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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 ..... abroad. The definition of deemed export under the foreign trade policy, which includes the supply of manufactured goods so that its applicability to computer software is suspect, to a STP Unit, would be of little assistance in view of the specific provisions of the Act, a self contained code in itself, and the provisions of which are in fact applicable under the SEZ Act itself. Further still, we may also here clarify that the Circular (No.1001/8/2015-CX.8, dated 28-04-2014) by CBEC, stating that the supply of goods from DTA to a SEZ Act would constitute an export, would again be of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 ₹ 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 as a contractor, is a Software Technology Park (STP) Unit and, therefore, supply of goods thereto is a deemed export under the foreign trade policy (for the period 01.04.2013 to 31.03.2020). Two, the export proceeds are received in US dollars (USD)), a convertible foreign exchange, and the same currency in which invoices were raised on MGSC, Hyderabad, India. The provisions of the Special Economic Zones Act, 2005 (the SEZ Act herein after), particularly s. 53 thereof, which states that the special economic zone shall, on and from an appointed day, be deemed to be territory outside the customs territo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o by, any authority, and stands referred before us for the first time. This aspect, where relevant, shall have to be examined at the end of the Assessing Officer (AO); the assessee before us supporting its this claim with a listing of the units registered as STP units with Software Technology Parks of India (STPI), Hyderabad. Considering its relevance, we are unable to find any. This is as the Act is a self contained code in itself. Rather, in our clear view, sec. 10B is itself a self contained code, as stands held by the Hon ble Apex Court in respect of other provisions of the Act, viz. sec. 80HHC (IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR 521 (SC)); s. 115JB (Ajanta Pharma Ltd. v. CIT [2010] 327 ITR 305 (SC)), etc. As explained in IPCA 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the export out of India can be given either a constricted or expanded meaning. There is accordingly no scope for allowance of deduction u/s. 10B on what is being termed as deemed export . Thus, even assuming that the export proceeds are received in foreign exchange, a matter which, in view of the contrary contentions, would require being finally determined on the basis of some material as, say, a certificate/s from the assessee s banker/s, the question becomes of no consequence. The assessee has therefore been rightly disallowed its claim for deduction u/s. 10B on the deemed export, i.e., even assuming MGSC to be a STP Unit, and the export proceeds in respect of the development of computer software therefor, and which is further for its foreign client, being received by the assessee in foreign exchange, i.e., either by its purchase from an authorized dealer or through direct remittance from abroad. The definition of deemed export under the foreign trade policy, which includes the supply of manufactured goods so that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med. How can, one may ask, an article or thing or computer software be exported out of India twice, as, for example, once by the assessee-contractor and then by the contractee (STP) Unit in the present case? Further, that a decision by a non-jurisdictional High Court is not a binding precedent for the Tribunal, 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 foreign exchange, which may though have chosen its conversion in local currency; its account being denominated therein, shall require being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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