9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 301 - HC - Income TaxDeduction u/s 10B - HELD THAT - Section 10A and 10B of the Act are pari materia provisions. However, difference is with regard to nature of the unit. Section 10A deals with Free Trade Zone (FTZ) unit whereas, Section 10B deals with 100% export oriented unit. Section 10A of the Act covers newly established undertaking in Free Trade Zones whereas, Section 10B deals with newly established 100% export oriented undertakings. Section 10A of the Act was introduced to give effect to EXIM policy of the Central Government. Policy deals with exchange through others and provides that EOU/EHTP/STP/BTP unit may export goods manufactured / software developed by it through another exporter or any other EOU/EHTP/STP/SEZ unit subject to the conditions mentioned. In the instant case, admittedly, the assessee is a manufacturing unit and is 100% export oriented unit as has been found by the Tribunal in para 3 of the order. The assessee has manufactured precision components and has exported the same through Toyota Tsusho P. Ltd., which had received the export proceeds in convertible foreign currency. Therefore, the assessee was entitled to the benefit of deduction under Section 10B of the Act. Substantial questions of law framed by this court are answered in favour of the assessee and against the revenue. The orders passed by the AO, CIT (Appeals) and the order of the Tribunal insoafar it deprives the assessee of the benefit u/s 10B of the Act are hereby quashed and the assessee is entitled to the benefit of deduction under Section 10B of the Act.
Issues:
1. Interpretation of Section 10B of the Income Tax Act for claiming deduction. 2. Eligibility criteria for deduction under Section 10B. 3. Application of EXIM policy in determining eligibility for deduction. Analysis: Issue 1: Interpretation of Section 10B of the Income Tax Act for claiming deduction The appellant appealed under Section 260A of the Income Tax Act, 1961, challenging the denial of deduction under Section 10B for the Assessment Year 2009-10. The primary contention was regarding the correct interpretation of Section 10B(3) by the Tribunal, which led to the disallowance of the deduction. The appellant argued that the export proceeds, though received by a third party, should still qualify the appellant for the deduction. The Tribunal's decision was based on the requirement that the export proceeds must be received by the assessee in convertible foreign exchange. The appellant cited relevant case laws to support their claim, emphasizing the legality of the deduction under Section 10B. Issue 2: Eligibility criteria for deduction under Section 10B The Assessing Officer disallowed the deduction under Section 10B for the appellant, stating that the export proceeds were not realized in convertible foreign currency by the appellant but by a third party. The Commissioner of Income Tax (Appeals) upheld this decision, emphasizing the conditions required for claiming deduction under Section 10B. The Tribunal also dismissed the appeal, stating that the appellant, being a supporting manufacturer, was not eligible for the deduction. However, the appellant argued that being a 100% export-oriented unit, they were entitled to the deduction under Section 10B. The High Court analyzed the provisions of Section 10B and relevant case laws to determine the eligibility of the appellant for the deduction. Issue 3: Application of EXIM policy in determining eligibility for deduction The High Court highlighted the difference between Section 10A and Section 10B of the Act, with Section 10B dealing with 100% export-oriented units. Referring to the EXIM policy, the Court emphasized the permissibility of exporting goods through other units subject to specified conditions. Citing previous judgments, the Court reiterated that the appellant, as a manufacturing unit and a 100% export-oriented unit, was entitled to the deduction under Section 10B. The Court held that the appellant's exports, facilitated through a third party, met the requirements of Section 10B, entitling them to the deduction. In conclusion, the High Court ruled in favor of the appellant, quashing the orders that deprived them of the benefit under Section 10B. The Court held that the appellant met the conditions for claiming the deduction under Section 10B of the Income Tax Act, thereby allowing the appeal.
|
