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WNS Global Services Pvt. Ltd. Versus Income Tax Officer, Mumbai

Eligibility of deduction under section 10A for assessee’s STPI units in Mumbai and Pune - Held that:- Respectfully There being no saving clause or any amendment while omitting sub-section (9) of section 10A of the Act, the result is that it is to be read as having never been passed and had never existed on the statute. In this view of the matter, we reverse the order of the CIT(A) on this issue and direct the Assessing Officer to allow the assessee’s claim for deduction under section 10A of the .....

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ny engaged in providing IT enabled BPO services filed its return of income for assessment year 2003-04 01/12/2003 declaring income of ₹ 24,59,770/- after claiming deduction under section 10A of the Income Tax Act, 1961 ( in short the Act ) amounting to ₹ 31,89,63,929/-. The assessee, a part of the WNS Group and in May 2002, WNS (Mauritius) Ltd., a wholly owned subsidiary of WNS Holdings acquired the entire share capital of the assessee from M/s. British Airways. The assessee carries .....

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n 10A of the Act. The assessee had also put forth an alternate claim that it be granted deduction under section 80HHE of the Act in case the claim under section 10A of the Act was not allowed. The case was taken up for scrutiny and the assessment was completed under section143(3) of the Act vide order dated 17/3/2006 allowing the assessee deduction claimed under section 10A of the Act. 2.2 Subsequently, the CIT-10, Mumbai in exercise of revisionary powers passed an order under section263 of the .....

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urisdiction by the CIT(A) under section 263 of the Act on the ground that the Assessing Officer had not examined the assessee s claim for deduction under section10A of the Act in the light of the provisions of section 10A(9) of the Act for re-examination thereof. In respect of the CIT s rejection of the assessee s alternate claim for deduction under section 80HHE of the Act to be granted, the Co-ordinate bench modified the order of the CIT to the extent that while re-assessing the income, the As .....

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of the Act and consequently determining the income of the assessee at ₹ 31,89,13,930/-. 2.4 Pursuant to the order of the Co-ordinate bench of this Tribunal in ITA No.348/Mum/2008 dated 17/6/2009, in the matter of the assessee s appeal against the CIT s order under section 263 of the Act dated 20/11/2007, the Assessing Officer took up fresh assessment proceedings. After hearing the assessee in the matters of its claim for deduction under section10A of the Act and alternate claim for deduct .....

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on the ground that sub-section (9) to section 10A of the Act being omitted by Finance Act, 2003 w.e.f. 1/4/2004, the provisions of Section 10A(9) of the Act were in the force for assessment year 2003-04. Holding thus, the CIT(A) dismissed the assessee s appeal vide the impugned order dated 1/3/2013 3.1 Aggrieved by the order of the CIT(Appeals)-22, Mumbai, the assessee is in appeal before the Tribunal raising the following ground:- 1. On the facts and circumstances of the case and in law, the l .....

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(9) of the Act from the statute by Finance Act, 2003 w.e.f. 1/4/2004. Section 10A of the Act should be read as if the provisions of sub-section(9) thereof never existed on the statute book since the omission of sub-section (9) of section 10(A) of the Act was made without a saving clause In these circumstances, the Ld. Representative for the assessee submitted that the deduction under section10A of the Act was correctly claimed by the assessee in respect of its Mumbai Unit-I and Pune Unit-1&2 .....

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peech presenting the Union Budget for 2003-04 and particularly to para 102 thereof, wherein it was stated that …… it is proposed that the concession extended to IT under section 10A and 10B of the Income Tax Act will continue as originally envisaged. As per law such companies as are currently covered by these tax exemptions lose the benefits upon change in their ownership or shareholding. This is not logical. I am, therefore, removing these restrictions, the benefit of such tax exe .....

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h is pari-materia to the provisions of section 10A(9) of the Act) at para 11 of its order has held that even though the Finance Act, 2003 mentions that the aforesaid sub-section(9) is omitted with effect from 1st April 2004, in view of the fact that the said omission is different from repeal, the saving clause provided in section 6 of the General Clauses Act is not applicable. Therefore, section 10B of the Act should be read as though it never had sub-section(9) in it all in all the proceedings .....

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a Pvt. Ltd. (supra) has been upheld by the Hon ble Karnataka High Court vide order in ITA No.876 & 877/2008 dated 25/11/2014, wherein Revenue s appeal against the aforesaid order was dismissed and the substantial question of law was answered in favour of the assessee. 3.2.5 The Ld. Representative for the assessee submits that in view of the facts and circumstances of the case on hand and the judicial pronouncements relied upon, the orders of the authorities below in denying the assessee dedu .....

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the provisions of sub-section (9) of section 10A of the Act which was repealed only w.e.f. 1/4/2004 and was, therefore, applicable for the year in question. Citing, inter-alia, the decision of the Hon ble Apex Court in the case of Alladi Kuppuswamy (1977) (108 ITR 435) (SC), Ld. Departmental Representative contended that the plain language of the Act cannot be interpreted to read it down. It was further submitted that this issue has been held against the assessee by the decisions of the Co-ordin .....

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ear 2004-05(supra) has adjudicated the issue of the provisions of applicability of provisions of Sub-section (9) to section 10A of the Act for that year only and certainly has not rendered any finding in respect of the applicability of the provisions of sub-section(9) of section 10A in the context of the assessee s claim for deduction under section10A of the Act for assessment year 2003-04 as the present appeal was not before that bench for adjudication of this issue. In this context, the Ld. Re .....

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correct since the said order only upholds the assumption of jurisdiction by the CIT under section 263 of the Act and has not adjudicated on the assessee s claim for deduction under section 10A of the Act in the light of the provisions of sub-section (9) thereof. 3.5.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited. The issue before us for consideration and adjudication is whether the order of the author .....

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he assessee for assessment year 2003-04 the assessee had claimed deduction under section 10A of the Act; submitting that the amendment carried out by Finance Act, 2003, wherein section 10A(9) of the Act was deleted was an amendment of clarificatory nature and such deletion should be considered to have been omitted retrospectively. In original scrutiny assessment proceedings, the assessment was completed under section 143(3) of the Act vide order dated 17/3/2006 allowing this claim and accordingl .....

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n. 3.5.3 Sub-section (9) of section 10A of the Act was omitted from the statute by Finance Act, 2003,w.e.f. 1/4/2004. Para 102 of the Finance Minister s speech while presenting the Union Budget for 2003-04 has been perused and we find that the statement of intent of the legislature for omitting sub-section (9) of section 10A of the Act was that the concessions extended to the IT Sector under sections 10A & 10B of the Act are to be continued as originally envisaged. In this context, the prese .....

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nd 2005-06, which we feel squarely covers the issue before us in favour of the assessee. In this order (supra) the Bench, in respect of the effect of deletion of section 10B(9) of the Act (which is pari-materia to section 10A(9) of the Act) at para 11 of its order has held that even though the Finance Act, 2003 mentions that the aforesaid sub-section (9) is omitted w.e.f. 1/4/2004; in view of the fact that the said omission is different from repeal, the saving clause provided in section 6 of the .....

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s order the substantial question of law before the Hon ble High Court was: Whether the Tribunal was correct in holding that in view of the omission of sub-section 9 to Section 10B of the Act, w.e.f. 01.04.2004, it should be understood that the said section never existed in the statute book and therefore the benefit claimed by the assessee u/s. 10B should be allowed? Their Lordships at para 7 and 8 of their order (supra) have answered the question holding as under:- 7. The Apex Court in the case .....

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of Section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position. Thus the operation of repeal or deletion as to the future and the past largely depends on the savings applicable. I .....

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on introduced by way of an amendment while omitting sub-section (9) of Section 10B. Therefore, once the aforesaid section is omitted from the statute book, the result is it had never been passed and be considered as a law that never exists and therefore, when the assessment orders were passed in 2006, the Assessing Officer was not justified in taking note of a provision which was not in the statute book and denying benefit to the assessee. The whole object of such omission is to extend the benef .....

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