Tribunal Upholds CIT(A)'s Decision on Section 10B Deduction

The tribunal upheld the CIT(A)'s decision to allow the deduction under section 10B on the full export proceeds amount of Rs. 36,13,485/-, emphasizing the applicability of RBI circular No.91 and Section 155(11A) for amending assessment orders in cases of delayed receipt of export proceeds in convertible foreign exchange. The appeal against the deduction was dismissed, with the tribunal ruling in favor of the assessee due to the specific circumstances of the case related to the SEZ unit and the provisions allowing for adjustments in such situations.

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Issues involved: Appeal against deduction u/s 10B on export proceeds.

Summary:
The revenue appealed against the allowance of deduction u/s 10B on export proceeds of Rs. 36,13,485/-, citing a previous order against the assessee. The assessee's return declared income of Rs. 5,86,120/-, with assessment completed at Rs. 27,30,350/-. The claim of deduction u/s 10B was initially reduced due to delayed receipt of export proceeds in convertible foreign exchange. However, the CIT(A) reversed this decision, citing RBI circular No.91 and Section 155(11A) which allows for amendment of assessment orders in such cases. The appellant's unit being in a Special Economic Zone (SEZ) was a key factor in the decision, as per the circular allowing flexibility in realization of export proceeds. The appellant received the export proceeds in October 2005, making them eligible for deduction u/s 10B. The tribunal noted that Section 155(11A) provides for amending orders when income is subsequently received in convertible foreign exchange, supporting the allowance of deduction u/s 10B in this case.

The assessee did not attend the hearing, and the revenue could not identify any errors in the CIT(A)'s order. The tribunal observed that Section 155(11A) allows for modifying orders when sale proceeds are received after the prescribed time, indicating that correcting the deduction amount later would not be appropriate. Consequently, the tribunal upheld the CIT(A)'s decision to allow the deduction u/s 10B on the full export proceeds amount of Rs. 36,13,485/-. The appeal was dismissed, and the order was pronounced on 22.03.2011.

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