THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
AND
THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY
I.T.T.A.No.10 of 2006
JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)
Heard Mr. Challa Gunaranjan, learned counsel for
the appellant and Mr. J.V.Prasad, learned Standing
Counsel for Income Tax Department appearing for the
respondent.
2. This appeal has been preferred under Section 260A of the Income Tax Act, 1961 (briefly, "the Act" hereinafter) assailing the order dated 27.08.2004 passed by the Income Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad (briefly, "the Tribunal" hereinafter) in I.T.A.No.642/Hyd/2003 for the assessment year 2001- 2002.
3. From the docket proceedings we find that though the appeal was admitted on 15.02.2006, substantial questions of law were not framed.
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4. Be that as it may, learned counsel for the appellant submits that two questions were proposed as substantial questions of law by the appellant in the memo of appeal. out of which one question covers the controversy.
5. The proposed substantial question of law reads as under:
Whether on the facts and in the circumstances of the case, provisions relating to exemption under Section 10B of the Act granted to 100% export oriented unit would also include the unrealised part of sale proceeds?
6. Both the assessing officer as well as the first appellate authority had rejected the claim of the appellant that unrealised sale proceeds should also be included for granting exemption to 100% export oriented units like the appellant under Section 10B of the Act. In appeal before the Tribunal, the above ground was rejected by affirming the views taken by the assessing officer as well as by the first appellate authority.
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7. Learned counsel for the appellant submits that issue raised in this appeal is no more res integra. In Commissioner of Income Tax, Central-III, New Delhi v. HCL Technologies Limited1 Supreme Court has held that what is excluded from "export turnover" must also be excluded from "total turnover", since one of the components of "total turnover" is export turnover. Therefore, such deduction should be allowed from the total turnover in the same proportion.
8. Madras High Court in Commissioner of Income Tax v. Maars Software International Limited2 referred to the aforesaid decision of the Supreme Court in HCL Technologies Limited (supra) and reiterated that components of total turnover/denominator in the formula would be the quantum of export turnover/numerator plus proceeds from domestic sales. Total turnover for the purpose of the formula would be the actual sale receipts excluding unrealised foreign exchange as adopted by export turnover.
1(2018) 16 SCC 709 2 2018 SCC Online Mad 10907 4
9. In the light of the aforesaid two judicial pronouncements, Central Board of Direct Taxes (CBDT) has issued Circular No.4/2018 dated 14.08.2018 declaring that all charges/expenses specified in Explanation 2(iv) to Section 10A of the Act are liable to be excluded from the total turnover also for the purpose of computation of deduction under Section 10A of the Act. Income Tax Department has been instructed not to file appeals henceforth on the above settled issue and to withdraw those appeals already filed.
10. It is submitted at the bar that provisions of Section 10A and 10B of the Act insofar this issue is concerned, are in pari materia.
11. In view of the above, the substantial question of law, as framed above, is answered in favour of the assessee and against the revenue.
12. Appeal is accordingly allowed.
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Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.
______________________________________ UJJAL BHUYAN, CJ ______________________________________ C.V.BHASKAR REDDY, J 02.11.2022 vs