2011 (6) TMI 809 - AT - Income Tax

Summary

Issues Involved:
1. Eligibility for deduction u/s 10A for the assessment year 2006-07.
2. Eligibility for deduction u/s 10A for the assessment year 2007-08.

Summary:

Issue 1: Eligibility for deduction u/s 10A for the assessment year 2006-07

The appeal of the Revenue challenges the allowance of deduction u/s 10A amounting to Rs. 86,86,131/- on the grounds that the assessee's undertaking started production in the financial year 1999-2000 but was not registered with STPI at that time. The assessee got registered with STPI on 27.03.2002 and continued using old machinery. The Assessing Officer denied the exemption u/s 10A due to the lack of STPI registration at the commencement of production. The assessee argued that the dates in section 10A(2)(i)(a), 10A(2)(i)(b), and 10A(2)(i)(c) pertain to the year of manufacture for the purpose of a 10-year exemption period and that compliance with all conditions makes them eligible for the deduction. The CIT(A) directed the Assessing Officer to allow the exemption, citing the decision of the Punjab & Haryana High Court in Mahavir Spinning Mills and CBDT Circulars 764 of 2000 and 1 of 2005.

Issue 2: Eligibility for deduction u/s 10A for the assessment year 2007-08

Both sides agreed that the facts and issues for the assessment year 2007-08 are identical to those for 2006-07. The Tribunal, applying the same reasoning as for the assessment year 2006-07, upheld the order of the CIT(A) and dismissed the appeal of the Revenue.

Conclusion:

The Tribunal found that the issue raised by the Revenue is covered in favor of the assessee by various decisions, including the Hon'ble Karnataka High Court in ITA No. 323 of 2010. The Tribunal upheld the CIT(A)'s order allowing the deduction u/s 10A for both assessment years 2006-07 and 2007-08, dismissing the appeals of the Revenue and the Cross Objection of the assessee. The order was pronounced soon after the conclusion of the hearing on 01.06.2011.