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The Commissioner of Income Tax Versus M/s. Chowgule And Company Ltd.

2015 (9) TMI 23 - BOMBAY HIGH COURT

Entitlement to claim benefit u/s 10B - 10 years exemption by amendment to sub-section (3) of section 10B with effect from 1/4/1994 or benefit of 8 years exemption under amendment by the Finance Act, 1988, with effect from 1/4/1989, particularly, when assessee commenced manufacturing/production from the year 1993 ? - Held that:- We find substance in the submissions made by the learned Counsel for the Assessee that an Assessee would be entitled to get the benefit of the amended provisions of Secti .....

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espect of amount received towards uptopping vessel income, machinery hire income, barge management expenses and in respect of amount received towards miscellaneous income, sale of scrap, service charges, grant-in-aid for medical expenses, recovery of fuel, group insurance, deptch money - Held that:- The test has necessarily to be whether or not 90% sought to be excluded is independent income having no nexus with export and therefore similar to the income described in sub clause (baa) of the Expl .....

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foresaid decision of this Court in Sesa Goa Ltd. (2015 (5) TMI 621 - BOMBAY HIGH COURT), we are inclined to remand the matter. - Tax Appeals No. 6 & 7 of 2008 - Dated:- 20-8-2015 - Mohit S. Shah, CJ And Anuja Prabhudessai, JJ. For the Petitioner : Ms Asha Desai, Adv. For the Respondent : Mr Mihir Naniwadekar With Ms Vinita Palyekar, Adv. JUDGMENT ( Per Mohit S Shah, C. J. ) Both the above Tax Appeal No.6 of 2008 and Tax Appeal No.7 of 2008 under Section 260-A of the Income Tax Act, 1961 challeng .....

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on by amendment to sub-section (3) of section 10B by Finance Act, 2001, with effect from 1/4/1994 or benefit of 8 years exemption under amendment by the Finance Act, 1988, with effect from 1/4/1989, particularly, when assessee commenced manufacturing/production from the year 1993 ? (B) Whether on the facts and in the circumstances of the case, the ITAT was justified in deleting the exclusion made by the AO in respect of amount received towards uptopping vessel income, machinery hire income, barg .....

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not having any nexus with the export activity of the assessee under clause (baa) of Explanation for the purpose of determining profits of the business u/s 80HHC ? 3. As far as question no.A is concerned, the learned Counsel for the respondent-Assessee invites our attention to the judgment dated 12/10/2011 of the Division Bench of the Karnataka High Court in the case of Commissioner of Income Tax V/s. DSL Software Ltd. reported in (2013) 351 ITR 0385. 4. In the said decision, the Karnataka High C .....

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rks for five years out of the block of initial eight years, subject to fulfillment of certain conditions. The proposed amendment seeks to extend the period of tax holiday from five years to ten years in order to give added thrust to exports. Clause-4 seeks to similarly extend the five year tax holiday period to ten years to the export oriented units under, section 10B of the Income Tax Act. 5. Relying on the aforesaid object set out in the Statement of objects and reasons, Karnataka High Court f .....

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nefit of 10 years if other conditions are fulfilled. The other condition to be fulfilled is ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture. Therefore, the object with which this amendment was introduced is to extend the benefit of tax holiday for a period of 10 consecutive years from the date of commencement of manufacture or production, Before an assessee can claim the benefit of tax holiday, the s .....

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ld not be entitled to the said benefit. If the said 10 consecutive years from the date of production has not expired, prior to 01.04.1999, for the remaining unexpired period, he would be entitled to the benefit. On the ground that he had the benefit of unamended provision and the 5 years period has expired on the Jay amended provision came into force, he cannot be denied the benefit. If that is done, it would run counter to the intention with which the amended provision was brought on the statut .....

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anded to the Assessing Officer to decide the question in light of the aforesaid decision of the Karnataka High Court, after considering the date from which the appellant started its manufacturing operations. 7. Having heard the learned Counsel for the parties, we find substance in the submissions made by the learned Counsel for the Assessee that an Assessee would be entitled to get the benefit of the amended provisions of Section 10B extending the period of exemption to 10 years from the date of .....

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. In the said appeal, this Court considered the following substantial questions of law and answered them as set out herein below: Questions Answers A) Whether on the facts and in the circumstances of the case, the receipts forming part of the Appellant's turnover in its accounts under the head (i) hire of barges; (ii) proceeds of services; (iii) repairs of vessels, which receipts have substantial costs, and arise from the main business activity of the Appellant, could be considered as simila .....

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Whether on the facts and in the circumstances of the case, receipts by way of sale proceeds from (i) sale of pig iron, (ii) sale of vessels, (iii) sale of engineering products, (iv) sale of material, and (v) sale of coke breeze could be considered as similar to the specified receipts referred to in the said clause (baa)? (II) Question "B", is answered in the affirmative i.e in favour of the Respondent/ Revenue and against the Appellant/Assessee; C) Whether on the facts and circumstance .....

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not included twice while computing the appellant's total turnover. 9. Questions B and C involve the interpretation of the provisions of Section 80HHC, particularly, the following provisions: 80HHC (1) Where an assessee, being an Indian company or a person (other than a company) resident of India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed .....

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of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India. (emphasis supplied) 10. In Sesa Goa Ltd. (supra) this Court considered the expression "any other receipt of a similar nature" (emphasis supplied). This Court considered the decision of the Supreme Court in Commissioner of Income Tax V/s. Ravindranathan N .....

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