The Hindu Business Line : Revenue Dept clarifies on EoUs

THE Revenue Department has clarified that an undertaking set up in domestic tariff area (DTA) and subsequently converted itself into an export-oriented unit (EoU) and deriving profit from export of articles or things or computer software manufactured or produced by it should qualify for deduction under Section 10 B of the Income-Tax Act, upon getting approval as 100 per cent EoU.

In such a case the deduction should be available only from the year in which it has got the approval as 100 per cent EoU and should be available only for the remaining period of 10 consecutive assessment years, beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software as a DTA unit.

Moreover, in the year of approval, the deduction should be restricted to the profit derived from exports, from and after the date of approval of the DTA unit as 100 per cent EoU. In any case, the deduction to such units will not be available after the assessment year 2009-10 when the sunset clause for such benefits sinks in, a statement from the Export Promotion Council for EoUs and SEZ units issued here said.

The council's Director-General, Mr L.B. Singhal, said this clarification was issued by the Revenue Department after he and the council President, Mr Sharad Jaipuria, had met the Revenue Secretary, Mr K.M. Chandrashekar, early this month. During discussions, Mr Jaipuria pleaded for removal of the sunset clause of 2010 under Section 10B of the IT Act for EoUs as this is constraining investment into setting up fresh EoUs with the concept languishing into a limbo.

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Revenue Dept clarifies on EoUs