Relief to Serum Institute of India, Benefit of deduction u/s 10AA cannot be denied merely on ground that Goods not Exported outside India: ITAT [Read Order]
![Relief to Serum Institute of India, Benefit of deduction u/s 10AA cannot be denied merely on ground that Goods not Exported outside India: ITAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/10/Serum-Institute-of-India-Corporate-Guarantee-Bank-Guarantees-ITAT-taxscan.jpg "Relief to Serum Institute of India, Benefit of deduction u/s 10AA cannot be denied merely on ground that Goods not Exported outside India: ITAT [Read Order]")
In the case of the Serum Institute of India, the Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that the benefit of deduction under section 10AA of the Income Tax Act,1961 cannot be denied merely on ground that Goods not Exported outside India. The respondent-assessee company made a sales of Rs.69,80,96,800/- through SEZ-Unit –IV to UNICEF which is a United Nations...
In the case of the Serum Institute of India, the Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that the benefit of deduction under section 10AA of the Income Tax Act,1961 cannot be denied merely on ground that Goods not Exported outside India.
The respondent-assessee company made a sales of Rs.69,80,96,800/- through SEZ-Unit –IV to UNICEF which is a United Nations (UN) program headquartered in New York City that provides humanitarian and developmental assistance to children and mothers in developing countries.
The respondent-assessee company had entered into a contract with UNICEF and had supplied vaccines manufactured in Special Economic Zone, Hadapsar, Pune, Maharashtra to be supplied all over the world. The respondent-assessee company made a supply of some of the required vaccines in India as per delivery instructions by UNICEF and received the sale proceeds in convertible foreign exchange, even in respect of supplies made in India.
The Assessing Officer thought that since the sales were delivered in India and were not exported out of India, the respondent-assessee was not entitled to deduction u/s 10AA of the Act anddenied the deduction u/s 10AA in respect of sales made to UNICEF in India placing reliance on the Explanation 1 to section 10AA which defines the term “export out of India”.
On appeal, the CIT(A)allowed the deduction u/s 10AA in respect of sales of Rs.47,46,67,962/- made to United Nations International Children’s Emergency Fund (UNICEF).
The provisions of section 10AA were introduced in the Income Tax Act, 1961 by SEZ Act, 2005 only to promote exports to augment the foreign exchange earnings.On mere perusal of sub-section (1) of section 10AA, it would reveal that the export of goods, manufactured from the unit situated in the Special Economic Zone, is not a condition precedent for availing the benefit of deduction u/s 10AA of the Act.
A Coram of Shri Inturi Rama Rao, AM and Shri S S Viswanethra Ravi, JM observed that the Special Economic Zone Act, 2005 was enacted to provide for concessions which, apart from Central Excise Customs and other laws allied and as provided for deduction of Income Tax in respect of profits derived by an entrepreneur within the meaning of clause (j) of section 2 of Special Economic Zone Act, 2005. Clause 27 of the Special Economic Zone Act, 2005 provides for modification of the provisions of the Income-tax Act.
The Tribunal upheld the order of the CIT(A) and dismissed the revenue. Shri J. P. Chadraker appeared for the revenue and Shri Percy Pardiwalla & Shri Sukh Sagar Syal Counsels appeared for the assessee.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
