N. Kumar, J.

1. The assessee has preferred this appeal challenging the order passed by the Tribunal holding that the assessee is not entitled to the benefit of Section 10A of the Income Tax Act in respect of sales effected by them to other STP, as it does not amount to a deemed export.

2. The assessee, M/s. Tata Elxsi Limited is having a STP unit, which was registered with Software Technology Park, India, on 24.5.1993, which started production of software from 24.8.1993. The assessee claimed profits from this undertaking amounting to Rs. 14,75,12,687/- as deduction under Section 10A of the Income Tax Act, 1961 (for short hereinafter referred to as 'the Act'). The assessee has given the break-up of details of sales and services from 10A unit vide their letter dated 10.3.2003. The assessee has taken Rs. 4,49,09,602/- being sales and services to Texas Instruments (I) Ltd., as part of export turnover. The assessee was asked to explain why the said amount should not be treated as domestic sales from 10A unit. The assessee stated that it provides software services to Texas Instruments India Pvt. Ltd., (for short hereinafter referred to as TIIPL), which is also a registered STP unit at Bangalore. The software development services are provided on a principal to principal basis and based on the purchase orders placed by TIIPL on the assessee with the instructions to bill and deliver to TIIPL. The software development work done by the assessee for TIIPL is exported out of India by TIIPL. Therefore, the software development services provided to TIIPL would be eligible for deduction under Section 10A of the Act, as it has satisfied both the conditions prescribed being,

"(a) export of computer software from India indirectly (i.e., the software development work done by the Company for TIIPL is exported out of India by TIIPL which is a registered STP unit) and

(b) the consideration for the software work done by the Company is received in convertible foreign exchange within the specified period."

3. The assessee in support of its contention relied on the notification dated 30.4.1995 issued by the CBDT in respect of Software Technology Park Scheme. It provides that supplies made from a DTA to a STP unit will be regarded as 'deemed export' and will be eligible for the benefits specified at paragraphs 106 and 122 of the Export and Import Policy. The assessing authority rejected the said contention on the ground that the consideration the assessee received in respect of sales to TIIPL forms part of its domestic turnover only and not its export turnover. Aggrieved by the said order, the assessee preferred appeal to the Commissioner of Income Tax (Appeals).

4. The appellate authority held that as per the provisions of Section 10A of the Act, exemption is in respect of profits and gains as are derived by an undertaking from the export of articles or things or computer software. As per the provisions of Section10A(3), if the sale proceeds of articles or things or computer software exported out of India are received in, or brought into India by the assessee in convertible foreign exchange, then the Section applies. From the provisions of Section 10A of the Act, it is crystal clear that the exports have to be outside India similar to the provisions of Section 80HHE. As such, the assessee's contention that the distinction between the provisions of Section 80HHE and Section 10A is without any basis and not tenable. If the meaning of 'export' has to be adopted from STP unit, it is not tenable in view of Section 10A of the Act. If the assessee's contention is to be accepted that the sales made to TIIPL should be treated as 'deemed export' and exemption under Section10A of the Act should be allowed, it will amount to two separate undertakings i.e., TIIPL and the assessee will be claiming exemption under Section 10A of the Act in respect of same export turnover. To allow exemption under Section 10A of the Act, in respect of same exports to two different as