TMI Blog2013 (9) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10A(2)(b) of the Act - Section 10A(2)(i) of the Act shows that it has relevance to industry that has begun to manufacture or produce articles or things or computer software on or after the 1st day of April, 1994 – Decided in favor of Assessee. - Tax Case (Appeal) Nos.168 of 2011, 512 and 513 of 2011 and 336 and 337 of 2013 - - - Dated:- 19-8-2013 - Chitra Venkataraman And K. B. K. Vasuki,JJ. For the Appellant : Mrs. Pushya Sitaraman, Ms. Vardini Karthik, Mr. J. Narayanaswamy Standing Counsel for Income Tax Department For the Respondent : Mr. J. Narayanaswamy, Mrs. Pushya Sitaraman, Ms. Vardini Karthik JUDGMENT (The Judgment of the Court was made by Chitra Venkataraman, J.) Tax Case Appeal Nos.512 and 513 of 2011 and 336 and 337 of 2013, are at the instance of the Revenue raising the common question of law, which read as under:- "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee was eligible for deduction under Section 10A without considering the mandatory conditions to decide eligibility to claim deduction stipulated under Sections 10 A 2(i)(b) and 10A 2(i)(c) of the Act ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the Financial Year 1999-2000; in view of the above, the deduction granted was erroneous and prejudicial to the interests of the Revenue. Thus holding, the assessment was sought to be revised. This was contested by the assessee through its reply by placing reliance on the decision of the Income Tax Appellate Tribunal. 6. The Commissioner of Income Tax, however, rejected the contentions of the assessee. He viewed that the Income Tax Appellate Tribunal's decisions would not be of any assistance, as they were distinguishable on the facts of the case. Further, the Commissioner of Income Tax viewed that the Circular No.1 of 2005 dated 06.01.2005 relied on by the assessee related to the provisions of Section 10B of the Act and has no relevance to the operation of Section 10A of the Act; for the purposes of claiming deduction under Section 10A of the Act, the assessee should have begun the process of manufacture in the Software Technology Park depending on the date of commencement as provided for under Section 10A of the Act; thus, Section 10B of the Act operated on different consideration, thus there could not be any comparison between Section 10A of the Act and Section 10B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 625 of 2009 is of a total different nature having no relevance to the facts of the present cases. 11. Leaving this aside, in considering the claim of the assessee, the Income Tax Appellate Tribunal pointed out to the decision of the Karnakata High Court in the case of CIT and Others Vs. M/s.Expert Outsource (P) Ltd., reported in (2011) 243 CTR (Kar) 411, wherein, the Karnataka High Court held that the purpose of the Software Technology Park scheme was to encourage exports and gain valuable foreign exchange for the country; even though the assessee had begun operations on 17.12.2003, it had its registration on 04.08.2004; that the Software Technology Park authorities could also permit the conversion of an existing unit into a STPI unit. Thus, based on the decision of the Karnataka High Court, the Income Tax Appellate Tribunal allowed the assessee's claim, that, the fact of the assessee being in the business prior to the date of the registration of the STPI would not stand in the way of granting relief to the assessee. 12. Learned Standing counsel appearing for the Revenue took us through the provisions under Section 10A of the Act and Section 10B of the Act and submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the Circular No.1 of 2005 dated 06.01.2005 would apply to Section 10A of the Act too. Thus it held that the mere fact that the assessee was in existence prior to its date of registration on 04.08.2004 as Software Technology Park would not disentitle the assessee from claiming deduction under Section 10A of the Act. 16. As far as the present case is concerned, there is no denial of the fact that the assessee is in business right from 1999-2000. It got its registration as STPI on 27.03.2002. The Department accepted the claim of the assessee for two assessment years 2003-04 and 2004-05 and the assessment had become final. It is not as though the facts relating to the assessee's existence prior to its registration on 27.03.2002 is not a fact that the Department did not know and by mistake it allowed the benefit for the year 2003-04 and 2004-2005. In the circumstances, with the orders thus becoming final, principally stating, we do not find any justifiable ground for the Revenue to question the claim of the assessee from the assessment year 2005-06. 17. Even otherwise, we find that the claim of the Revenue could not be sustained. The provisions contained in Section 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industries in free trade zone, units in electronic hardware technology park or software technology park, units in special economic zone. The second requirement under Sub Section 2 of Section 10A of the Act is that it is not formed by splitting up or the reconstruction of a business already in existence and Sub clause (iii) of Sub Section 2 of Section 10A of the Act states that it is not formed by the transfer of machinery or plant previously used for any purpose to a new business. 18. As far as the present case is concerned, the assessee is in Software Technology Park. The assessee took advantage of the scheme notified by the Government of India in the Ministry of Commerce and Industry of the "software technology park" and sought for registration as STPI on 2002. In so getting the registration, the question that arises for consideration is as to whether the claim of the assessee would be covered by Clause (b) of Sub clause (i) of Sub Section 2 of Section 10A of the Act. A reading of the above Sub Section shows that in order to claim deduction, an undertaking in hardware technology park or software technology park must be in existence commencing its production on or after the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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