2011 (11) TMI 427 - HC - Income Tax

Entitlement of benefit of tax exemption for 10 years to assessee who availed the tax benefit of 5 years prior to coming into force of amended provision 10-B Held that - If the assessee already availed the benefit under the unamended provision and the 10 consecutive years would fall prior to 01.04.1999, then the assessee would not be entitled to the said benefit. If the said 10 consecutive years from the date of production has not expired, prior to 01.04.1999, for the remaining unexpired period, he would be entitled to the benefit. On the ground that he had the benefit of unamended provision and the 5 years period has expired on the day amended provision came into force, he cannot be denied the benefit Decided in favor of assessee.

Summary

Issues:
Interpretation of tax benefit provision under amended provision 10-B for unexpired period of 10 consecutive assessment years.

Analysis:
The High Court considered the issue of whether an assessee who availed tax benefit under the unamended provision is entitled to the extended tax exemption for 10 years under the amended provision 10-B for the unexpired period of 10 consecutive assessment years. Referring to a previous case, the court highlighted the objective behind the amendment, which aimed to extend the tax holiday period from 5 to 10 years to boost exports. The court emphasized that if an assessee had already benefited from the previous provision, they should automatically receive the extended benefit if all conditions are met. The condition requires ten consecutive assessment years starting from the year of commencement of production. The court clarified that the intention of the amendment was to provide a 10-year tax holiday from the date of production, and an assessee should be entitled to this benefit if the law governing the tax holiday was in force at the beginning of the relevant year. The court emphasized that denying the benefit for the unexpired period would contradict the purpose of the amendment and negate its effect.

The court found no merit in the appeal and upheld the orders of the Tribunal and the Appellate Authority, stating that they were in accordance with the law and did not have any legal flaws warranting interference. Consequently, the court dismissed the appeal, ruling in favor of the assessee and against the revenue department. The substantial question of law framed in the appeal was answered in favor of the assessee, affirming their entitlement to the extended tax exemption under the amended provision 10-B for the unexpired period of 10 consecutive assessment years.