Eou
This query is : Resolved
23 April 2012
Dear Sir,
Ours is partnership firm having EOU status. We have been claiming Section 10B benefit till FY 10-11. From FY 2011/12, this section 10B benefit is withdrawn. Then also we have done exports from this firm in FY 2011/12 and earned profit - on which we will pay I.Tax.
Now, we formed another firm in Oct-10.This unit is set up in SEZ-Sachin (Gujarat), which will have income tax benefit. In this new partnership firm, there are 5 partners out of which one partner is also a partner in EOU Firm. In this new firm, we have not yet exported anything.
My querry is : Can we export to our parties ( of EOU)from this new unit in SEZ ? And slowly, we show the turnover of EOU reducing month by month.
Can I.T officer object to this ?
thanks
anckoora
Ours is partnership firm having EOU status. We have been claiming Section 10B benefit till FY 10-11. From FY 2011/12, this section 10B benefit is withdrawn. Then also we have done exports from this firm in FY 2011/12 and earned profit - on which we will pay I.Tax.
Now, we formed another firm in Oct-10.This unit is set up in SEZ-Sachin (Gujarat), which will have income tax benefit. In this new partnership firm, there are 5 partners out of which one partner is also a partner in EOU Firm. In this new firm, we have not yet exported anything.
My querry is : Can we export to our parties ( of EOU)from this new unit in SEZ ? And slowly, we show the turnover of EOU reducing month by month.
Can I.T officer object to this ?
thanks
anckoora
23 April 2012
If you have setup new firm at surat-schin by complying with conditions of sec.10B then you can certainly export to your customers in old firm and dept.can object if turnover of EOU is reducing.Provided you have to established that turnover achieved is from production made from new SEZ firm.
23 April 2012
yes can do condition of NET FOREIGN EXCHANGE is mandatory.
23 April 2012
Dear Experts,
My only question is if I export the goods to all my customers ( to whom I was exporting from EOU till 31.3.2012) from SEZ unit - which will manufacture the same & export it. Thus I will get 100% I.Tax Exemption-being unit in SEZ.
In this scenario, I.Tax officer can say that to save I.Tax in EOU Firm ( as section 10B I.T.Exemption is withdrawn from 1.4.2011) , you have created a firm & established a unit in SEZ and started production & export from SEZ unit to claim I.T. Exemption.
Pl. reply
anckoora
My only question is if I export the goods to all my customers ( to whom I was exporting from EOU till 31.3.2012) from SEZ unit - which will manufacture the same & export it. Thus I will get 100% I.Tax Exemption-being unit in SEZ.
In this scenario, I.Tax officer can say that to save I.Tax in EOU Firm ( as section 10B I.T.Exemption is withdrawn from 1.4.2011) , you have created a firm & established a unit in SEZ and started production & export from SEZ unit to claim I.T. Exemption.
Pl. reply
anckoora
23 April 2012
Dear anckoora
Please refer to my earlier reply in which i mentioned that you will get benefit of income tax exemption under new SEZ unit if you comply with conditions of Sec.10B which requires installation of new plant and machineries and production of article or things.
you would not be entitled to income tax exemption by mere establishing new firm in SEZ but continuing to use old machineries.
If you don't install "new machineries" you will not get exemption.
Please refer to my earlier reply in which i mentioned that you will get benefit of income tax exemption under new SEZ unit if you comply with conditions of Sec.10B which requires installation of new plant and machineries and production of article or things.
you would not be entitled to income tax exemption by mere establishing new firm in SEZ but continuing to use old machineries.
If you don't install "new machineries" you will not get exemption.
23 April 2012
Dear Mr. Nilang,
Yes. We have purchased & installed new machinery in SEZ unit in Sachin - Surat (Gujarat).
SEZ Income Tax Exemption is u/s 10AA & not 10B.
In short I will close (slowly over 12 months) my EOU and export the goods from SEZ manufactured unit.
I.T. people will not ask : (1) why suddenly in 12 months your EOU is closed ? (2) Where your business ( of EOU) has gone ? (3) Will they not understand that SEZ is set to avoid to pay tax of EOU ?
regards
anckoora
Yes. We have purchased & installed new machinery in SEZ unit in Sachin - Surat (Gujarat).
SEZ Income Tax Exemption is u/s 10AA & not 10B.
In short I will close (slowly over 12 months) my EOU and export the goods from SEZ manufactured unit.
I.T. people will not ask : (1) why suddenly in 12 months your EOU is closed ? (2) Where your business ( of EOU) has gone ? (3) Will they not understand that SEZ is set to avoid to pay tax of EOU ?
regards
anckoora
24 April 2012
Dear Ankoora
To answer your questions in chronological order as under:
1.IT dept.has nothing to do with business policy.It's purely a internal matter whether to continue the business or to closed down.Dept.can't interfere in business policy.
2.It is justifiable that since the Firm is closed the business has not business has also gone.
3.Once you comply with the conditions granting the exemptions you should not worried about what dept.would understand.
Inconvenience caused due to wrong citation of Section No. is regretted.
Thanking you
CA.Nilang A Dalal
nil_dalal@yahoo.co.in
To answer your questions in chronological order as under:
1.IT dept.has nothing to do with business policy.It's purely a internal matter whether to continue the business or to closed down.Dept.can't interfere in business policy.
2.It is justifiable that since the Firm is closed the business has not business has also gone.
3.Once you comply with the conditions granting the exemptions you should not worried about what dept.would understand.
Inconvenience caused due to wrong citation of Section No. is regretted.
Thanking you
CA.Nilang A Dalal
nil_dalal@yahoo.co.in
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