2012 (6) TMI 112 - HC - Income Tax

Exemption u/s 10A - denial on ground that assessee did not fulfill the conditions stipulated in clauses (a),(b)and(c) to Section 10A(2)(i) - Revenue contended that clause (c) applicable w.e.f. 1st April, 2001 had the effect of overriding clauses (a) and (b) - Held that - clause (c) extends the benefit and does not withdraw the benefit extended and available to undertakings covered by clauses (a) and (b). The three clauses are mutually exclusive and operate in their own field. Facts on records reveal that STP registration was granted to the erstwhile partnership firm whose entire business was transferred to the assessee in 2005. The name of the assessee -company was substituted in the STP registration record, which is located in a STP and thus is accordingly covered by Section 10A(2)(i)(b) - Decided in favor of assessee

Summary

Issues:
1. Entitlement to exemption under Section 10A
2. Interpretation of Section 10A(2)(i) of the Income Tax Act, 1961

Entitlement to Exemption under Section 10A:
The appeal by the Revenue under Section 260A of the Income Tax Act, 1961 challenges the order passed by the Income Tax Appellate Tribunal regarding the assessment year 2007-08. The Revenue contended that the respondent-assessee is not eligible for exemption under Section 10A due to the formation of the business through splitting up or reconstruction, violating Section 10A(2)(ii). However, as this contention was not raised by the Revenue before the tribunal, it was not adjudicated upon. The tribunal had only addressed the violation of Section 10A(2)(i) (a) (b) and (c) and not Section 10A(2)(ii). Consequently, the court found no substantial question of law regarding this issue in the impugned order.

Interpretation of Section 10A(2)(i) of the Act:
The second contention raised by the Revenue related to the interpretation of Section 10A(2)(i) of the Act. The Revenue argued that the respondent did not fulfill the conditions outlined in clauses (a), (b), and (c) of Section 10A(2)(i). The Revenue claimed that clause (c) overrides clauses (a) and (b), but this was deemed incorrect. A Circular issued by the CBDT clarified that the benefit under clause (c) does not withdraw the benefit available to undertakings covered by clauses (a) and (b). The three clauses are considered mutually exclusive and operate in their respective domains. In this case, the respondent's undertaking, located in a software technology park, was covered by clause (b) of Section 10A(2)(i). The court found the appeal to be without merit and dismissed it without costs.

This detailed analysis of the judgment provides insights into the issues of entitlement to exemption under Section 10A and the interpretation of Section 10A(2)(i) of the Income Tax Act, 1961.