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TMI Blog2013 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... k done by the assessee. Therefore, sub contract receipts and stitching charges as amounting to local sales for the purpose of granting 100% exemption to the assessee. In favour of revenue - TC(A). No.1751 of 2006 - - - Dated:- 6-8-2012 - MRS. CHITRA VENKATARAMAN AND MR. K. RAVICHANDRABAABU JJ. For Appellant: Mr. T.Ravikumar For Respondent: Mr. N.Muthukumar for Dr.Anita Sumanth JUDGMENT CHITRA VENKATARAMAN, JJ. The Revenue has filed the above appeal as against the order of the Income Tax Appellate Tribunal for the assessment year 2000-01. The above appeal was admitted on the following substantial questions of law:- "(i) Whether in the facts and circumstances of the case, the Tribunal was right in holding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee that the stitching charges received was less than 25%, held that the assessee is entitled to exemption under Section 10B of the Act. Aggrieved by the same, the Revenue went on appeal before the Income Tax Appellate Tribunal. The Tribunal viewed that sub contract receipts and stitching charges were less than 25% of the total sales and hence, the assessee was entitled to the exemption under Section 10B of the Act. Aggrieved by this, the Revenue has filed the above appeal before this Court. 3. Learned standing counsel for the Revenue pointed out that the second proviso to sub section (1) to Section 10B speaks about the deeming fiction on profits and gains derived from the domestic sales as export of articles or things. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B as it stood during the assessment year 2001-02 herein has to be seen, which reads as under:- 10B(1) Special provisions in respect of newly established hundred per cent export oriented undertakings - Subject to the provisions of this Section, a deduction of such profits and gains as are derived by a hundred per cent export oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee; Provided that where in computing the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India". 7. Section 10B as it stood originally prior to the amendment under the Finance Act 2000 with effect from 1.4.2001, provided for 100% exemption to 100% E.O.U as by way of tax holiday in respect of profits and gains derived from the export of articles or things for the full period of any five consecutive assessment years falling within a period of eight years. For this purpose, the assessee has to disclose the option and furnish a declaration to that end. As long as domestic sales of 100% EOU were within the reasonable limits, 100% EOU were granted full tax hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s derived from the export of articles or things, sub section (4) of Section 10B(1) prescribed the formula to be adopted. The profits derived from the export of articles shall be calculated by taking the export turnover in respect of articles or things in proportion to total turnover of the business carried on by the assessee. As already seen, the Section defines the "export turnover". Thus, the total turnover carried on by the assessee need not necessarily be confined to export sales or local sales, but would also include the job work done by the assessee. Thus, when the legislature had chosen distinct phraseology for the purpose of deeming a particular income viz., the profits and gains derived from the domestic sale, on the profits and ga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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