Law:

Section:

Section 10A of the Income-tax Act, 1961 - Free trade zone - Assessment year 2004-05 - Whether extension of time for realization of export proceeds by competent authority under FEMA can be said to be approval granted by competent authority under section 10A(3) and assessee would be entitled to benefits under section 10A in respect of such export proceeds - Held, yes [In favour of assessee] FACTS The assessee had not received certain export proceeds within six months from the end of the relevant assessment year. As the exports were effected prior to 31-3-2004, the export proceeds ought to have been realized by 30-9-2004 for availing deduction under section 10A but same was realized by the assessee till December 2004. The assessee had, in fact, made an application to the RBI on 7-10-2004 seeking extension of time for realization of the export proceeds. The RBI granted approval in relation to realization of export proceeds but said approval was issued in the context of the provisions of the FEMA and there was no formal approval granted by the RBI under section 10A. The Tribunal held that once the assessee had applied for extension and had completed all the formalities and in response the RBI had taken the remittances on record, then non-issuance of a formal letter of approval by the RBI could not be held against the assessee for none of its fault. The Tribunal further held that in the facts of the case, it must be held that the extension had been granted in substance and, therefore, the benefit of section 10A had to be allowed to the assessee. On the revenue's appeal : HELD Explanation 1 to section 10A(3 ) clearly provides that the expression 'competent authority' in section 10A means the RBI or such other authority as is authorized under any law for the time being in force for regulating payments and dealings in foreign exchange. Admittedly, RBI is the competent authority under the FEMA which regulates the payments and dealings in foreign exchange. Thus, what section 10A(3) provides is that the benefits under section 10A(1) would be available if the export proceeds are realized within the time prescribed by the competent authority under the FEMA. In the instant…

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