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TMI Blog2013 (1) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... g, the return was selected for scrutiny as a result of which a sum of Rs.1,43,53,355/- claimed by assessee as deduction u/s.10A was disallowed by the AO. According to the AO, the assessee has not only sold the scrap, after segregating, to local parties in India but also received their sale proceeds in Indian Rupees and therefore mandatory conditions as prescribed u/s 10A(3) for allowing the deduction were not satisfied. The AO has given the following reasons in the assessment order for assessment year 2003-04 for making the impugned disallowance:- From the plain reading of section 10A (1), it is clear that profit should be derived from the exports of goods for exemption. However, in the present case, the assessee has derived profit from export sales of goods only upon of Rs.16,02,150/-. The maximum sales proceeds have been received in Indian Rupees and not in Foreign Convertible Exchange. Therefore, its claim for exemption u/s.10A of the IT Act of Rs. 1,43.53,355/- claimed upon local sales is hereby disallowed and added to the total income of the assessee. The inference of the Department is further fortified by the judgment of Rajkot Bench in the case of Accumax Ltd. for A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax laws have to be interpreted reasonably and in consonance with justice adopting a purposive approach. The contextual meaning has to be ascertained and given effect to. Therefore considering the views taken by various judicial authorities (supra), I am of the considered view that the assessee firm is eligible for deduction u/s.10A of the I.T. Act. It is, therefore, held that the A.O. was not justified in denying the benefits of section 10A to the appellant. He is, therefore, directed to allow the deduction of Rs.1,43,53,355/- u/s.10A. Both these grounds of appeal are thus allowed. 4. Aggrieved by the order passed by the CIT (A) for AY 2003-04, the Department is now in appeal before this Tribunal, on the following grounds:- 1) The Ld. CIT (A) has erred in Law and on facts in deleting the addition of Rs.1,43,53,355/- on account of disallowance of deduction u/s.10 of the IT Act. 2) The Ld. CIT (A) has erred in not appreciating that almost entire sales of the assessee were to the local parties and sales proceeds were received in Indian rupees and not in convertible foreign exchange. 3) The Ld. CIT (A) has erred in ignoring the fact that the export sales of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulates that the eligible units should have made export of articles, things, or computer software. Section 10A(3) stipulates that the sale proceeds should be received in convertible foreign exchange. The appellant failed to comply both the above conditions. In fact, both the above conditions were non-existant in the appellant s case. In such circumstances, the appellant could not claim the benefit of section 10A. In view of the above facts, I hold that the AO was fully justified in rejecting the claim of appellant u/s.10A of the Act. The action of the A.O. on this count is confirmed and this ground of appeal is dismissed. With due respect to my predecessor s order in the appellant s case for A.Y. 2005-06 in ITA No.0030/05/06, I differ from his decision for the reason that certain legal and factual aspects discussed above in this order were not considered by him. 6. Aggrieved by the order passed by the CIT (A) for assessment year 2006-07, the assessee is now in appeal before this Tribunal, on the following grounds:- 1. That, the learned CIT(A) has erred on facts and in law by confirming disallowance of exemption u/s.10A of Rs.43,18,584/- 2. That, the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of section 10A(3) should be extended to it. 10. The issue under appeal has been considered at length by the Hon ble Kerala High Court in Commissioner of Income-tax v. Electronic Controls Discharge Systems (P) Ltd. (supra) and disposed off with the following observations:- 6. After hearing both sides and after going through the above referred provisions of the Income-tax Act and the provisions of the Special Economic Zones Act, 2005, we are unable to uphold the order of the Tribunal because the concept of deemed export under the Special Economic Zones Act is not incorporated in the scheme of exemption under section 10A of the Incometax Act and it is the settled position that the Income-tax Act is a selfcontained code and the validity or correctness of the assessment has to be considered with reference to statutory provisions. It is not as if the Special Economic Zones Act, 2005 or the Foreign Exchange Regulation Act or the Foreign Exchange Management Act are not referred to in the Income-tax Act. The Income-tax Act refers to several statues in different places and wherever required, provisions of such statutes are incorporated in the Act through reference or by incor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarely covered against the assessee by the aforesaid judgment of the Hon ble Kerala High Court. 12. Provisions of section 10A (3) are identical with those of section 10B(3) in as much as both of them stipulate that the relief under them can be extended only if the articles or things are exported out of India and their sale proceeds are received in, or brought into, India by the assessee in convertible foreign exchange, within the period stipulated by law. Therefore, the decisions rendered in the context of the provisions of section 10B(3) would also squarely apply to the issue under appeal. In the context of the provisions of section 10B(3), this Tribunal has taken the following view in its order dated 28-09-2012 in ITO v. Monarch Overseas, ITA No.253/Rjt/2011: 6. We have heard both the parties and carefully considered their submissions. It is clear on plain reading of sub-section (3) of section 10B that section 10B applies to the undertaking if the sale proceeds of articles or things or compute software exported out of India are received in, or brought into, India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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