Tribunal ruling: Sales to other SEZ units not eligible for deduction

The Tribunal dismissed the appeal for A.Y. 2008-09 and partly allowed the appeal for A.Y. 2010-11 for statistical purposes. It emphasized the ineligibility of sales to other SEZ units for deduction under section 10AA and the exclusion of unrelated interest income from export turnover. The challenge against the levy of interest under sections 234B, 234C, and 234D was also dismissed by the Tribunal, stating it as mandatory. The issue of penalty proceedings under section 271(1)(c) was not adjudicated due to being at a pre-mature stage.

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Issues:
1. Claim of deduction under section 10AA of the Income Tax Act, 1961 for assessment years 2008-09 and 2010-11.
2. Levy of interest under sections 234B, 234C, and 234D of the Act.
3. Exclusion of interest received on fixed deposit from export turnover for computing deduction under section 10AA.
4. Initiation of penalty proceedings under section 271(1)(c) of the Act.

Issue 1: Claim of deduction under section 10AA
- The assessee claimed deduction under section 10AA for income from job work done in respect of other SEZ units.
- The Assessing Officer disallowed part of indirect expenses allocated to export income, but allowed the deduction under section 10AA as per the audit report.
- The Commissioner (Appeals) upheld the decision, stating no necessity for alternative computation of deduction.
- The Tribunal held that sales to other SEZ units cannot be considered export turnover under section 10AA, dismissing the alternative working of deduction.

Issue 2: Levy of interest under sections 234B, 234C, and 234D
- The Tribunal dismissed the challenge against the levy of interest, stating it as mandatory and not requiring interference.

Issue 3: Exclusion of interest received on fixed deposit from export turnover
- The Assessing Officer and Commissioner (Appeals) excluded interest on fixed deposit from export turnover for deduction under section 10AA, as it lacked a direct nexus with export income.
- The Tribunal upheld the decision, dismissing the claim to include the interest in export turnover.

Issue 4: Initiation of penalty proceedings under section 271(1)(c)
- The Tribunal noted the pre-mature stage of the penalty proceedings and did not adjudicate on this ground.

In conclusion, the Tribunal dismissed the appeal for A.Y. 2008-09 and partly allowed the appeal for A.Y. 2010-11 for statistical purposes, emphasizing the ineligibility of sales to other SEZ units for deduction under section 10AA and the exclusion of unrelated interest income from export turnover.

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