TMI Blog2017 (6) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive assessment years. The assessee is in existence from 1997-98 which had commenced production/manufacture of articles/things during the FY 1997-98 and exemption period of 10 years was ended with the AY 2007-08 and therefore for the AY under consideration, the assessee is not eligible for deduction u/s.10A as held by the Ld.CIT(A) in his order. - Decided against assessee. - ITA No. 2514/Mds/2016 - - - Dated:- 26-5-2017 - Shri N.R.S. Ganesan, Judicial Member And Shri D.S. Sunder Singh, Accountant Member Appellant by : Mr.K.Raghu, CA Respondent by : Mr.Supriyo Pal, JCIT ORDER Per D. S. Sunder Singh, Accountant Member This is an appeal filed by the assessee against the Order dated 24.06.2016 of Commissioner of Income Tax (Appeals)-1, Chennai, in ITA No.47/15-16 for the AY 2009-10. 2.0 Ground Nos.1 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of articles/things was way back to the date of 03.10.1997 and considering the date of commencement of manufacturing the year under consideration for which the claim made was 11th year and the assessee is not eligible for deduction u/s.10A for the year under consideration. The assessee has furnished the wrong statement for claiming the deduction as 10th year. Therefore, the Ld.DR argued that the assessee has made the wrong claim u/s.10A for which it was not eligible for deduction. Therefore, the Ld.DR argued that notice issued u/s.148 is valid and no interference is called for. 6.0 We heard the rival submissions and perused the material placed on record. The assessee s Audit Report for the AY 2009-10, in Form-56F, the assessee has mentioned that the claim for the consecutive year for which deduction claimed was 10th year. The assessee has commenced the production/manufacture of articles/things on 03.10.1997 and till the end of the previous year relevant to the AY 2009-10, the assessee has completed 11 years from the date of commencement of production/manufacture of articles/things. As per the provisions of Sec.10A, the assessee is eligible for deduction u/s.10A only for 10 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... close full and true material facts. In the case law cited, the facts regarding the profits of the 10A units and the losses were declared by the assessee and the AO after calling for the information completed the assessesment. The assessee has not furnished any wrong or misleading information. In the instant case the assessee has made the wrong claim and furnished the misleading information and incorrect certificate issued by the Accountant. Therefore, the Hon ble jurisdictional High Court decision is not applicable in assessee s case. In the instant case, the assessee has not brought on record any evidence to show that the AO has examined the claim of the assessee with respect to the number of years. There was no discussion in the assessment order. Therefore, we are of the considered pinion that the facts of the case law relied upon by the assessee are not applicable in this case. In the case of CIT v. Aravind Remedies Ltd., relied upon by the assessee, the AY involved was 1996-97 and the notice was issued u/s.148 on 04.02.2003 which is beyond the period of four years and the issue was whether the expenditure was revenue expenditure or the deduction u/s 35D amortization of pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1997-98 i.e. when the assessee began to manufacture or produce such article or thing or computer software or the year from which the assessee was granted STPI Registration i.e. from Asst. Year 2000-01, considering that the assessee was granted STPI Registration on 27.03.2000. 7. In this regard the contention of the assessee is that the date of commencement was wrongly mentioned in the Audit Report as 03 10.1997, whereas it was incorporated only on 06.10.1997. It is submitted that even if the date was wrongly mentioned as 03.10.1997 (i.e. 3 days prior to date of actual incorpora ion) in the Audit Report, it does not have any effect on the merits of the case as the first year of business anyway happens to be only the A.Y. 1998-99. This is acknowledged by the assessee as well as evidenced by the copy of the covering letter to the return of income filed by the assessee for that assessment year, a copy of which is enclosed in Annexure-A . 8. It is the contention of the assessee that the 1st proviso to Section 10A is not applicable to them. Ironically, during the course of the assessment proceedings, the assessee had relied on the very same proviso in their support. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From-56F, the commencement of production/manufacture was 03.10.1997 and the date of initial registration with the SEZ was 27.03.2000. Though, the assessee argued that the company was incorporated on 06.10.1997, no evidence has been produced by the assessee to establish that the company has not commenced the production on 06.10.1997. The assessee also not produced the evidence in the form of Income Tax returns filed for the AY 1998-99 to 2000-01 evidencing that the company has not commenced its manufacturing activities. Prior to 2000, the company was in a free trade zone but not in software Technology Park. As per the material placed before us, the company has filed its return of income for the AY 1998-99 and the company s income for the AYs 1998-99 1999-2000 are taxed under the normal provisions of the Act as the deduction u/s Sec.10A was not available to the assessee. As per the letter dated 27.11.2012 filed by S.Krishna Murthy, CA, the company was in existence ,commenced the production and the filed returns of income for the AYs 1998-99 1999-2000. The relevant part of the letter from the S. Krishna Murthy,CA dated 27.11.2012 is re-produced as under: The proviso under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckoning u/s.10A deduction should be from the date of re-location of the unit in STPI zone. The assessee has commenced its production in the FY 1997-98 and section 10A for the relevant FY 1997-98 is extracted as under 64[Special provision in respect of newly established industrial undertakings in free trade zones.65 10A. (1) Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking to which this section applies shall not be included in the total income of the assessee. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:- 66[(i) it has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year- (a) commencing on or after the 1st day of April, 1981, in any free trade zone; or (b) commencing on or after the 1st day of April, 1994, in any electronic hardware technology park or, as the case may be, software technology park;] 67[(ia) in relation to an undertaking which begins to manufacture or produce any article or thing on or after the 1st day of April, 1995, its exports of such ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2000. [Special provision in respect of newly established undertakings in free trade zone, etc. 10A. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee : Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive assessment years : Provided further that where an undertaking initially located in any free trade zone or export processing zone is subsequently located in a special economic zone by reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, or brought into, India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous yea or, within such further period as the competent authority may allow in this behalf. From the plain reading amended section of Sec.10A, it is clear that the assessee is eligible for deduction u/s.10A for the period of 10 years from the date of commencement of production/manufacture of articles/things for 10 consecutive AYs. It was also made it clear in section that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive assessment years. The assessee is in existence from 1997-98 which had commenced production/manufacture of articles/things during the FY 1997-98 and exemption period of 10 years was ended with the AY 2007-08 and therefore for the AY under consideration, the assessee is not eligible for deduction u/s.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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