Eligibility of 100% EOU to get the exemption u/s 10 B

[Adoni Raghavendra]

Dear All, I have an doubt to clarify about the deduction U/s 10B of Income Tax Act, 1961. for the export made through 100% EOU. A 100% EOU has an contractual agreement with third party[MMTC], as a service buyer, that the 3rd party [MMTC]has to complete the export sale with the foreign buyer located by the 100% Export oriented unit. The contract entered between MMTC & 100% EOU and the price are INR equivalent to the USD [$] as on the date of sale realization received by the service buyer. The Seller[100% EOU] raise the invoice on Service Buyer in USD[$] after the completion of the shipment. The payment has been released by the service buyer in INR equivalent to the total USD[$] as per invoice raised by 100% Export oriented unit. I feel that the foreign exchange conversion done by the service buyer since he received the foreign exchange. Further in the shipping bill the service buyer given the declaration that 100% EOU is the manufacturer & Exporter. Please clarify the doubts whether the 100% EOU is eligible to get the exemption u/s 10B a) As 100% Export b) As Deemed Export Kamal Kumar Bagaria.

[Surender Gupta]

There was a concept of disclaimer certificate u/s 80HHC for the purpose of allowance of deduction to supporting manufacturer. In this case also, the status of 100% EOU appears to be a supporting manufacturer which is attracting the provisions of section 10B. There is corresponding provision u/s 10B which allowed exemption on the basis of disclaimer certificate.

[RadheyShyam Mangal]

There is no concept of deemed export in sec. 10B of income tax act, 1961. in case of third party export made by 100% EOU, the benefit under 10B is not available. though such deemed export is counted towards fulfilment of export obligation/NFE under para 6.9 of the FTP.

AI Summary

Can a 100% Export Oriented Unit claim Section 10B exemption for exports via MMTC? Debate over deemed exports continues. A discussion on a forum addresses whether a 100% Export Oriented Unit (EOU) can claim an exemption under Section 10B of the Income Tax Act, 1961, for exports made through a third party, MMTC. The EOU raises invoices in USD, and payments are made in INR. One respondent suggests that the EOU might qualify as a supporting manufacturer under Section 10B, similar to provisions under Section 80HHC. Another respondent argues that Section 10B does not recognize deemed exports, thus the benefit is not applicable, although such exports may fulfill obligations under the Foreign Trade Policy.