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2021 (7) TMI 965 - HC - Income TaxDisallowance u/s 10B - whether the assessee has complied with the conditions prescribed under Section 10B? - HELD THAT - The fact that the assessee has exported the goods through third party is not disputed. The substantial questions of law Nos.1 and 2 have already been answered by two division benches of this court in INTERNATIONAL STONES INDIA (P.) LTD 2018 (6) TMI 1478 - KARNATAKA HIGH COURT and 'METAL CLOSURES (P.) LTD 2018 (6) TMI 1468 - KARNATAKA HIGH COURT For the reasons assigned in the aforesaid decisions, the aforesaid substantial questions of law are answered in favour of the assessee and against the revenue. Whether, the Tribunal was justified in law in ignoring the decision of the Hon'ble Jurisdictional Karnataka High Court in the case of Tata Elxsi Vs. ACIT 2015 (10) TMI 634 - KARNATAKA HIGH COURT and consequently passed a perverse order on the facts and circumstances of the case? - The tribunal while passing the impugned order has not taken note of decision of this court in 'TATA ELXSI VS. ACIT', 2015 (10) TMI 634 - KARNATAKA HIGH COURT and therefore, the substantial question of law No.3 is answered in the affirmative.
Issues:
1. Entitlement to deduction under Section 10B of the Income Tax Act for exports made through third parties. 2. Treatment of sales to third parties and 100% Export Oriented Units as exports under Section 10B of the Act. 3. Consideration of the decision of the Jurisdictional Karnataka High Court in similar cases. 4. Charging of interest under section 234 C of the Act. Entitlement to deduction under Section 10B for exports made through third parties: The assessee, engaged in the manufacture and sale of surgical products, filed returns for the Assessment Years 2009-10 and 2010-11, claiming deductions under Section 10B of the Act. The Assessing Officer disallowed a portion of the claim made under Section 10B for both years. The Commissioner of Income Tax (Appeals) confirmed the disallowance, leading to an appeal before the Income Tax Appellate Tribunal. The tribunal dismissed the appeal, prompting the current appeal. The court noted that the assessee exported goods through third parties, a fact undisputed by the revenue. Citing previous decisions, the court held in favor of the assessee, allowing the appeal and quashing the tribunal's order on substantial questions of law. Treatment of sales to third parties and 100% Export Oriented Units: The court considered whether sales to third parties and 100% Export Oriented Units should be treated as exports under Section 10B of the Act. The assessee argued that exports made through third parties should be deemed exports and qualify for deduction under Section 10B. The revenue contended that the matter should be remitted to the Assessing Officer for further examination of compliance with Section 10B conditions. Relying on previous decisions, the court ruled in favor of the assessee, emphasizing that exports through third parties remain deemed exports, entitling the assessee to Section 10B deductions. Consideration of the decision of the Jurisdictional Karnataka High Court: The court addressed whether the tribunal ignored the decision of the Jurisdictional Karnataka High Court in a relevant case, leading to a perverse order. Noting the tribunal's oversight of the court's decision in a specific case, the court answered the substantial question of law in the affirmative. This acknowledgment of the court's decision impacted the outcome of the appeal, resulting in the quashing of the tribunal's order on substantial questions of law. Charging of interest under section 234 C of the Act: The issue of charging interest under section 234 C of the Act was raised in the appeal. However, the judgment did not provide detailed analysis or resolution regarding this specific issue. The focus of the judgment primarily revolved around the entitlement to deductions under Section 10B for exports made through third parties, treatment of sales to third parties, and compliance with relevant legal precedents. This detailed analysis of the judgment showcases the court's considerations and rulings on the various issues raised in the appeal, emphasizing the interpretation and application of the Income Tax Act provisions, particularly regarding deductions for exports and compliance with legal precedents.
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