Tribunal Upholds Tax Exemption for 1999-2000, Dismisses Objections on Export Sales, Trading Turnover, and Unit Formation.

The Tribunal dismissed the Revenue's appeals and upheld the CIT(A)'s order granting exemption under s. 10B of the IT Act for the assessment year 1999-2000. The Tribunal found no merit in the Revenue's objections, determining that the assessee effectively addressed issues regarding export sales, trading turnover, and unit formation. The Tribunal emphasized that the AO must ensure the assessee's claims are allowed in accordance with the law, noting that the absence of separate accounts did not disqualify the claim, but the correct quantum of profits eligible for deduction must be determined.

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Issues:
- Appeal against orders of CIT(A) related to exemption under s. 10B of the IT Act for the assessment year 1999-2000.

Analysis:
1. The case involved two separate appeals by the Revenue challenging the orders of the CIT(A) regarding the allowance of exemption under section 10B of the IT Act for the assessment year 1999-2000. The Tribunal disposed of both appeals together as they shared a common issue.

2. The primary issue under appeal was the allowance of exemption under section 10B of the IT Act. The matter had been previously heard by the first appellate authority and was remitted back to the CIT(A) by the Tribunal for fresh adjudication. The Revenue contended that the prerequisites for a valid claim under section 10B were not satisfied by the assessee. However, the assessee argued that the deficiencies pointed out by the AO were effectively countered with evidence already on record and duly considered by the CIT(A).

3. The objections raised by the Revenue included:
- Export sales not being out of India but only to another 100% EOU.
- Trading turnover not amounting to manufacturing activity.
- Unit formed through splitting up/reconstruction of an existing unit.

4. The Tribunal found that each of the objections raised by the Revenue was effectively addressed by the assessee. The Tribunal clarified that the requirement for sale proceeds to be received in convertible foreign exchange was not a precondition for exemption under section 10B. The Tribunal also noted that the disqualification based on trading turnover was unfounded as the claim was only for profits accruing after the date of approval as an EOU. Additionally, the Tribunal found no evidence of splitting up or reconstruction of an existing unit in forming the EOU.

5. The Tribunal upheld the order of the CIT(A) as it found no merit in the Revenue's objections. It was noted that the absence of separate accounts for the eligible undertaking did not disentitle the assessee's claim, but the correct quantum of profits eligible for deduction needed to be determined. The Tribunal dismissed the appeals, emphasizing that the AO must ensure the assessee's claims are allowed in accordance with the law.

6. In conclusion, the Tribunal dismissed the appeals and upheld the order of the CIT(A) regarding the allowance of exemption under section 10B of the IT Act for the assessment year 1999-2000.

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