2012 (6) TMI 660 - HC - Income Tax

Extended benefit of exemption u/s 10A - Applicability of amendment - condition to be fulfilled is ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture Held that - assessee has commenced production in the year 1993-94 - He enjoyed the benefit of 5 years from 1993-94 to 1997-98 - amended provision came into force on 1-4-1999 - denial of the benefit runs canteen to the sprit of Section 10B and it would negate the object with which the amended provision was brought in. - The assessee is entitled to the benefit of extension from 5 years to 10 years tax holiday as provided under the amended provision for 10 consecutive years from the date of commencement of production In favor of assessee

Summary

Issues: Appeal against Tribunal's order on the applicability of the beneficial Clause of 10 years amendment to Section 10A to the assessee.

Analysis:
The main issue in this case revolved around the applicability of the beneficial Clause of 10 years amendment to Section 10A to the assessee. The Tribunal had ruled in favor of the assessee, stating that the amendment extending the tax holiday from 5 years to 10 years should apply to the case. The Court referred to a previous judgment where it was established that the amendment aimed to extend the tax benefit to 10 consecutive assessment years from the commencement of production. The Court highlighted that if an assessee had already availed the benefit under the unamended provision and the 10 consecutive years had not expired before the amendment came into force, the assessee should be entitled to the extended benefit. In this case, the assessee had commenced production in 1993-94 and enjoyed the benefit of 5 years until 1997-98. The amended provision came into force on 1-4-1999, entitling the assessee to the tax holiday extension from 1999-2000 onwards. However, the benefit was denied for the period 2001-02, which the Court found to be against the spirit of Section 10B. The Court upheld the Tribunal's decision, emphasizing that the assessee was entitled to the benefit of the extended tax holiday for 10 consecutive years from the commencement of production, as per the amended provision.

In conclusion, the Court dismissed the appeal based on the judgment discussed above, which clarified the entitlement of the assessee to the extended tax holiday benefit under the amended provision. The Court emphasized the legislative intent behind the amendment to promote exports by extending the tax holiday period and ensure that the benefit is granted for the full duration specified in the law. The judgment reinforced the principle that once a taxpayer meets the conditions for a tax benefit under a specific provision, any subsequent amendments should not unjustly deprive them of the benefit if the conditions continue to be met.