Brief of the case:
The ITAT New Delhi in the above cited case held even export made by assessee through third parties are also to be considered while working out deductions allowable u/s 10B as such exports are deemed exports and recognized by Foreign trade policy for extending export benefits. Therefore, the only other thing to be checked is whether assessee has received export proceeds in convertible forex.
Facts of the case:
- The assessee is 100%Export Oriented Unit (EOU), dealing in manufacturing and processing of Marble, sand stone, slate stone, tiles, limestone, quartzite etc. and filed the return of income on 27.09.2008 declaring Nil income after claiming the deduction u/s 10B of the Act amounting to Rs.9,64,64,001/-.
- During the course of assessment proceedings, the AO found that it had made local sale to its sister concern M/s Stone World which is the proprietary concern of one of the partners Sh. Lokesh Arora. The assessee was asked to justify the deduction/exemption claim made u/s 10B of the I.T. Act, 1961 as relatable to such sale to sister concern.
- The AO after considering the assessee’s submissions concluded that there is no provision of deemed export in Section10B of the Act and deduction can also not be allowed as the sale proceeds of such indirect export not directly received by the assessee in convertible foreign exchange. Therefore, AO excluded the export made through sister concern from export sales amounting to Rs. 4.04 crores.
- AO worked out allowable deduction in respect of profits in proportion to recomputed export sale after making adjustment of sale to sister concern (which was treated as local sale). The AO recomputed the deduction allowable u/s 10B as Rs. 8.12 crores against of 9.64 crores made by assessee.
- CIT(A) also upheld the re-computation made by AO. The CIT(A) held that the AO has correctly applied the provisions of Section 10B of the Act to compute the deduction equal to the profits derived from the export of articles or things, in the same proportion as the export turnover bears to the total turnover. Accordingly, disallowance of the alleged excess deduction claimed at Rs.1,52,51,935/- was upheld.
- Aggrieved assessee is in appeal before tribunal.
Contention of the Assessee:
Paid content
Become a Basic or Premium Member, or log in if you are already a Basic or Premium member.
