TaxTMI 
TaxTMI 
2011 (4) TMI 683
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....d deduction of Rs. 1,28,97,161 under section 10B of the Act. They contended that they are a 100 per cent. export-oriented unit (EOU) as approved under the scheme of the Government of India, and they are entitled for deduction under section 10B of the Act. The Assessing Officer noticed that the goods were cleared from the factory on November 4, 2006 and, as per the invoicecum-challan, the place of delivery is at Attola Village in Silvasa (Daman and Nagar Haveli Union Territory). During the scrutiny of the return, the assessee pleaded that the machinery was delivered to M/s. Chandra Proteco Ltd. (the agent for short) under section 143(3) of the Act on the express instructions of the foreign buyer, M/s. Proteco De Marino Ozino and C Sass, Italy (Proteco for short) and, therefore, it is deemed to be an export for the purpose of section 10B of the Act. The Assessing Officer disallowed deduction holding that the assessee did not fulfil the conditions laid down for deduction under section 10B of the Act ; the goods were delivered in India ; and they were not exported out of India. Being aggrieved, the appellant preferred an appeal to the Commissioner of Income-tax (Appeals). While holding....
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.... though it is delivered in India at Silvasa, it should be deemed to be delivery to a foreign buyer, and a delivery on export. He points out that the payment was made in convertible foreign exchange as evidenced by the Foreign Inward Remittance Certificate (FIRC) issued by the State Bank of Hyderabad and, therefore, the learned Tribunal erred in rejecting the contention of the appellant. According to the counsel, the FIRC is conclusive proof of export and, therefore, the assessee is entitled for claiming deduction under section 10B of the Act. 5. Exports and imports are regulated by the Customs Act, 1962 which, among others, repealed the Sea Customs Act, 1878. Section 2(18) of the Customs Act defines "export" to mean "taking out of India to a place outside India". As defined in section 2(16) of the Customs Act "entry" in relation to goods, inter alia, means an entry made in a bill of entry, shipping bill or bill of export. Sections 50 and 51 of the Customs Act stipulate the procedure for entry of goods for exportation as well as clearance of goods for exportation. For ready reference they are quoted below. "50. Entry of goods for exportation.-(1) The exporter of ....
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....ction of 100 per cent. profits and gains derived from the export for a period of 10 years and, under section 10B of the Act, an assessee can claim deduction of profits and gains as are derived by 100 per cent. EOUs from the export of articles or things for a period of 10 years. Section 80HHC of the Act is to the effect that an assessee, being an Indian company engaged in the business of "export out of India", may be allowed deduction of the profits to the extent specified in section 80HHC(1B) of the Act. The Explanation to all these provisions has a definite bearing in understanding section 10B(3) of the Act on which the petitioner's counsel placed considerable emphasis. For ready reference, we quote the same hereunder : "10B. (3) This section applies to the undertaking, if the sale proceeds of articles or things or computer 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 year or, within such further period as the competent authority may allow in this behalf." 8. The language of section 10B(3) of the Act is plain. It does not admit a....
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....xchange in accordance with sub-section (3), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India ; "export out of India" shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situated in India, not involving clearance at any customs station as defined in the Customs Act, 1962 (52 of 1962) ; Explanation (b) "export turnover" means the sale proceeds received in, or brought into, India by the assessee in convertible foreign exchange in accordance with clause (a) of sub-section (2) of any goods or merchandise to which this section applies and which are exported out of India, (ii) "export in relation to the special economic zones" means taking goods or providing services out of India from a special economic zone by land, sea, air, or by any other mode, whether physical or otherwise ; but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs ....