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TMI Blog2017 (8) TMI 1643X X X X Extracts X X X X X X X X Extracts X X X X ..... t year (AY) 2009-10 vide order dated 30.11.2011. 2. The short question arising in the present appeal, i.e., in relation to the principal issue raised thereby, is if the assessee, a company in the business of software development at Chennai, is entitled to deduction u/s. 10B of the Act on the deemed export of Rs. 123,66,641/-. The same stands denied by the Revenue on the ground that the work for the same was carried out in India and the sale proceeds were received in Indian rupees i.e., as against in convertible foreign exchange, as required by sec. 10B. The assessee refutes both the charges before us, claiming that a Microsoft Global Services Centre (India) Ltd. (MGSC), i.e., the principal for whom the software is developed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10B(4), is not in doubt. Section 10B(3) provides a further condition whereby the section would apply only where the sale proceeds of the export outside India are received in, or brought into, India by the assessee in convertible foreign exchange within six months from the end of the previous year, or within such extended time as may be allowed to it in his behalf by the competent authority. The question before us therefore is whether the computer software developed by the assessee under the contract agreement with MGSC under work order (vide letter dated 29.11.2011) constitutes an export out of India, i.e., for the purpose of computing deduction u/s. 10B (1) r/w s. 10B(4)? The secondary question, i.e., where it so does, would be whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laboratory Ltd. (supra), a beneficial provision is yet to be interpreted on its terms. Rather, it is trite law that provisions of a taxing statute are to be strictly construed and, further, so are to be the exemption provisions, provide as they do an exception to the norm. Even if therefore sale to a STP Unit is deemed as an export under the foreign trade policy, or for the purposes of foreign exchange regulation, the same cannot be regarded as in satisfaction of the condition of 'export out of India' provided in sec. 10B. Such a finding or interpretation could only be by reference to, or by way of incorporation under, the relevant legislation - the foreign trade policy being only a policy statement of the Government of India for the promot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll apply to, or in relation to, the developer or entrepreneur for carrying on the authorized operations in a Special Economic Zone or Unit subject to the modifications specified in the second Schedule.' That is, provides for the applicability of the Act, subject to the modifications listed in the second schedule thereto. There is no modification to s. 10B listed in the second Schedule thereto. Section 51 of the SEZ Act provides for an overriding effect of the provisions of the said Act over any other law for the time being in force. Accordingly, the provisions of the Act shall apply both to the assessee company as well as to MGSC and, therefore, to the transactions between them. In that view of the matter, it is difficult to see as to how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... little relevance. This is as the same is in respect of rebate on duty on goods cleared from DTA to SEZ as well as cenvat credit in respect thereof. The same, accordingly, has no bearing on the deduction under the provision of the Act. Chapter VI of the SEZ Act, titled 'Special fiscal provisions of Special Economic Zones', under which Chapter section 27 falls, contains several provisions (viz. ss. 26 to 30) with regard to the exemption of duties under the Customs Act and the Central Excise Act, making the said Circular consistent with the provisions of the SEZ Act. We have already clarified that such a mechanism only would ensure extension of the benefit of the provisions of the Act, i.e., by reference or by incorporation under the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is well settled (refer: Suresh Desai & Ass. v. CIT [1998] 230 ITR 912 (Del); Geoffery Manners & Co. Ltd. v. CIT [1996] 221 ITR 695 (Bom); CIT v. Thane Electricity Supply Ltd. [1994] 206 ITR 797 (Bom); Patil Vijayakumar v. Union of India [1985] 151 ITR 48 (Kar)). Decision 4. We, accordingly, for the reasons aforementioned, find no merit in the assesee's stand and, therefore, no reason to interfere with the impugned order in the matter. We may though clarify; our order being appealable, that in case of the same not finding favour with the Hon'ble High Court, the matter for factual findings, i.e., qua the contractee unit being a STP unit, or governed by SEZ Act and, finally, of the sale proceeds received by the assessee in convertible foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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