INCOME TAX ACT, 1961

Section 10A

Deduction under section 10A - Allowability - 'Deemed export' made to another STP unit -

Question for consideration was whether 'deemed export' made to another STP unit was eligible for deduction under section 10A. Revenue argued that section 27 of the SEZ Act clearly states that provisions of IT Act, subject to modifications specified in Sch. II would be applicable, which itself showed that provisions of IT Act would prevail and, there is no concept of deemed export in IT Act. Held: Therefore, a proper reading of section 27 of SEZ Act would clarify that benefit, which would accrue to assessee would be subject to the modification specified in Second Schedule and it would mean fulfillment of certain conditions for being entitled to the benefit of special provision, namely, section 10AA. The provisions of SEZ Act cannot be ignored because of the fact that terms 'developer', 'entrepreneur' and 'authorized operations' are not defined under the Income Tax Act, but they are defined under SEZ Act, which, being a special Statute, will have to be applied to consider as to whether transaction is an 'export' or a 'deemed export'. This is amply made clear by the provisions of section 53 of SEZ Act, which states that 'a Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations'. In fact, CBEC issued a clarification vide Circular No. 1001/8/2015-CX.8, dated 28-4-2015 with regard to rebate of duty on goods cleared from DTA to SEZ, which clearly explains the concept of a 'deemed export' and also states that provisions of the SEZ Act would have overriding effect over provisions of the Income Tax Act in case of any inconsistency. In the instant case, there was no inconsistency. Rather, provisions of Income Tax Act resorts to the provisions of SEZ Act while considering as to whether the assessee would be entitled for the benefit under section 10A or 10B of the Act. Accordingly, 'deemed export' made to another STP unit was also eligible for deduction under section 10A.

Distinguished:Tata Elxsi Ltd. v. Asstt. CIT (2015) 94 CCH 0202 (Karn-HC) and Pr.CIT v. International Stones India (P) Ltd. (2018) 95 Taxmann.com 287 (Karn) : 22018 TaxPub(DT) 4058 (Karn-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

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