TaxTMI 
TaxTMI 
2015 (10) TMI 634
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....en Rs. 4,49,09,602/- being sales and services to Texas Instruments (I) Ltd., as part of export turnover. The assessee was asked to explain why the said amount should not be treated as domestic sales from 10A unit. The asses see stated that it provides software services to Texas Instruments India Pvt. Ltd., (for short hereinafter referred to as TIIPL), which is also a registered STP unit at Bangalore. The software development services are provided on a principal to principal basis and based on the purchase orders placed by TIIPL on the asses see with the instructions to bill and deliver to TIIPL. The software development work done by the assessee for TIIPL is exported out of India by TIIPL. Therefore, the software development service s provided to TIIPL would be eligible for deduction under Section 10A of the Act, as it has satisfied both the conditions prescribed being, (a) export of computer software from India indirectly (i.e., the software development work done by the Company for TIIPL is exported out of India by TIIPL which is a registered STP unit) and (b) the consideration for the software work done by the Company is received in convertible foreign exchange within the speci....
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....see preferred appeal to the Tribunal. 5. The Tribunal, after referring to Chapter VIII of the Exim Policy, which has defined 'deemed export' and the benefits under the said provisions and after referring to clause 6.12 of the said policy, held that whatever benefit given should be as per the provisions of Section 10A and 10B of the Act. Apar t from the benefit conferred under the aforesaid Chapter, nothing has been indicated in respect of any 'deemed export' under the Act. The Exim Policy obviously does not include in respect of benefit to be given under the Act other than the one referred to under Chapter 6.12(a). Therefore, it was held that the sales effected to the STP by the assessee would not constitute a 'deemed export' and therefore, confirming the orders of lower appellate authorities, the appeal came to be dismissed. Aggrieved by the said order, the assessee is before this Court. 6. The learned Counsel for the assessee assailing the impugned orders contended that the word 'export' is not defined under the Act. Therefore, it has to be understood in the context of definition contained in the Exim Policy. Section 10A of the Act being beneficial provision, it gives inc....
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....Government may, by a notification in the Official Gazette, specify for the purposes of this Section. 11. The tax exemption is granted with reference to the assessing year relevant to the previous year in which the industrial undertaking begun or begins to manufacture or produce articles or things or computer software and each of the nine immediately succeeding assessment years. 12. Section 10A of the Income Tax Act reads as under: " 10A. Special provision in respect of newly established undertakings in free trade zone, etc . - (1) Subject to the provisions of this section, ad education of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee: Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as....
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....ons of Explanation 1 and Explanation 2 to sub-section (2) of section 80-I shall apply for the purposes of clause (iii) of this sub- section as they apply for the purposes of clause (ii) of that sub- section. (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. Explanation 1.-For the purposes of this sub-section , the expression "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange. Explanation 2.-The sale proceeds referred to in thi s sub-section shall be deemed to have been received i n India where such sale proceeds are credited to a separate account maintained for the purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India. xxx xxx xxx Explanation 2.-For the purposes of this secti....
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....r 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. Therefore, the intention of the legislature is manifest that the encouragement is g iven for establishment of export oriented industries with the object of receiving convertible foreign exchange. 14. Explanation 2 (iv) to Section 10A defines 'export turnover' for the purpose of this Section as 'the consideration in respect of export by the undertaking of articles or things or computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with Sub- Section (3)'. Further, it makes it clear that 'export turnover' does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or thi ngs or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India. 15. Sub-Section (2) of Section 10A makes this pro vision applicable to undertakings which have begun or begin to manufacture or produce articles or thing....
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....ons, it is clear that if a assessee wants to claim the benefit of Section 10A, firstly he must export articles or things or computer software. Secondly, the said export may be done directly by him or through other exporter after fulfilling the conditions mentioned therein. Thirdly, such an export should yield foreign exchange which should be brought into the country. If all these three conditions are fulfilled, then the object of enacting Section 10A is fulfilled and the assess ee would be entitled to the benefit of exemption from payment of Income Tax Act on the profits and gains derived by the Undertaking from the export. 21. Clause 6.11 of Exim Policy dealing with entitlement for supplies from the DTA states that supplies from the DTA to EOU/EHTP/STP/BTP units will be regarded as 'deemed export', besides being eligible for relevant entitlements under paragraph 6.12 of the Policy. They will also be eligible for the additional entitlements mentioned therein. What is of importance is when a supply is made from DTA to STP, it does not satisfy the requirements of export as defined under the Customs Act. However, for the purpose of Exim Policy, it is treated as 'deemed export'. There....