M/s Indus Medicare Private Limited, Hyderabad V. DCIT, Circle-2(1), Hyderabad

ITA 891/HYD/2013

• Counselvise Citation: 89122514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Deemed export; Competent authority
• Section: 10AA; 80HHC; 10B; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.891/HYD/13 : ASSESSMENT YEAR 2008 - 09 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD ( PAN - AAACI 6449 L) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHURAM REVENUE BY : SHRI R.MOHAN REDDY DR DATE OF HEARING 10 .0 7 .2014 DATE OF PRONOUNCEMENT 18.07.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) 12 TH MARCH, 2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE COMPUTATION OF RELIEF UNDER S.10B OF THE ACT, AND THE GROUNDS OF THE ASSESSEE IN THIS BEHALF READ AS FOLLOWS - 1. .. 2. A) THE LEARNED CIT(A PPEALS ) ERRED IN UPHOLDING THE DECISION OF T HE ASSESSING OFFICER IN RESTRICTING THE CLAIM FOR DEDUCTION U/S. 10 B TO RS.56,32,290 AS AGAINST THE VALID CLAIM MADE FOR A SUM O F RS .2,52,37,535/ - . B) THE LEARNED CIT(A PPEALS ) FAIL E D TO APPRECIATE THAT THE TERMS OF SECTION 10B R / W THE FOREIGN TRA DE P O LICY IN FORCE AT THE RELEVANT TIME THE N FE (NET FOREIGN E XCHANGE EARNINGS) WAS IN FAVOUR O F THE APPELLANT SUPPO R TING IT CLAIM FOR U/S. 10 B . C) T H E LEARNED CIT(A PPEALS ) FAILED TO APPRECIATE T H A T DEEMED EXP ORTS ARE ALSO EXPORTS FOR THE PU R PO S E OF ITA NO.891 /HYD/201 3 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD 2 COMPUTATION OF DEDUCTION U/S. 10B AND THE USAGE EXPORT OF GOODS CANNO T BE CON S TRUED AS EXPORT OU T OF I N D IA. CON S EQUENTLY, THE LEARNED CIT(A PPEALS ) ERRED IN UPHOLDING THE RESTRICTED DEDUCTION U/S. 10B. HE OUGHT TO HAVE ALLOWED THE VALID CLAIM MADE U/S. 10B FOR THE TOTAL AMOUNT OF R S .2,52, 3 7,535. 3) THE LEARNED CIT(A PPEALS ) HAS NO T CON S IDERED FOR CALCULATION OF EXEMPTION U/S. 10B, THE PROFITS OF BUSINESS AS PER INCOME TAX ACT INSTEAD OF BOOK PROFIT. 4) 5)_ ..... 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE, AN APPROVED HUNDRED EXPORT ORIENTED COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURE OF SHEATH CONTRACEPTIVES, FILED ITS RETURN O F INCOM E FOR THE ASSESSMENT YEAR 2008 - 09 ON 25.9.2008, ADMITTING T OTAL INCOME OF RS.3,07,74,359, AFTER CLAIMING EXEMPTION OF R S . 2,52,57,535 UNDER S.10B OF THE ACT. THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT NOTICED THAT THE TURNOVER OF THE ASSESSEE COMPRISES OF EXPORT TURNOVER OF R S .22,56,32,051 AND DOM E STI C TU RNO V ER OF R S .20,26,62,467. THE ASSESSING OFFICER FOUND THAT EVEN OUT OF TH E EXPORT TURNOVER, AN AMOUNT OF RS.10,26,76,360 WAS RECEIVED BY THE ASSESSEE IN INDIAN RUPEES IN RESPECT OF SALES MAD E WI T HIN THE COUNTRY, BUT WHICH WERE INCLUDED IN TH E EXPORT TURNOVER. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THESE SALES REPRESENT MERCHANT EXPORTS. THEY WERE MADE TO M/S. MEDTECH PRODUCTS LTD., CHENNAI WHICH IS ALSO 100% EOU. SIMILARLY, I T ALSO MADE SALES TO M/S. SY N MEDIC LABS D , NEW DE LHI, WHICH FURTHER EXPORTED I T S SALES TO ROMANIA AND SOME SALES WERE ALSO MADE TO M/S. VSP INTERNATIONAL HYDERABAD, AND THESE MERCHANT EXPORT S TURNOVER IS ALSO ELIGIBLE FOR EX E MPTION UNDER S.10B OF THE AC T. THE ASSESSING OFFICER, NOT FINDING MERIT IN T HE CONTENTION OF THE ASSESSEE IN THIS BEHALF, RESTRICTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.10B TO RS.56,32,290, DISALLOWED THE BALANCE AMOUNT CLAIMED, WHILE COMPLETING THE ASSESSMENT UNDER S.143(3) OF THE ACT, VIDE O R DER OF ASSESSMENT DATED 31.12.2010. ON APPEAL, THE CIT(A) TOO ITA NO.891 /HYD/201 3 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD 3 UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. HENCE, THIS SECOND APPEAL BY THE ASSESSEE BEFORE THIS TRIBUNAL. 3. WE HEARD BOTH SIDES AND PERU S ED THE IMPUGNED ORDERS OF THE RE VENUE AUTHORITIES AND OTHER M ATE R IAL A VAILABLE ON RECORD. AS FOR THE MAIN GRIEVANCE OF THE ASSESSEE, WITH REGARD TO ITS ELIGIBILITY FOR EXEMPTION UNDER S.10B OF THE ACT IN RESPECT OF THE SO - CALLED MERCHANT TURNOVER, WE FIND THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECIS ION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SWAYAM CONSULTANCY P. LTD. V/S. ITO ( 336 ITR 189 ) , WHEREIN THE HONBLE HIGH COURT DISCUSSED AND DECIDED THE ISSUE AGAINST THE ASSESSEE, IN THE FOLLOWING IT HAS BEEN HELD AS FOLLOWS - EXPORTS AND IMPORTS ARE REGULATED BY THE CUSTOMS ACT, 1962 WHICH, AMONG OTHERS, REPEALED THE SEA CUSTOMS ACT, 1878. SEC. 2(18) OF THE CUSTOMS ACT DEFINES 'EXPORT' TO MEAN 'TAKING OUT OF INDIA TO A PLACE OUTSIDE INDIA'. AS DEFINED IN S. 2(16) OF THE CUSTOMS ACT 'ENTRY' IN RELATION TO GOODS, INTER ALIA, MEANS AN ENTRY MADE IN A BILL OF ENTRY, SHIPPING BILL OR BILL OF EXPORT. SECS. 50 AND 51 OF THE CUSTOMS ACT STIPULATE THE PROCEDURE FOR ENTRY OF GOODS FOR EXPORTATION AS WELL AS CLEARANCE OF GOODS FOR E XPORTATION. FOR READY REFERENCE THEY ARE QUOTED BELOW - 'SEC. 50. ENTRY OF GOODS FOR EXPORTATION. (1) THE EXPORTER OF ANY GOODS SHALL MAKE ENTRY THEREOF BY PRESENTING TO THE PROPER OFFICER IN THE CASE OF GOODS TO BE EXPORTED IN A VESSEL OR AIRCRAFT, A SHI PPING BILL, AND IN THE CASE OF GOODS TO BE EXPORTED BY LAND, A BILL OF EXPORT IN THE PRESCRIBED FORM. (2) THE EXPORTER OF ANY GOODS, WHILE PRESENTING A SHIPPING BILL OR BILL OF EXPORT, SHALL AT THE FOOT THEREOF MAKE AND SUBSCRIBE TO A DECLARATION AS TO T HE TRUTH OF ITS CONTENTS. SEC.51. CLEARANCE OF GOODS FOR EXPORTATION. WHERE THE PROPER OFFICER IS SATISFIED THAT ANY GOODS ENTERED FOR EXPORT ARE NOT PROHIBITED GOODS AND THE EXPORTER HAS PAID THE DUTY, IF ANY, ASSESSED THEREON AND ANY CHARGES PAYABLE UN DER THIS ACT IN RESPECT OF THE SAME, THE PROPER OFFICER MAY MAKE AN ORDER PERMITTING CLEARANCE AND LOADING OF THE GOODS FOR EXPORTATION.' THE EXPORTER OF ANY GOODS HAS TO PRESENT A SHIPPING BILL MAKING ENTRY IN RELATION TO THE GOODS TO BE EXPORTED IN A VESSEL AND THE SHIPPING BILL SHOULD CONTAIN A DECLARATION AS TO THE TRUTH OF THE CONTENTS THEREOF. AFTER THE OFFICER IS SATISFIED THAT THE GOODS ENTERED IN THE SHIPPING BILL ARE NOT PROHIBITED GOODS, AND THE EXPORTER HAS PAID THE DUTY OF CUSTOMS AND CHARGE S LEVIABLE UNDER THE CUSTOMS ACT, HE MAY MAKE AN ORDER FOR CLEARANCE AND LOADING THE GOODS FOR EXPORTATION. THEREFORE THE DOCUMENT EVIDENCING ITA NO.891 /HYD/201 3 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD 4 CLEARANCE AND LOADING THE GOODS FOR EXPORTATION IS CONCLUSIVE PROOF OF EXPORT OUTSIDE INDIA. IT IS ALSO THE FACT T HAT, FOR THE PURPOSE OF CENTRAL EXCISE ACT AND THE CUSTOMS ACT, CERTAIN TRANSACTIONS INVOLVING SALE OF GOODS IN INDIA ARE TREATED AS 'DEEMED EXPORTS' UNDER DIFFERENT SCHEMES EVOLVED BY THE CENTRAL GOVERNMENT TO FACILITATE GROWTH OF INCOME FROM EXPORT AND I MPORT DUTIES. BUT FOR THE PURPOSE OF IT ACT AS WE SHALL PRESENTLY SEE, THE LAW NEITHER CONTEMPLATES NOR RECOGNIZES SUCH 'DEEMED EXPORTS'. THE TERM 'EXPORT' IS NOT DEFINED IN THE IT ACT THOUGH THE TERM 'EXPORT TURNOVER' IS EXPLAINED/DEFINED BY FOUR PROVIS IONS, NAMELY, THE EXPLANATIONS TO SS. 10A, 10AA, 10B AND 80HHC OF THE ACT. BE IT NOTED, S. 10A OF THE ACT ENABLES AN UNDERTAKING IN A FREE TRADE ZONE TO CLAIM DEDUCTION OF PROFITS AND GAINS FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A P ERIOD OF 10 CONSECUTIVE YEARS. SIMILARLY, UNDER S. 10AA OF THE ACT, A NEWLY ESTABLISHED UNIT IN A SPECIAL ECONOMIC ZONE CAN CLAIM DEDUCTION OF 100 PER CENT PROFITS AND GAINS DERIVED FROM THE EXPORT FOR A PERIOD OF 10 YEARS AND, UNDER S. 10B OF THE ACT, AN ASSESSEE CAN CLAIM DEDUCTION OF PROFITS AND GAINS AS ARE DERIVED BY 100 PER CENT EOUS FROM THE EXPORT OF ARTICLES OR THINGS FOR A PERIOD OF 10 YEARS. SEC. 80HHC OF THE ACT IS TO THE EFFECT THAT AN ASSESSEE, BEING AN INDIAN COMPANY ENGAGED IN THE BUSINESS O F EXPORT OUT OF INDIA, MAY BE ALLOWED DEDUCTION OF THE PROFITS TO THE EXTENT SPECIFIED IN S. 80HHC(1B) OF THE ACT. THE EXPLANATIONS TO ALL THESE PROVISIONS HAS A DEFINITE BEARING IN UNDERSTANDING S. 10B(3) OF THE ACT ON WHICH THE PETITIONERS COUNSEL PLA CED CONSIDERABLE EMPHASIS. FOR READY REFERENCE, WE QUOTE THE SAME HEREUNDER. 'SEC. 10B(3). THIS SECTION APPLIES TO THE UNDERTAKING, IF THE SALE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN, OR BROUGHT INTO, IN DIA 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.' THE LANGUAGE OF S. 10B(3) OF THE ACT IS PLAIN. IT DO ES NOT ADMIT ANY OTHER MEANING THAN WHAT IS CONVEYED BY THE LANGUAGE USED THEREIN. THE BENEFIT UNDER S. 10B(1) OF THE ACT IS AVAILABLE TO 100 PER CENT EOUS ONLY IF THE SALE PROCEEDS OF ARTICLES OR THINGS EXPORTED OUT OF INDIA ARE RECEIVED IN CONVERTIBLE FO REIGN EXCHANGE. TWO CONDITIONS SHOULD BE SATISFIED BEFORE THE BENEFIT UNDER S. 10B(1) OF THE ACT IS CLAIMED. THERE SHOULD BE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUT OF INDIA, AND THE SALE PROCEEDS THEREFOR SHALL BE RECEIVED IN CONVERTIBLE FOR EIGN EXCHANGE. ONE WOULD NOT EXCLUDE THE OTHER NOR ONLY ONE CONDITION WOULD SATISFY THE ELIGIBILITY CONDITIONALITIES. THE INTENTION OF THE PARLIAMENT, IN GRANTING BENEFIT TO THE UNITS IN FREE TRADE ZONES, SPECIAL ECONOMIC ZONES AND EOUS, IS TO ALLOW THE BE NEFIT OF DEDUCTION ONLY WHEN THE ARTICLES OR THINGS OR COMPUTER SOFTWARE ARE ACTUALLY AND FACTUALLY EXPORTED OUT OF INDIA FOR FOREIGN CURRENCY. THIS IS MADE VERY CLEAR BY THE EXPLANATIONS TO OTHER SUCH SIMILAR SECTIONS CONFERRING THE BENEFIT OF DEDUCTION O F PROFITS. FOR READY REFERENCE, THEY ARE SHOWN IN THE FOLLOWING TABLE. ITA NO.891 /HYD/201 3 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD 5 SEC. 10A SEC. 10AA SEC. 10B SEC. 80HHC EXPLN. 2(IV) EXPLN. 1 (I) EXPLN. 2(III) EXPLN. (AA) 'EXPORT TURNOVER' MEANS THE CONSI - DERATION IN RESPECT OF EXPORT BY THE UNDERTAKING OF ARTICLES OR THINGS OR COMPUTER SOFT - WARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCOR - DANCE WITH SUBS. (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGE S OR INSU - RANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPU - TER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA; 'EXPORT TURNOVER' MEANS THE CONSI - DERATION IN R ESPECT 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, TELECOMMU NICATION 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 SER - VICES (INCLUDING COMPUTER SOFT - WARE) OUTSIDE INDIA; '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; 'EXPORT TURN - OVER' MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDER - TAKING OF ARTICLES OR THINGS OR COMPUTER SOFT - WARE RECEIVED IN, OR BROUGHT INTO , INDIA BY THE ASSESSEE IN CONVERTIBLE FOR - EIGN E XCHANGE IN ACCORDANCE WITH SUBS. (3), BUT DOES NOT INCLUDE FREIGHT, TELE - COMMUNICATION CHARGES OR INSURANCE ATTRI - BUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EX - PENSES, IF ANY, INCURRED IN FOR - EIGN EXCHANGE IN PROVIDING THE TECHNICAL SER - VICES OUTSIDE INDIA; 'EXPORT OUT OF INDIA' SHALL NOT INCLUDE ANY TRANSACTION BY WAY OF SALE OR OTHERWISE, IN A SHOP, EMPO - RIUM OR ANY OTHER E STABLISH - MENT SITUATED IN INDIA, NOT INVOLV ING C LEARANCE AT ANY CUSTOMS STATION AS DEFIN - ED IN THE CUSTOMS ACT, 1962 (52 OF 1962); EXPLN.(B) 'EXPORT TURNOVER' MEANS THE SALE PRO CEEDS RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOR - EIGN EXCHAN GE IN ACCORDANCE WITH CL. (A) OF SUB - S. (2) OF ANY GOODS OR MERCHANDISE TO WHICH THIS SECTION APPLIES AND WHICH ARE EXPORTED OUT OF INDIA, BUT DOES NOT INCLUDE FRE - IGHT OR INSU - RANCE ATTRIBUTA - BLE TO THE TRANS - PORT OF THE GOODS OR MER - CHAN DISE BEYOND TH E CUSTOMS STA - TION AS DEFINED IN THE CUSTOMS ACT, 1962 (52 OF 1962); ITA NO.891 /HYD/201 3 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD 6 SECS. 10A, 10AA, 10B AND 80HHC OF THE ACT ALLOW AN ASSESSEE TO CLAIM DEDUCTION OF PROFITS FROM EXPORT OF ARTICLES. THESE PROVISIONS, IN EFFECT, DEAL WITH DIFFERENT CATEGORIES OF ELIGIBLE UNDERTAKINGS AND ESTABLISHMENTS ENGAGED IN THE EXPORT OF ARTICLES AND THINGS IN VARIOUS LOCATIONS. THE EXPLANATION TO THESE PROVISIONS DEFINES/EXPLAINS THE 'EXPORT TURNOVER'. THE FREIGHT AND TELECOMMUNICATION CHARGES INCURRED IN CONNECTION WITH TH E 'DELIVERY OF ARTICLES OR THINGS OUTSIDE INDIA' DURING THE COURSE OF EXPORT CANNOT BE RECKONED AS 'EXPORT TURNOVER'. THIS CLEARLY INDICATES THAT WHEN THE PROFITS FROM EXPORTS ARE ALLOWED AS DEDUCTION, THE PARLIAMENT INTENDED THE ACTUAL EXPORT OUT OF INDIA OF THE ARTICLES OR THINGS. THE INTENTION WAS NEVER TO CONSIDER THE DELIVERY OF GOODS TO A FOREIGN BUYER IN INDIA AS AMOUNTING TO EXPORT. THE DECISIONS RELIED BY THE PETITIONERS COUNSEL DO NOT IN ANY MANNER ASSIST THE POINT ARGUED BY HIM. INDEED THEY SUPP ORT THE VIEW EXPRESSED BY US SUPRA. EXPLANATION (AA) OF S. 80HHC OF THE ACT IS CLARIFICATORY IN NATURE AND EXPLAINS A TRANSACTION WHICH CANNOT BE TREATED AS 'EXPORT OUT OF INDIA'. A SALE IN A SHOP, EMPORIUM, OR OTHER ESTABLISHMENT IN INDIA WHICH DOES NOT R EQUIRE ANY CLEARANCE IN ANY CUSTOMS STATION IS NOT CONSIDERED AS 'EXPORT OUT OF INDIA'. THE VIEW OF THE ALLAHABAD HIGH COURT IN RAM BABU & SONS (SUPRA) TO THE SAID EFFECT FOLLOWED BY THE RAJASTHAN HIGH COURT RECEIVED IMPRIMATUR FROM THE SUPREME COURT IN SI LVER & ARTS PALACE (SUPRA). SUFFICE TO EXCERPT THE FOLLOWING OBSERVATIONS FROM THE DECISION OF THE SUPREME COURT WHICH READS AS UNDER : 'THE ALLAHABAD HIGH COURT SPECIFICALLY CONSIDERED THE EFFECT OF INTRODUCTION OF EXPLN. (AA) TO S. 80HHC OF THE ACT AND HAD TAKEN VIEW IN RAM BABU & SONS & ANR. VS. UNION OF INDIA & ANR. (1997) 141 CTR (ALL) 310 : (1996) 222 ITR 606 (ALL) THAT THIS EXPLANATION MEANS THAT, FOR THE PURPOSE OF THIS SECTION, THERE WILL BE NO EXPORT OUT OF INDIA IF TWO CONDITIONS ARE CUMULATIVEL Y FULFILLED VIZ., (A) IT IS A TRANSACTION BY WAY OF SALE OR OTHERWISE IN A SHOP, EMPORIUM OR ESTABLISHMENT SITUATE IN INDIA, AND (B) THAT IT DOES NOT INVOLVE CLEARANCE IN ANY CUSTOMS STATION AS DEFINED IN THE CUSTOMS ACT. THIS VIEW OF THE ALLAHABAD HIGH CO URT HAD BEEN CONSISTENTLY FOLLOWED BY SEVERAL OTHER HIGH COURTS, INCLUDING THE RAJASTHAN HIGH COURT ITSELF IN ITO VS. VAIBHAV TEXTILES (2002) 177 CTR (RAJ) 593 : (2002) 258 ITR 346 (RAJ).' IT IS THE ADMITTED POSITION HEREIN THAT INITIALLY PROTECO AGREED TO TAKE DELIVERY OF WIRE/CABLE DRAWING MACHINES AT HYDERABAD EX - FACTORY, SUBSEQUENTLY PROTECO SENT A COMMUNICATION ADVISING THE APPELLANT TO DELIVER THE MACHINERY TO THEIR AGENT AT SILVASA WHICH IS ALSO A 100 PER CENT EOU, THE PAYMENT WAS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE AS EVIDENCED BY FIRC, AND THE GOODS WERE DELIVERED TO THE AGENT UNDER A PROFORMA INVOICE IN THE NAME OF THE FOREIGN BUYER. THIS TRANSACTION OF MANUFACTURING MACHINES IN INDIA BY EOU AND DELIVERING THEM IN INDIA TO ANOTHER 10 0 PER CENT EOU, WHICH IS ALLEGED TO BE THE AGENT OF A FOREIGN BUYER, DOES NOT AMOUNT TO 'EXPORT OUT OF INDIA' EITHER UNDER THE CUSTOMS ACT OR UNDER THE IT ACT. THE AO, THE APPELLATE AUTHORITY AND THE LEARNED ITA NO.891 /HYD/201 3 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD 7 TRIBUNAL APPRECIATED THE PRINCIPLE OF LAW AND AP PLIED IT CORRECTLY. THE APPEAL IS MISCONCEIVED. 4. IN THE ABSENCE OF ANY DECISION TO THE CONTRARY BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE ABOVE BINDING DECISION OF THE JURISDICTIONAL HIGH COURT, WHICH SQUARELY COVERS THE ISSUE AGAINST THE ASS ESSEE AND CLEARLY HOLDS THAT FOR LTHE PURPOSE OF THE INCOME - TAX ACT, THE LAW NEITHER CONTEMPLATES NO R RECOGNIZES SUCH DEEMED EXPORTS , WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A), IN SUSTAINING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, OUT OF THE EXEMPTION UNDER S.10B OF THE ACT CLAIMED BY THE ASSESSEE. WE ACCORDINGLY UPHOLD THE SAME, REJECTING THE GROUNDS OF THE ASSESSEE ON THIS ASPECT. 5. AS FOR THE OTHER GRIEVANCE, AGITATED THROUGH GROUND NO.3 EXTRACTED ABOVE, RELATING TO COMP UTATION WITH REFERENCE TO PROFITS OF BUSINESS AS PER INCOME TAX ACT, INSTEAD OF BOOK PROFIT, WE FIND THAT THE CIT( A) REJECTED THE GROUNDS OF THE ASSESSEE BEFORE HIM ON THIS ASPECT OBSERVING THAT NO ARGUMENTS WERE ADVANCED ON THIS ASPECT, AND IN ANY EVENT, THERE IS NO MERIT IN THE SAME. POSITION REMAINING THE SAME EVEN BEFORE US ALSO, WE FIND NO INFIRMITY IN THE IMPUG NED ORDER OF THE CIT(A) ON THIS ASPECT. WE ACCORDINGLY REJECT THE GROUND OF THE ASSESSEE ON THIS ASPECT AS WELL. 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 18 TH JULY, 2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 18 TH JU LY , 2014 ITA NO.891 /HYD/201 3 M/S. INDUS MEDICARE PRIVATE LIMITED, HYDERABAD 8 COPY FORWARDED TO: 1. M/S. INDUS MEDICARE PRIVATE LIMITED, 1 - 10 - 60/3, SURYODAYA, BEGUMPET, HYDERABAD 500 016 2 . DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1) , HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) III HYDERABAD 4. COMMISSIONER OF INCOME - TAX - II , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S