9911796707
TMI Blog2012 (8) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2004-05." 2. Brief facts, which are relevant for adjudication of the issue, are that the assessee company is engaged in the business of providing I.T. enabled services, outsourcing (BPO) and is part of WNS Group. The assessee company is jointly held by Warburg Pincus Group (73%), British Ariways (16.8%) and balance by others (10.2%). It was carrying out its business from 4 Software Technologies Parks through various units located in Mumbai, Pune and Nasik. It had in all seven units out of which two units were in Mumbai, three units in Pune and two units in Nasik. In the notes filed along with the return of income, the assessee has claimed deduction under section 10A of the Act for Mumbai Unit-1 and Pune Unit-1 only and in other units, the assessee has not claimed any deduction. These details have been duly mentioned in the said notes filed along with the return of income. Mumbai Unit-1 had commenced its operation in March 1997 and since then it has been claimed deduction under section 10A. During the year, it had claimed deduction under section 10A, at Rs. 8,26,80,319. In other units i.e., Pune Unit-1, which had commenced its operation from December 1999, and has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the A.Y. relevant to such previous year and subsequent years. You are a wholly owned subsidiary of British Airways Pvt. Ltd. United Kingdom. The assessee company has been providing data processing and management service through its units and claiming deduction of resultant profits u/s.10A of the IT, Act, 1961. During the financial year 2002-03 (i.e. May 2002) Warburg Pincus Group acquired from 'British Airways, the majority stake in the WNS Group through WNS (Holdings) Ltd., New Jersey and still claimed deduction u/s. 10A of the I.T. Act, 1961. 3. The Assessing Officer erroneously allowed the deduction u/s.10A amounting to Rs.19,32,57,546/- which is not in conformity with the statute in this behalf. The Assessing Officer accepted your claim of deduction u/s.10A amounting to Rs.19,32,57,546/-. He failed to apply his mind and erroneously accepted your wrong claim. Thus the assessment is erroneous and also prejudicial to the Interest of revenue." 5. In response, the assessee made very detailed submissions on various aspects which have been incorporated from Pages-2 to 17 of the impugned order. The sum and substance of the assessee's objection and the submissions made before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this, various decisions and CBDT circulars have been referred to and also, on the point that the law which stands in force as on the first day of April of the financial year would apply for the assessment. Specific reliance was placed on the judgments of Hon'ble Supreme Court in Reliance Jute & Industries Ltd. v/s CIT, [1979] 120 ITR 921 (SC) and Karimtharuvi Tea Estate Ltd. (supra) and various other judicial pronouncements. All these contentions have been incorporated in Paras-4.1 to 4.2.6 of the impugned order. The other set of arguments of the assessee was that the intention of section 10A(9), was to prevent shell companies in abusing the beneficial provisions of section 10A, and the words appearing in section 10A(9) would be applicable only for the assessment year in which the change in share holding takes place and not for the assessee who have been claiming deduction prior to assessment year 2003-04 and subsequent years; (vi) Provisions of section 10A are beneficial which could be interpreted liberally and there should be equity in applying such beneficial provisions of law; (vii) Once the provision has been deleted, the rigours of such provision has to be given retrosp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of income duly supported with the auditor's report in Form no.56F, giving details and computation of deduction and also the notes given along with the return of income. It was after considering these documents, the Assessing Officer has allowed the claim in scrutiny proceedings, therefore, such allowance of deduction cannot be held to be erroneous or prejudicial to the interests of Revenue. He drew our attention to the various units of the assessee and particularly the details and working of deduction in Form no.56F, with regard to eligible unit i.e., Pune Unit-1 and Mumbai Unit-1. He fairly admitted that in the assessment year 2003-04, similar revision under section 263, was initiated which has been partly confirmed by the Tribunal, vide order dated 17th June 2009, passed in ITA no.348/Mum./2008, wherein the Tribunal has held that the Assessing Officer has failed to address the issue of applicability or non-applicability of provisions of sub-section 9 to section 10A. However, he submitted that the said decision cannot be relied upon in view of the judgment dated 8th September 2009, passed by the Jurisdictional High Court in Zycus Infotech Pvt. Ltd. [2010] 191 Taxman 13 (Bom. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 30th May 2008, wherein a similar issue had come up before the Tribunal. The Tribunal, after considering the various judgments of Hon'ble Supreme Court, has held that sub-section 9 of section 10A, will not apply in the assessment year 2004-05, even if there is a change in composition of holding in the earlier years. The learned Sr. Advocate drew our attention to the Finance Minister's speech and submitted that the Finance Minister has specifically mentioned that denying of exemption upon change in ownership or share holding is not logical and, therefore, such restrictions are removed and benefit of such tax exemption will remain even in the case of amalgamation and de-merger. This speech of Finance Minister along with the omission of the said section by Finance Act, 2003, has to be interpreted in such a manner that such an omission is retrospective in nature. He took us through relevant paragraphs of the judgment of the Hon'ble Supreme Court in Allied Motors Pvt. Ltd. etc. (supra), that once a provision which has caused hardship and has been removed subsequently, the same has to be given retrospective effect. Whenever the Parliament makes any provision to be not effectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ict interpretation has to be given. In support of this contention, he relied on the judgment of Hon'ble Supreme Court in Novapan India Ltd. v/s Collector of Central Excise, [1994] Suppl. (3) SCR 549. He further submitted that the Assessing Officer has to discuss both the views and then has to come to a conclusion that which view he has taken. In support of this contention, he relied on the judgment of Karnataka High Court in CIT v/s Infosys Technologies Ltd., [2012] 17 Taxman.com 203 (Kar.). He submitted that the provisions of section 10A(9) is very clear that if change in ownership takes place, then no exemption can be given under this section and this will remain so even if such a change has taken place in the earlier years. He relied on the judgment of Hon'ble Supreme Court in CIT v/s Shah Sadiq & Sons, [1987] 166 ITR 102 (SC). Lastly, he submitted that the learned Commissioner has merely restored the mater to the file of the Assessing Officer to re-examine the issue on merits and all these issues can be raised before the Assessing Officer also. 10. In the rejoinder, the learned Sr. Advocate, submitted that once the Finance Minister has stated that it is illogical provision, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us year and the subsequent years." 13. The purpose and intention for which the provisions was brought on statute, has been clarified by the CBDT vide its circular no.8 of 2002, dated 27th August 2002, in the following manner:- "19.6 Sub-section (9) of section 10A and sub-section (9) of section 10B provide that no deduction under those sections shall be available where during any previous year the ownership or the beneficial interest in the undertaking is transferred by any means. 19.7 The above provision was introduced by the Finance Act, 2000 to prevent trading in incentives by shell companies formed only for that purpose. However, the above provision was not intended to bring within its purview cases of genuine business reorginazation while maintaining the major portion of ownership or beneficial interest with the same persons who were the owners of the business before such reorginazation." 14. The above circular clearly brings out the purpose of sub-section 9 section 10A, which was to curb the trading in incentives by shell companies, formed only for that purpose. The object was to discourage unscrupulous shopping of EOUs and STPs and not to discourage genuine business re- o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (Ker.). Now in the wake of omission of sub-section 9 of section 10A, in this year, can it be held that such an omission can have a retrospective effect to the extent that change in the ownership in the assessment year 2003-04, when such a provision was applicable will have effect on exemption in the assessment year 2004-05. Sub-section 9 has been omitted without any saving clause and it is not a case of repeal. The effect of repeal has been dealt in section 6 of General Clauses Act, 1897, in the following manner:- "S. 6 Effect of repeal - Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not - (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or any thing duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition of law, it is clear that if a provision in a statute is unconditionally omitted without any saving clause in favour of the pending proceedings, all actions must stop where such an omission is found. Thus, once the provisions of sub-section 9 have been omitted, then it can be safely inferred that such an omission will be applicable wherever omitted section comes into play. The Bangalore Bench of the Tribunal in M/s. G.E. Thermo Matrix India P. Ltd. (supra), after relying on the aforesaid judgment of Constitutional Bench of the Hon'ble Supreme Court, has held that sub- section 9 of section 10B (which is similar to section 10A), held that provisions of section 10B should be read as though it never had sub-section 9 in all the proceedings under the Act. 17. Therefore, in our considered opinion, sub-section 9 to section 10A, which has been omitted from the statute w.e.f. 1st April 2004, has to be read to be obliterated from the statute book or at least it will not have any effect from the year in which it was omitted. Thus, even if there was any change in the ownership through acquisition of shares in earlier year 2003-04, exemption under section 10A, cannot be denied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to keep in mind the settled principle of interpretation that retrospectivity cannot be lightly inferred unless it is clearly provided for the statute. The first proviso to section 10A implies continuity. If the intention was to deprive the existing industries or to impose a condition, which is not capable of being fulfilled in the context of transfer having already occurred prior to the statute, it would have been specifically made clear. Under these circumstances, keeping in mind the general principle that vested right cannot be divested, one cannot assume retrospectivity to a greater extent than what the section intends. 15. At this juncture, it is needless to mention that, 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 the Explanation 1, 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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