2008 (9) TMI 26 - HC - Income Tax

Export AO denied exemptions u/s 10A/10B on ground that assessee s direct exports were less than 75% of the total sales - AO did not accept the assessee s explanation that the stock transfers to his Rotterdam unit were actually export sales - Tribunal hold that stock which had been transferred had actually been sold by the unit and therefore, would have to be construed as actual exports by the said units of the assessee - pure finding of fact exemption allowed revenue appeal dismissed

Summary

Issues:
Interpretation of Section 10A/10B of the Income Tax Act, 1961 for exemption eligibility based on export sales percentage.

Analysis:
The case involved an appeal against the Income Tax Appellate Tribunal's order regarding the assessment year 2000-01. The Assessee, engaged in manufacturing computer products, claimed exemption under Section 10A/10B of the Income Tax Act for profits earned. The Assessing Officer disputed the claim due to the percentage of direct export sales falling below 75% of total sales, including stock transfers and domestic sales. The Tribunal considered the nature of stock transfers to a foreign unit and previous decisions, ruling in favor of the Assessee's eligibility for exemptions.

The Commissioner of Income-tax (Appeals) supported the Assessee's plea and directed a re-computation of exemptions. The Tribunal analyzed the stock transfer to the foreign unit and concluded that sales exceeding 75% of total sales were eligible for exemptions under Section 10A/10B. The Tribunal's decision was based on factual findings that supported the Assessee's claim, as per the provisions applicable for the assessment year 2000-01.

The Tribunal's ruling was upheld as it was deemed a factual finding without any legal questions for consideration. The judgment dismissed the appeal, affirming the Assessee's entitlement to exemptions under Section 10A/10B based on the percentage of export sales meeting the statutory requirement.