2013 (1) TMI 396 - AT - Income Tax

Deduction u/s 10B - not entitled to the benefit in the assessment year 2004-05 as period of ten years has to be reckoned from the assessment year relevant to the previous year in which the assessee begins manufacturing process i.e. 1994-95 - Held that - A perusal of sub-section (3) of section 10B prior to the amendment of Income Tax (Second Amendment) Act, 1998 shows that the assessee could have availed the benefit of section 10B in any of the five consecutive assessment years falling within a period of eight years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things. It is an admitted fact that the assessee started manufacturing in May, 1993 & assessee was eligible for claiming deduction under section 10B for the period of 10 years beginning with the assessment year 1994-95. Accordingly, the assessee was entitled for benefit upto assessment year 2003-04. The Tribunal inadvertently calculated the period of 10 years starting from assessment year 1995-96 and ending with assessment year 2004-05. This is a mistake which has to be rectified. Assessee fairly conceded to the factual error in calculation of period of 10 years. Since the change of the year goes to the root of the order, it fit to recall the order dated 24.7.2012 and the Registry is directed to fix the hearing of appeal in due course after informing both the parties - Miscellaneous Petition filed by the Revenue allowed.

Summary

Issues:
Calculation of deduction period under section 10B of the Income Tax Act.

Analysis:
The Revenue filed a Miscellaneous Petition seeking rectification of the Tribunal's order dated 27th September, 2012, which allowed the appeal of the assessee in ITA No.586/Mds/2012 for the assessment year 2004-05. The dispute arose regarding the interpretation of section 10B of the Income Tax Act, specifically the period for which the assessee was eligible for deduction. The Revenue argued that the assessee was not entitled to the benefit of deduction under section 10B for the assessment year 2004-05 as the ten-year tax holiday period had lapsed in 2003-04. The Tribunal noted that the assessee had started manufacturing in May 1993 and was eligible for claiming deduction under section 10B for ten years beginning with the assessment year 1994-95. However, the Tribunal mistakenly calculated the period starting from 1995-96 to 2004-05 instead of 1994-95 to 2003-04. Both parties agreed to the error in calculation, leading the Tribunal to recall the order dated 24.7.2012 to rectify the mistake.

In conclusion, the Tribunal rectified the error in the calculation of the deduction period under section 10B of the Income Tax Act, recalling the previous order and directing the Registry to schedule a new hearing for the appeal. The judgment clarified the correct interpretation of the provisions of section 10B and emphasized the importance of accurately calculating the entitlement period for tax deductions under the Act.