2018 (3) TMI 1843 - HC - Income Tax

Deduction u/s 10B - HELD THAT - Substantial question of law raised with regard to the correctness of the view taken by the Tribunal to the effect that in view of the omission of sub-Section (9) in Section 10B with effect from 01.04.2004 should it be understood that the said section never existed in the statute book and therefore the benefit claimed by the assessee under Section 10B should be allowed has held in paragraph 8 after referring to the judgment of the Supreme Court in the case of KOLHAPUR CANESUGAR WORKS LTD. vs. UNION OF INDIA 2000 (2) TMI 823 - SUPREME COURT held that whole object of such omission is to extend the benefit under Section 10B of the Act irrespective of the fact whether during the period to which they are entitled to the benefit the ownership continues with the original assessee or it is transferred to another person. Benefit is to the undertaking and not to the person who is running the business - Decided in favour of the assessee

Summary

Issues:
1. Entitlement to deduction under Section 10B of the Income Tax Act, 1961.

Analysis:
The appeal before the Karnataka High Court involved a dispute regarding the entitlement of the assessee to a deduction under Section 10B of the Income Tax Act, 1961. The Tribunal had allowed the assessee's claim for deduction, stating that the provisions under Section 10B(9) were no longer in existence, and therefore, the assessee was entitled to the deduction for the assessment year 2005-06. The Revenue contended that the Tribunal erred in its interpretation, arguing that the omission of sub-section 9 of Section 10B did not imply that the section never existed, and thus, the benefit claimed should not be allowed.

During the proceedings, both parties referred to a previous judgment of the Court in a similar case, where it was held that the omission of sub-section (9) of Section 10B without a saving clause meant that the section should be considered as if it never existed in the statute book. The Court cited the Supreme Court's decision in the case of KOLHAPUR CANESUGAR WORKS LTD. vs. UNION OF INDIA, emphasizing that the benefit under Section 10B is meant for the undertaking and not the person running the business. The Court concluded that the Assessing Officer was not justified in denying the benefit to the assessee based on a provision that was no longer in the statute book. Therefore, the substantial question of law was answered in favor of the assessee, and the appeals were dismissed.

Based on the precedent and reasoning provided in the previous judgment, the High Court dismissed the appeal, stating that the earlier decision was applicable to the current case, and therefore, the assessee was entitled to the deduction under Section 10B.