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2016 (3) TMI 24 - ITAT MUMBAI

2016 (3) TMI 24 - ITAT MUMBAI - TMI - 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 f .....

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e as under:- 2.1 The assessee, a company 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. .....

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of ₹ 31,89,63,929/- under section 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 pa .....

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d 17/6/2009 upheld the assumption of jurisdiction 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 .....

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laim for deduction under section 80HHE 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 .....

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deduction under section10A of the Act 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 circu .....

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virtue of the omission of section 10A(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 i .....

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the bench to the Finance Minister s speech 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 res .....

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on of section 10B(9) of the Act ( which 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-sectio .....

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h in the case of GE Thermometrics India 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 authorit .....

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of the fact that its claim is hit by 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 ass .....

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n the assessee s case for assessment year 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 t .....

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mental Representative are factually incorrect 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 adjudicat .....

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s Ltd., U.K. In the return of income the 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 17/3/2 .....

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e matter is before us for consideration. 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 .....

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ng/2008 for assessment years 2003-04 and 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 savi .....

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h of the ITAT(supra). In para 4 of this 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 .....

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ception is engrafted by the provisions 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 largel .....

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, there is no saving clause or provision 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 o .....

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e dismissed. 3.5.5 In the facts and circumstances of the case and taking into account the legal precedents, we are of the considered opinion that the aforesaid finding rendered by the Hon ble Karnataka High Court in the case of GE Thermometrics India Pvt. Ltd. (supra) squarely applies to the case of the assessee; section 10B and 10A of the Act being pari-materia . Respectfully following the aforesaid decision of the Hon ble Karnataka High Court in the case of GE Thermometrics India Pvt. Ltd. (su .....

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