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2009 (9) TMI 623 - HC - Income TaxExemption – Newly established undertaking in free trade zone (FTP) – Change in shareholding in newly established company - Explanation 1 to section 10A(9) of the Income-tax Act, 1961 was at all applicable - appellant-company has issued shares without voting rights - original promoters, continue to hold shares of the appellant-company carrying not less than 51 per cent. Of the voting power even after change in shareholding resulted in their having less than 50 per cent. Of the shares – assessee entitled to deduction under section 10A (1) of the Act. Where the words used are “has made, has ceased, has failed and has become”, they were found to be words which can be understood as happening both prior and after coming into force of the statute, as it was understood from the words “if a person has been convicted” to include anterior conviction. In Explanation 1, the present tense is used with an injunction that the shares “are not beneficially held by the persons who hold the shares in company”. The present tense cannot be assumed to describe the status of the shareholder as the owner, but the status of the shares which are beneficially held. On this interpretation the language of the section can only be understood to describe "the date on which the undertaking was set up" as applicable only for those who are setting up the undertaking after the new provision, so that in case of others, the date has to be understood at best, as on April 1, 2000, the date on which the law was brought in the statute.
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