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: of the debate, lets consider this scenario: company A has a total turnover of Rs 150, of which Rs 100 come from one SEZ unit and Rs 50 from another non-SEZ unit, and also an export turnover of Rs 100 and profits of Rs 100, both from the SEZ operations. Now consider the case of company B which has a total turnover of Rs 100 and a profit of Rs 100, both coming SEZ operations. Here, the tax-exempted profits of company B’s SEZ unit shall still be higher at Rs 100 since, while computing, only the turnover of its SEZ unit will be considered. Whereas, while computing the turnover of the SEZ unit of company A, the turnover of both SEZ and non-SEZ units will be considered. Hence, company A ends up being a loser with a total tax-exempted profit of Rs 66.67. In our view, the stand adopted by the assessees seems to have merit. Further, judicial authorities have also been saying, that the benefit under such Sections is to be calculated keeping in mind the unit alone .

Even the Central Board of Direct Taxes has previously clarified in relation to similarly worded provisions of Section 10A of the IT Act—that the calculation of profits to be exempted is to be computed keeping in mind only the undertaking and not the business as a whole.Given the importance of SEZs to the our economy, the government could consider clarifying the legislative intent by using this year’s Finance Act and laying to rest an issue that has caused much consternation among a section of the taxpayers.