Eligibility of 100% EOU to get the exemption u/s 10 B, Income Tax

[Adoni Raghavendra]

Dear All, I have an doubt to clarify about the deduction U/s 10B of Income Tax Act, 1961. for the export made through 100% EOU. A 100% EOU has an contractual agreement with third party[MMTC], as a service buyer, that the 3rd party [MMTC]has to complete the export sale with the foreign buyer located by the 100% Export oriented unit. The contract entered between MMTC & 100% EOU and the price are INR equivalent to the USD [$] as on the date of sale realization received by the service buyer. The Seller[100% EOU] raise the invoice on Service Buyer in USD[$] after the completion of the shipment. The payment has been released by the service buyer in INR equivalent to the total USD[$] as per invoice raised by 100% Export oriented unit. I feel that the foreign exchange conversion done by the service buyer since he received the foreign exchange. Further in the shipping bill the service buyer given the declaration that 100% EOU is the manufacturer & Exporter. Please clarify the doubts whether the 100% EOU is eligible to get the exemption u/s 10B a) As 100% Export b) As Deemed Export Kamal Kumar Bagaria.

Posts / Replies

[Surender Gupta]

There was a concept of disclaimer certificate u/s 80HHC for the purpose of allowance of deduction to supporting manufacturer. In this case also, the status of 100% EOU appears to be a supporting manufacturer which is attracting the provisions of section 10B. There is corresponding provision u/s 10B which allowed exemption on the basis of disclaimer certificate.

[R.S. Mangal]

There is no concept of deemed export in sec. 10B of income tax act, 1961. in case of third party export made by 100% EOU, the benefit under 10B is not available. though such deemed export is counted towards fulfilment of export obligation/NFE under para 6.9 of the FTP.