INCOME TAX ACT, 1961

Section 10B

Deduction under section 10B - Allowability - Sales made through third parties, i.e., export houuses and inter unit transfers -

Assessee, a 100% export oriented unit engaged in the business of manufacture and export of granites, slabs and monuments claimed deduction under section 10B of the Act in respect of exports made to third parlies and inter unit transfers. AO allowed deduction only to the extent of direct export made by assessee and disallowed the claim in respect of the sales made through third parties, i.e., export houses and inter unit transfers. Held: From perusal of section 10A it becomes evident that the intention of legislature is to encourage establishment of export oriented industries with the object of receiving convertible foreign exchange. In order to allow deduction under the section a narrow and pedantic approach could not be applied in construcing the words 'by an undertaking ' and restricting the benefit under section 10B only in resepct of direct export of such goods manufactured by such units. Export by assessee 100% EOU even through third party who had exported such goods to foreign country and had fetched foreign currency for India still remained deemed export in the hands of assessee undertaking also. Accordingly, assessee was entitled to the benefit of deduction under section 10B in respect of sales made through third parties and inter unit transfers as well.

Followed:Pr. CIT v. International Stones India (P) Ltd. (2018) 95 Taxmann.com 287 (Karn) : 2018 TaxPub(DT) 4058 (Karn-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

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