1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.650 OF 2009 The Commissioner of Income Tax – 8, Mumbai ..Appellant. Versus M/s.Powertel India Private Limited ..Respondent. Mr.Suresh Kumar for the appellant. Mr.P.S. Jetly i/by Warerkar & Warerkar for the respondent. CORAM : V.C. DAGA & J.P. DEVADHAR, JJ. DATE : 6TH AUGUST 2009 P.C. : 1. There are two questions raised in this appeal, which reads thus : i) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the A.O. was not justified in disallowing the adjustment of value of goods received from foreign company against sale consideration as the same was not permissible without approval of RBI in terms of Explanation (2) to Section 10A(3) and thereby arrived at the conclusion that the total sales figure of Rs.6,59,96,233/- is required to be taken as export turnover instead of Rs. 1,90,63,903/- for the purpose of determination of eligible amount of deduction u/s. 10A ? ii) Whether, on the facts and in the circumstances of the case, the Tribunal was correct or not in holding that adjustment of sale proceeds in foreign exchange against the imports would amount to bringing of sale proceeds in convertible form as per the I.T. Act ? 2 2. The assessee, a 100% EOU, manufactures magnetic transformers and inductors in its unit situated at Seepz and is entitled to 100% deduction on profits and gains arising from its export business. 3. Admittedly, the raw materials required for the export product were imported free of cost. However, to meet the requirement of Seepz authorities, the market value of the raw materials was debited to the purchase account and added to the sale account so that the statement submitted to the Seepz authorities complied with the requisite requirement. 4. The adjustments made by the assessee, according to the Tribunal did not require approval of the R.B.I. as contemplated under Explanation 2 to Section 10A(3). We see no infirmity in the order of the Tribunal, because, having taken the notional value of the raw materials in to account when actually the raw materials were received free of cost, the assessee was justified in making necessary adjustments in determining the export turnover. In such a case, Explanation 2 to Section 10A(3) would not apply. 5. In this view of the matter, we see no merit in the appeal. The appeal is, therefore, dismissed in limini with no order as to costs. (J.P. Devadhar, J.) (V.C. Daga, J.)