2011 (1) TMI 1103

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of software. It is a joint venture of HAL and British Aerospace. The assessee filed its return of income for the assessment year 1999-2000 declaring a total income and claiming exemption under section 10B of various amounts in each of the assessment orders. The Assessing Officer has disallowed the exemption under section 10B on the ground that the assessee has commenced production much prior to April 1, 1994, i.e., before section 10B was amended by the Finance Act, 1994, which came into effect from April 1, 1994. As the assessee does not satisfy the requirement mentioned in the section, it is not entitled to exemption. Aggrieved by the said order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income-ta....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ontentions, it is necessary to know the law prior to this amendment, i.e., April 1, 1994. Section 10B was introduced into the statute by the Finance Act, 1988, with effect from April 1, 1989. Prior to April 1, 1994, sub-section (1) of section 10B was as follows :   "10B.(1) Subject to the provisions of this section, any profits and gains derived by an assessee from a hundred per cent. export-oriented undertaking (hereafter in this section referred to as the undertaking) to which this section applies shall not be included in the total income of the assessee."   6. The phrase "hundred per cent. export-oriented undertaking" has been defined in Explanation 2(iv) of sub-section (9A) as under :   "2.(iv) 'hundred per cent.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....llow them to dispose of the export rejects and by-products, they are allowed to sell 25 per cent. of their product in the domestic market. In effect, such units get exemption for five years even in respect of profits from the 25 per cent. domestic sales allowed to them.   23.3 As long as domestic sales of 100 per cent. EOUs are within reasonable limits, such sales getting exempt can be justified as a con-cession incidental to export. Recently, however, it has come to notice that several units approved as 100 per cent. EOUs export less than 75 per cent. of their turnover and sell the balance amount in the domestic market. Such units are, thus, getting the five-year tax holiday even on the profit generated from domestic sales forming ....