICH THE LAW DOES NOT CONTEMPLATE. 17. IN THIS REGARD, WE ALSO FIND THAT THE BANGALOR E BENCH OF THE ITAT IN THE CASE OF M/S.GRANITE MART (SUPRA) HAS TA KEN AN IDENTICAL VIEW IN THE CASE OF AN ASSESSEE EOU WHO CLAIMED DED UCTION U/S.10B OF THE ACT IN RESPECT OF EXPORTS MADE THROU GH THIRD PARTY. THE TRIBUNAL RELYING ON THE DECISION OF THE ITAT BA NGALORE IN THE CASE OF TATA ELXSI LTD. VS. ACIT 115 TTJ 423 (BANG) HELD THAT DEDUCTION U/S.10B OF THE ACT IS NOT AVAILABLE IN RE SPECT OF EXPORTS ITA.184/BANG/2014 PAGE - 7 MADE THROUGH THIRD PARTIES. IN THE CASE OF TATA EL XSI LTD. (SUPRA), THE ASSESSEE WAS A SOFTWARE TECHNOLOGY PARK UNIT. D URING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAD MADE CER TAIN SALES TO M/S TEXAS INSTRUMENTS INDIA LTD., WHICH WAS ALSO A REGISTERED STP. THIS TRANSACTION, ASSESSEE HAD CLAIMED, AS EXPORT F OR THE PURPOSES OF S. 10A. THIS WAS NOT ACCEPTED BY THE AO AND SUBS EQUENTLY CONFIRMED BY THE LEARNED CIT(A). BEFORE TRIBUNAL T HE ASSESSEE SUBMITTED THAT SALE TO M/S.TEXAS INSTRUMENTS INDIA LTD., SHOULD ALSO BE TREATED AS DEEMED EXPORT. M/S TEXAS INSTRUMENTS INDIA LTD., IS A REGISTERED STP UNIT AND SALE TO SUCH COMPANY SHOULD BE REGARDED AS EXPORTS FOR THE PURPOSE OF S. 10A. AS THE SALE B Y ASSESSEE TO M/S TEXAS INSTRUMENTS INDIA LTD., IS REGARDED AS AN EXP ORT SALE UNDER EXIM POLICY, THE SAME MEANING SHOULD BE ATTACHED TO UNDERSTAND THE TERM EXPORT TURNOVER FOR THE PURPOSE OF S. 10 A ALSO. THE ASSESSEE ALSO RELIED ON CLARIFICATION GIVEN BY THE MINISTRY OF COMMERCE & INDUSTRY, DEPARTMENT OF COMMERCE, BY WHI CH IT WAS CLARIFIED THAT SALES BY ONE STP TO ANOTHER STP WITH IN INDIA IS A DEEMED EXPORT. THE TRIBUNAL HOWEVER REJECTED THE CL AIM MADE BY THE ASSESSEE OBSERVING AS FOLLOWS: 14. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED TH E 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 PAYMENT FOR SUCH SUPPLIES IS RECEIVED EITHER IN INDIAN RUPEES OR IN FREE FOREIGN EXCHANGE.' UNDER CL. 8.3 BENEFIT FOR DEEMED EXPORTS ARE AS UND ER : '8.3 DEEMED EXPORTS SHALL BE ELIGIBLE FOR ANY/ALL O F FOLLOWING BENEFITS IN RESPECT OF MANUFACTURE AND SUPPLY OF GO ODS QUALIFYING AS DEEMED EXPORTS SUBJECT TO TERMS AND CONDITIONS AS I N HBP V1. (A) SUPPLY OF GOODS AGAINST ADVANCE AUTHORIZATION/ADVAN CE AUTHORIZATION FOR ANNUAL REQUIREMENT/DF1A. (B) DEEMED EXPORT DRAWBACK. ITA.184/BANG/2014 PAGE - 8 (C) EXEMPTION FROM TERMINAL EXCISE DUTY WHERE SUPPL IES ARE MADE AGAINST ICB. IN OTHER CASES, REFUND OF TERMINA L 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 TREA TED AS DEEMED EXPORT ONLY FOR THE PURPOSE OF DUTY DRAW BACK AND E XEMPT FROM TERMINAL EXCISE DUTY. AS RIGHTLY CONTENDED BY THE L EARNED DEPARTMENTAL REPRESENTATIVE, S. 10A, WITH RELEVANT PROVISO, STOOD DURING THE RELEVANT TIME ITSELF PROVIDES THAT WHEN DOMESTIC SALES OF STP UNIT DO NOT EXCEED 25 PER CENT, SUCH SALE SHOUL D BE DEEMED TO BE THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE. THUS THE PROVISIONS OF S. 10A AS IT STOOD SPECIFICALLY PROVIDE HOW MUCH BENEFIT TO BE G IVEN TO THE ASSESSEE IF SALES TO ANOTHER STP WHEN NOT EXCEEDED 25 PER CENT OF THE TOTAL PRODUCTS. THE EXIM POLICY 2002-07 (CHAPTER 6, CL. 6.12) ALSO CLARIFIES OTHER ENTITLEMENTS AS UNDER : '6.12 OTHER ENTITLEMENTS OF EOU/EHTP/STP/ BTP UNITS ARE AS UNDER : (A) EXEMPTION FROM INCOME-TAX AS PER SS. 10A AND 10 B OF IT ACT.' FURTHER, FROM THE PERUSAL OF THE EXIM POLICY (CHAPT ER 6) EXTRACTED ABOVE, IT IS SEEN THAT WHATEVER BENEFIT GIVEN SHOUL D 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 C ONSIDERED UNDER THE IT ACT. THE EXIM POLICY EXTRACTED ABOVE (CHAPTE R 8.1 AND 8.3) OBVIOUSLY DOES NOT INCLUDE IN RESPECT OF BENEFIT TO BE GIVEN UNDER IT ACT OTHER THAN ONE REFERRED TO UNDER CHAPTER 6.12(A ). WHEN THIS BEING CONSCIOUSLY OMITTED IN THE POLICY, WE DO NOT FIND ANY FORCE IN THE STAND TAKEN BY THE LEARNED COUNSEL FOR ASSESSEE TO TREAT THE SALES EFFECTED TO OTHER STP BY THE ASSESSEE AS DEEMED EXP ORT. THIS GROUND FAILS. 18. THE AFORESAID DECISION OF THE TRIBUNAL IS CLEA RLY AN ANSWER TO THE ARGUMENTS PUT FORTH BY THE LEARNED COUNSEL FOR THE ASSESSEE ITA.184/BANG/2014 PAGE - 9 BEFORE US. WE ARE THEREFORE OF THE VIEW THAT THE C IT(A) WAS JUSTIFIED IN UPHOLDING THE ORDER OF THE AO REFUSING TO ALLOW DEDUCTION U/S.10B OF THE ACT TO THE ASSESSEE. WE U PHOLD THE ORDERS OF CIT(A) AND DISMISS THE APPEALS BY THE ASSESSEE. 08. FINDING OF THE TRIBUNAL THAT ASSESSEE WAS A MAN UFACTURER AND TTIPL WAS THE BUYER AND TTIPL, EUROPE, S. A, BELGIUM WAS THE CONSIGNEE. THUS TTIPL WAS A THIRD PARTY EXPORTER. AFTER GOING THRO UGH THE PROVISIONS OF SECTION 10B AND SECTION 80HHC OF THE ACT, THIS TRIB UNAL HELD THAT SECTION 10B DID NOT GIVE ANY LEEWAY FOR A LIBERAL INTERPRET ATION SUGGESTED BY THE ASSESSEE FOR GIVING BENEFITS UNDER THAT SECTION TO A SUPPORTING MANUFACTURER. NO DOUBT SUBSTANTIAL RELIANCE WAS PL ACED BY THE TRIBUNAL ON THE DECISION OF A COORDINATE BENCH IN THE CASE OF T ATA ELXSI LTD (SUPRA). IN TATA ELXSIS CASE ALSO IT WAS HELD BY THE TRIBUNAL THAT THE BENEFIT U/S.10A OF THE ACT COULD NOT BE GIVEN TO A SUPPORTING MANUFACT URER. DECISION OF COORDINATE BENCH IN THE CASE OF TATA ELXSI LTD (SUP RA), WAS ASSAILED BY THE ASSESSEE CONCERNED BEFORE THE HONBLE JURISDICTIONA L HIGH COURT. HONBLE 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 T AKE 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 ITA.184/BANG/2014 PAGE - 10 EOU/EHTP/STP/BTP UNIT MAY EXPORT GOODS MANUFACTURED / SOFTWARE DEVELOPED BY IT THROUGH ANOTHER EXPORTER O R ANY OTHER EOU/EHTP/STP/SEZ UNIT SUBJECT TO THE CONDITIONS MENTIONED IN PARAGRAPH 6.19 OF HANDBOOK. THE CONDIT IONS TO BE FULFILLED IF A UNIT HAS TO EXPORT THROUGH OTH ER EXPORTERS IS AS UNDER: '6.19 AN EOU/ EHTP/ STP/ BTP UNIT MAY EXPORT GOODS MANUFACTURED / SOFTWARE DEVELOPED BY IT THROUGH OTHER EXPORTER OR ANY OTHER EOU/ EHTP / STP/ SEZ/ DTP UNIT SUBJECT TO CONDITION THAT : A) GOODS SHALL BEPRODUCED IN EOU/ SHTP/STP/BTP 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 PO RT OF SHIPMENT. D) FULFILLMENT OF NFE BY EOU/EHTP/STP/BTP UNITS IN REGARD TO SUCH EXPORTS SHALL BE RECKONED ON BASIS O F PRICE AT WHICH GOODS ARE SUPPLIED BY ECUS TO OTHER EXPORTER OR OTHER EOU/EHTP/STP/RTP/SEZ UNIT. E) ALL EXPORT ENTITLEMENTS, INCLUDING RECOGNITION AS S TATUS HOLDER WOULD ACCRUE TO EXPORTER IN WHOSE NAME FOREI GN EXCHANGE EARNINGS ARE REALIZED. HOWEVER, SUCH EXPOR T SHALL BE COUNTED TOWARDS FULFILLMENT OF OBLIGATION UNDER EOU/EHTP/ STP/ BTP SCHEME ONLY.' 20. FROM THE AFORESAID PROVISIONS, IT IS CLEAR THAT IF A ASSESSEE WANTS TO CLAIM THE BENEFIT OF SECTION 10 A, FIRSTLY HE MUST EXPORT ARTICLES OR THINGS OR COMPUTER SOFTWARE . SECONDLY, THE SAID EXPORT MAY BE DONE DIRECTLY BY HIM OR THROUGH OTHER EXPORTER ITA.184/BANG/2014 PAGE - 11 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 FULF ILLED, 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 WITH ENTITLE MENT FOR SUPPLIES FROM THE DTA STATES THAT SUPPLIES FROM THE DTA TO EOU/EHTP/STP/BTP UNITS WILL BE REGARDED AS 'DEEMED EXPORT', BESIDES BEING ELIGIBLE FOR RELEVANT ENTITL EMENTS UNDER PARAGRAPH 6.12 OF THE POLICY. THEY WILL ALSO BE ELI GIBLE FOR THE ADDITIONAL ENTITLEMENTS MENTIONED THEREIN. WHAT IS OF IMPORTANCE IS WHEN A SUPPLY IS MADE FROM DTA TO STP , IT DOES NOT SATISFY THE REQUIREMENTS OF EXPORT AS DEFI NED UNDER THE CUSTOMS ACT. HOWEVER, FOR THE PURPOSE OF EXIM POLICY, IT IS TREATED AS 'DEEMED EXPORT'. THEREFORE , WHEN SECTION 10A OF THE ACT WAS INTRODUCED TO GIVE EFFEC T TO THE EXIM POLICY, THE SUPPLIES MADE FROM ONE STP TO ANOTHER S TP HAS TO BE TREATED AS 'DEEMED EXPORT' BECAUSE CLAUSE 6.19 SPEC IFICALLY PROVIDES FOR EXPORT THROUGH STATUS HOLDER. IT PROVI DES THAT AN EOU/EHTP/STP/BTP UNIT MAY EXPORT GOODS MANUFACTURED /SOFTWARE DEVELOPED BY IT THROUGH OTHER EXPORTER OR STATUS HOLDER RECOGNIZED UNDER THIS POLICY OR ANY OTHER EOU/EHTP/STP/SEZ/BTP UNIT. WHAT FOLLOWS FROM THIS PROVISION IS THAT TO BE ELIGIBLE FOR EXEMPTION FROM PAYMENT OF INCOME TAX, EXPORT SHOULD EARN FOREIGN EXCHANGE. IT DOES NOT MEAN THAT THE UNDERTAKING SHOULD PERSONALLY EXPORT GOODS MANUFACTURED / SOFTWARE DEVELOPED BY IT OUTSIDE THE COUNTRY. IT MAY EXPORT OUT OF INDIA BY ITSELF OR EXPORT OUT OF INDIA THROUGH ANY OTHER STP UNIT. ONCE THE GOODS MANUFACT URED BY THE ASSESSEE IS SHOWN TO HAVE BEEN EXPORTED OUT OF INDIA EITHER BY THE ASSESSEE OR BY ANOTHER STP UNIT AND FOREIGN EXCHANGE IS DIRECTLY ATTRIBUTABLE TO SUCH EXPORT, THEN SECTION 10A OF THE ACT IS ATTRACTED AND SUCH EXPORTER IS ENTITLED TO B ENEFIT OF DEDUCTION OF SUCH PROFITS AND GAINS DERIVED FROM SU CH EXPORT FROM PAYMENT OF INCOME TAX. THEREFORE, THE FINDING OF THE AUTHORITIES THAT THE ASSESSEE HAS NOT DIRECTLY EXPO RTED THE I P ITA.184/BANG/2014 PAGE - 12 COMPUTER SOFTWARE OUTSIDE COUNTRY AND BECAUSE IT SU PPLIED THE SOFTWARE TO ANOTHER STP UNIT, WHICH THOUGH EXPORTED AND FOREIGN EXCHANGE RECEIVED WAS NOT TREATED AS AN EXP ORT AND WAS HELD TO BE NOT ENTITLED TO THE BENEFIT IS UNSUS TAINABLE IN LAW. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS ALLOWED. THE IMPUGNED ORDERS A RE SET ASIDE. THE ASSESSEE IS HELD TO BE ENTITLED TO DEDUCTION OF SUCH PROFITS AND GAINS DER IVED FROM THE EXPORT OF THE COMPUTER SOFTWARE. NO COSTS. 09. THE TONE AND TENOR OF THE ABOVE JUDGMENT IS THA T 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 HONBLE JURISDICTIONAL HIGH COURT, WE ARE OF THE OPINION THAT THE MATTER REQUIRES A FRESH LOOK B Y THE AO. THE AO HAS TO VERIFY WHETHER EXIM POLICY CITED BY HONBLE JURISDI CTIONAL HIGH COURT, WHILE GIVING A FINDING THAT BENEFIT U/S.10A WOULD B E AVAILABLE EVEN TO AN ASSESSEE WHICH WAS NOT DIRECTLY INTO EXPORTS, IS AP PLICABLE TO AN ASSESSEE PREFERRING A CLAIM U/S.10B OF THE ACT, AS WELL. WE THEREFORE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND REMIT THE ISSUE REGARDING AVAILABILITY OF DEDUCTION U/S.10B OF THE ACT, BACK TO THE AO FOR CO NSIDERATION AFRESH IN ACCORDANCE WITH LAW. ITA.184/BANG/2014 PAGE - 13 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DAY OF M AY, 2016. SD/- SD/- (SUNIL KUMAR YADAV) (ABRAHAM P GEORGE ) JUDICIAL MEMBER ACCOUNTA NT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR ITA.184/BANG/2014 PAGE - 14
Other Referred Cases
-
Laws Referred To
-
360 Brand Audit (30 mins)
₹299
1:1 Consultation on Legal Requirements
₹1
1:1 Consultation with family dentist -Your Smile Deserves the Best Care!
₹250
Assignment of Registered Trademark
Mehul₹500
CRM Implementation Plan
₹0
When Global Talent Meets GST: The Huawei Secondment Ruling explained
Team Counselvise - March 09, 2026
Why Lacoste Won a 20-Year Trademark Battle Against Crocodile ?
Team Counselvise - March 10, 2026
Why Meesho got ₹1,500 Crore Tax Demand ?
Team Counselvise - March 09, 2026