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TMI Blog2021 (6) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... me/Electronic Hardware Technology Parks (EHTP) scheme are concerned. 2. The petitioner / Indus Teqsite Private Limited was incorporated in the year 1998, has proven expertise and experience in manufacture of highly reliable electronic products and systems. The petitioner company is a Government of India approved "100% Export Oriented Undertaking" [in short 'EOU'] under the "Electronic Hardware Technology Park" [in short, 'EHTP'] Scheme, and has been duly granted such an approval by the "Software Technology Parks of India" [in short 'STPI'] through the powers delegated to it by the Department of Electronics, Government of India. 3. The issue raised in this writ petition is that the Deputy Commissioner of Income Tax, Chennai, who is the Assessing Officer of the Income Tax Department under respondents 2 and 1 Ministry has re-opened the assessment of the petitioner company (Assessee) for the Assessment Year 2006-2007 for the reasons noted in the files, that for the relevant Assessment Year, the petitioner company is not entitled to Section 10-B of the Income Tax Act, 1961 exemption as an 100% EOU. 4. The re-opening of the assessment has been initiated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said contentions by stating that the petitioner has misconstrued the issues by erroneously interpreting the provisions of the Act. There is no ambiguity in respect of the grant of approval and for grant of ratification. 8. The second respondent filed a counter affidavit, holding that Notification SO 117 (E) dated 22.02.1993 states that for the purpose of the various paras 111 to 117 in Chapter IX of the Export and Import Policy (1992-97) mentioned in the said notification, Board of Approval shall be substituted by the Inter-Ministerial Standing Committee. The said paragraphs of the Export and Import Policy (1992-97) deal with issues such as subcontracting by EOU/EPZ, Sale of imported materials, disposal of scrap, Private bonded warehouses, period of bonding, and de-bonding and it is only with respect to these issues that the Board of Approval has been substituted by the IMSC. The Exim Policy does not substitute the BOA with IMSC for the purpose of exemption under Section 10-B of the Income Tax Act. The said notification only extended incentives to EOUs to set up units under the STP Scheme. 9. Relying on the counter affidavit, the learned counsel for the second respondent reiter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 117 of Chapter-DC of Export and Import Policy (1992- 97) do not deal with that aspect, but other questions such as subcontracting by EOU/EPZ, Sale of imported materials, Disposal of scrap, Private bonded warehouses, period of bonding, and de-bonding. The notification therefore extended incentives to EOUs to set up units under the STP scheme. However, for the Court to conclude that the Interministerial Committee was authorized to issue approval under Section 10- B and that its imprimatur or approval under Section 10-A ought to be deemed as an approval under Section 10-B, there ought to be more direct, or express authorization. 15. Section 10A extends the exemption to the units set up under STP scheme which start production of goods during the previous year relevant to the assessment year commencing on or after 1st April, 1994. The assessee's plea about eligibility of a 100% EOU STP eligible for exemption would render the amendment brought about by the Finance Act, 1993 (extending the benefit under Section 10A of the Act to the STPs from 1st April, 1994) superfluous. There is no reason for Parliament to amend the law, and extend benefits of Section 10A to units under STP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n limited purposes and for the purpose of exemption under Section 10-B of the Income Tax Act, a further ratification from the Board of Approval is required and therefore, there is no confusion in respect of the clarification issued and the said clarifications cannot be said to be in violation of the provisions of the Income Tax Act. 12. This Court is of the considered opinion that admittedly, the petitioner obtained an approval from the Software Technology Parks of India and it is an autonomous society under Government of India, Ministry of Communications & Information Technology, Department of Information Technology. The petitioner has obtained the said approval in proceedings dated 17.04.2008. The approval states that the application submitted by the petitioner for setting up of 100% Export Oriented Unit under the Electronic Hardware Technology Park scheme of Government of India has been approved by this office under the delegated powers to the Directors of STPI by IMSC vide MIT letter No.5(100)/93-Export dated 24.06.1993. 13. The approval granted further clarified that the petitioner has to maintain a separate bank account for EHTP operations. Separate annual balance sheet wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the approval granted by the Software Technology Parks of India cannot be utilized for claiming exemption under Section 10-B of the Income Tax Act. Thus, the petitioner would be entitled to claim exemption under Section 10-B of the Income Tax Act, only if a ratification order is obtained from the Board of Approval. 18. Regarding the validity of the impugned clarifications, this Court is of an opinion that Explanation 2(iv) to Section 10-B of the Income Tax Act contemplates that "hundred per cent export-oriented undertaking" means an undertaking which has been approved as a hundred per cent export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by Section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) and the rules made under that Act. 19. The learned counsel for the petitioner made a submission that the word "approval" alone is contemplated under the said explanation and therefore, the approval granted by the Software Technology Parks of India is valid for the purpose of Section 10-B of the Income Tax Act. In this regard, it is to be considered, whether the word "approva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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